Understanding Labour Productivity Convergence: Empirical Evidence from South Asia

A key metric for evaluating a nation's level of development and comparing per capita economic growth is labour productivity. The data used in this study, which focuses on South Asian nations like Bangladesh, India, Pakistan, and Sri Lanka, were collected between 1991 and 2018. Our analysis' findings paint a complex picture when looking at various industries, but there is not any conclusive evidence of convergence at the aggregate level, indicating that economies are not necessarily convergent overall. A more thorough sectoral examination, however, shows some intriguing trends. Convergence is evident in most economic sectors, suggesting that many industries are heading toward comparable productivity or income per worker levels. Notable convergence patterns can be seen in industries like business services, government services, utility services, trade services, and mining. This implies that economies or areas within these sectors are catching up to one another in terms of income levels or productivity. Nonetheless, the lack of convergence in other industries, such as services, transportation, construction, agriculture, and others, suggests that these sectors will continue to experience gaps or different paths.