Growth of the Peruvian Economy and Convergence in the Regions of Peru: 1970-2010

The Peruvian economy has been growing sustainably during the last 15 years. Verifying whether the Departments (or Regions) have achieved a process of convergence, be it towards a single stationary state or its own stationary state, would be equivalent to verifying a process of inclusion in the said process of growth. Basic characteristics of the national Census allow us to state that a great number of the Departments that still do not reach certain minimum criteria of subsistence are therefore in a clear process of exclusion. From this perspective, we think that the concept of convergence can give us some light over the situation. If convergence exists, it is probable that the said convergence is realized towards poverty or exclusion. In this document, different statistical tests are applied to verify the existence of stochastic and deterministic convergence, as well as a recent methodology for identifying the so-called clubs of convergence. The results of the application of the tests of unit root without structural break indicate the inexistence of stochastic convergence. However, when incorporating the presence of endogenous break the results get reversed for all the Departments with the exception of Huancavelica. The application of a statistic for structural break robust to the presence of errors of type I(0) and I(1) allow us to estimate the departamental rates of growth before and after the break. The results suggest that the majority of the Departments have accelerated their rates of growth after the breaking point. Some Departments show the inexistence of structural change and even a few cases show a deceleration of their rates of growth. On the other hand, evidence has been found about the formation of clubs of convergence that are robust to different order settings proposed by the methodology that was utilized. According to that methodology, the Departments of Apurimac and Huancavelica are not part of any club of convergence, which means that they are disconnected to the rest of the country.

Keywords

Convergence, Inclusion, Clubs of Convergence, per capita GDP

JEL Classification

C22, O40, R00

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