IDEAS home Printed from https://ideas.repec.org/a/vrs/enviro/v8y2020i1p1-8n1.html
   My bibliography  Save this article

Convergence and growth – conflicting goals of economics policy – A case study of Georgia

Author

Listed:
  • Jibuti Mariam

    (Ivane Javakhishvili Tbilisi State University, University Street 11, Tbilisi, Georgia)

Abstract

Over the years, it has been the subject of discussions whether efficiency-oriented interventions contribute to an equity distribution of wealth across regions and whether equity orientation is a source of inefficiency. While efficiency refers to the maximization of growth in the national economy, convergence-oriented policy is focused on equalizing the level of development at interregional level. The case of Georgia was studied as a developing country facing various challenges in terms of economic growth and regional divergence. This article provides an overview of the economic development trends taking place in the regions of Georgia and reveals the high level of divergence within the country. A logarithmic model was created and used to run simulations to predict the possible results of convergence-oriented policy in Georgia. In order to make the forecast we estimated GDP per capita and average growth rates in all the Georgian regions. Use of the model allowed us to answer two main questions: (1) If the last 5 and 10 year average growth rates are maintained, how long will it take for the poorest region to converge to the wealthiest one? (2) What should be the minimum growth rate in the poorest region for the upcoming 5, 10 and 20 years in order to converge to the wealthiest capital? Results of the calculations showed that convergence between regions can only be achieved by slowing down economic growth in relatively wealthier regions and by focusing on the development of the poorest ones. The results of the study revealed that the convergence process will be faster for the regions with medium or big cities and growth centres. Therefore, creating competitive growth centres would be a reasonable regional policy objective to promote fast economic growth and future convergence without redirecting the growth process from more developed areas to lagging ones.

Suggested Citation

  • Jibuti Mariam, 2020. "Convergence and growth – conflicting goals of economics policy – A case study of Georgia," Environmental & Socio-economic Studies, Sciendo, vol. 8(1), pages 1-8, March.
    • Handle: RePEc:vrs:enviro:v:8:y:2020:i:1:p:1-8:n:1
    DOI: 10.2478/environ-2020-0001
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/environ-2020-0001
    Download Restriction: no
    File URL: https://libkey.io/10.2478/environ-2020-0001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 857-880.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    3. Giuli Keshelashvili, 2018. "Value Chain Management in Agribusiness," Proceedings of International Academic Conferences 6409097, International Institute of Social and Economic Sciences.
    4. Thomas Farole & Andrés Rodríguez‐Pose & Michael Storper, 2011. "Cohesion Policy in the European Union: Growth, Geography, Institutions," Journal of Common Market Studies, Wiley Blackwell, vol. 49(5), pages 1089-1111, September.
    5. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    6. Marta Degl'Innocenti & Roman Matousek & Nickolaos G Tzeremes, 2018. "Financial centres' competitiveness and economic convergence: Evidence from the European Union regions," Environment and Planning A, , vol. 50(1), pages 133-156, February.
    7. Giuli Keshelashvili, 2018. "Value Chain Management in Agribusiness," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 6(2), pages 59-77, November.
    8. Richardson, Harry W. & Townpoe, Peter M., 1987. "Regional policies in developing countries," Handbook of Regional and Urban Economics, in: P. Nijkamp (ed.), Handbook of Regional and Urban Economics, edition 1, volume 1, chapter 16, pages 647-678, Elsevier.
    9. repec:hhs:iuiwop:430 is not listed on IDEAS
    10. J. V. Henderson & J. F. Thisse (ed.), 2004. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 4, number 4.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gianni Guastella & Francesco Timpano, 2016. "Knowledge, innovation, agglomeration and regional convergence in the EU: motivating place-based regional intervention," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 36(2), pages 121-143, October.
    2. Thomas Straubhaar & Marc Suhrcke & Dieter Urban, 2002. "Divergence. Is it Geography?," Development Working Papers 158, Centro Studi Luca d'Agliano, University of Milano.
    3. Laura Casi & Laura Resmini, 2017. "Foreign direct investment and growth: Can different regional identities shape the returns to foreign capital investments?," Environment and Planning C, , vol. 35(8), pages 1483-1508, December.
    4. Fabrizio Barca & Philip McCann & Andrés Rodríguez‐Pose, 2012. "The Case For Regional Development Intervention: Place‐Based Versus Place‐Neutral Approaches," Journal of Regional Science, Wiley Blackwell, vol. 52(1), pages 134-152, February.
    5. Vincenzo Lombardo, 2008. "Income distribution and Growth: A Critical Survey," Working Papers 11_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    6. Dentinho, Tomaz Ponce, 2017. "Regional development and migration in the Lower Basin of the Zambezi River. The importance of property rights," Socio-Economic Planning Sciences, Elsevier, vol. 58(C), pages 87-102.
    7. Vassilis Tselios, 2009. "Growth and Convergence in Income Per Capita and Income Inequality in the Regions of the EU," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(3), pages 343-370.
    8. Alberto Díaz Dapena & Esteban Fernández Vázquez & Fernando Rubiera Morollón, 2016. "The role of spatial scale in regional convergence: the effect of MAUP in the estimation of $$\beta $$ β -convergence equations," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 473-489, March.
    9. Michelle Baddeley, 2006. "Convergence or Divergence? The Impacts of Globalisation on Growth and Inequality in Less Developed Countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 391-410.
    10. Rodríguez-Benavides, Domingo & Mendoza-González, Miguel Ángel & Venegas-Martínez, Francisco, 2014. "¿Realmente existe convergencia regional en México? Un modelo no lineal de datos panel TAR [Is There Really Regional Convergence in Mexico? A Non-linear Panel-Data TAR Model]," MPRA Paper 56874, University Library of Munich, Germany.
    11. Tobias Hagen & Philipp Mohl, 2011. "Econometric Evaluation of EU Cohesion Policy: A Survey," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 16, Edward Elgar Publishing.
    12. Sergio J. Rey & Mark V. Janikas, 2003. "Convergence and space," Urban/Regional 0311002, University Library of Munich, Germany, revised 16 Nov 2003.
    13. Urban, Dieter M., 2007. "Terms of trade, catch-up, and home-market effect: The example of Japan," Journal of the Japanese and International Economies, Elsevier, vol. 21(4), pages 470-488, December.
    14. William Darity & Lewis S. Davis, 2005. "Growth, trade and uneven development," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(1), pages 141-170, January.
    15. Gries, T. & Grundmann, R. & Palnau, I. & Redlin, M., 2015. "Does technological change drive inclusive industrialization? : A review of major concepts and findings," MERIT Working Papers 2015-044, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Goli, Srinivas & Perianayagam, Arokiasamy & Bhemeshawar, Reddy, 2013. "Socioeconomic Progress across the Major Indian states: Converging or Diverging," MPRA Paper 48978, University Library of Munich, Germany, revised 05 Aug 2013.
    17. Panagiotis Artelaris & Paschalis A. Arvanitidis & George Petrakos, 2011. "Convergence patterns in the world economy: exploring the nonlinearity hypothesis," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(3), pages 236-252, August.
    18. Jan Fagerberg & Bengt-Åke Lundvall & Martin Srholec, 2018. "Global Value Chains, National Innovation Systems and Economic Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 533-556, July.
    19. Kutuk, Yasin, 2022. "Inequality convergence: A world-systems theory approach," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 150-165.
    20. Kar, Sabyasachi & Pritchett, Lant & Raihan, Selim & Sen, Kunal, 2013. "Looking for a break: Identifying transitions in growth regimes," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 151-166.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:enviro:v:8:y:2020:i:1:p:1-8:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.