Bi-Polar Convergence Analysis of Income and Related Factors in the BRICS Nations: A Stochastic Convergence Approach

Abstract

The present study focuses on the dynamics of the four key indicators, per capita gross domestic product (PCGDP), savings, capital-output ratio and population, for the Brazil, Russia, India, China and South Africa (BRICS) group in order to analyse the convergence, divergence or others, in line with the neoclassical and time series methods for 1991–2019. The cross-country regression results, as per the unconditional β convergence, show no signs of convergence or divergence in any of the four indicators, although there is sigma convergence in some of them. Further, the results of the time series analysis do not show any sign of convergence in income in any pair of the countries. There is non-diverging catching up in incomes per capita for two pairs of countries only, Brazil–China and Brazil–Russia, and divergence result in PCGDP for two other pairs, Brazil–India and India–Russia. Hence, there are maximum results in favour of non-consolidations of the group. Thus, the non-convergence results may hinder the group from establishing them as the parallel body in the global decision-making processes in different economic and political situations. In order to attain the basic objectives behind the BRICS group formation the policy makers should focus on reducing the inter-country disparities.