INCOME DISPARITIES AND CONVERGENCE ACROSS GLOBAL REGIONS

Abstract

Purpose: This paper explores global income distribution and inequality from 1990 to 2023, analyzing 183 countries across 10 regions.

Methodology: Using PPP-adjusted GDP per capita data for 183 countries, the study assesses income dynamics across ten world regions through β-convergence (linear regression), σ-convergence (standard deviation), and the catch-up index (relative dynamics of income).

Results: The results reveal a complex picture: while overall income disparities between countries have decreased (β-convergence), regional comparisons with the U.S. as a benchmark show diverse trends. Of the nine analyzed regions (excluding the U.S.), five exhibit convergence, while four show divergence, based on σ-convergence and the catch-up index. Eastern Europe and South Asia have made the most progress in narrowing the income gap, where as the Middle East & North Africa and Sub-Saharan Africa have fallen further behind. Despite maintaining minimal disparities with the U.S., Western Europe and the Western Off shoots have exhibited signs of mild divergence. These results highlight the heterogeneity of income dynamics across regions.

Conclusion: This study provides a nuanced perspective on convergence dynamics, emphasizing that the process of economic catch-up is neither uniform nor guaranteed. The results highlight that regions characterized by political stability, strong institutional capacity, and sustained investment in education and technology, such as Eastern Europe, are advancing more effectively. In contrast, regions facing persistent political instability, weak institutional frameworks, and limited investment—particularly Sub-Saharan Africa and the Middle East & North Africa—continue to fall behind. These findings point to the importance of targeted policy interventions aimed at fostering inclusive and balanced global economic development.