Evaluating the β-Convergence of Labour Productivity under Varying Political Regimes

Article DOI: https://doi.org/10.57017/jaes.v20.4(90).16

Author(s):

Weerasak SAWANGLOKE Mahasarakham Bussiness School, Mahasarakham University, Thailand
Aphichat WIYO Mahasarakham Bussiness School, Mahasarakham University, Thailand
Mana LUKSAMEE-ARUNOTHAI Department of Economics, Faculty of Economics, Kasetsart University, Thailand
Suteera CHANTHES Mahasarakham Bussiness School, Mahasarakham University, Thailand
Phubet SENBUT Parliamentary Budget Office, The Secretariat of the House of Representatives, Thailand
Nut THANCHAROEN Mahasarakham Bussiness School, Mahasarakham University, Thailand
Supattra NUTTEE Mahasarakham Bussiness School, Mahasarakham University, Thailand

Abstract:

This paper evaluates the β-convergence of labour productivity across the political regimes. The analysis provides insight into the extent and pattern of labour productivity convergence differentiated by political system, controlling for economic and political stability variables. Data were collected from 129 countries, which were grouped by four political regime types and using fixed effects and Generalized Method of Moments (GMM) estimations on dynamic panel data, we examine the unconditional and conditional convergence of three separate periods. The control variables include gross fixed capital formation, life expectancy, foreign direct investment, trade openness, and political stability. The results show a significant relationship between labour productivity growth rates and the initial levels of productivity across all regime types, with full democracies exhibiting the most rapid β-convergence relative to the other system types. The analysis reveals that the impact of political stability on convergence rates is profound; specifically, more politically stable regimes tend to converge at higher rates of labour productivity. This explains considerable variance in labour productivity convergence paths across political contexts. The paper provides new evidence on the relevance of the political regimes for β-convergence of labour productivity, while employing political regime typologies rather than traditional geographic or sector classifications.

Copyright© 2025 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

Article’s history: Received 29th of October, 2025; Revised 22nd of November, 2025; Accepted 22nd of December, 2025; Available online: 30th of December, 2025. Published as article in the Volume XX, Winter, Issue 4(90), December, 2025.

How to cite:

Sawangloke, W., Wiyo, A., Luksamee-Arunothai, M., Chanthes, S., Senbut, P., Thancharoen, N., & Nuttee, S. (2025). Evaluating the β-Convergence of Labour Productivity under Varying Political Regimes.. Journal of Applied Economic Sciences, Volume XX, Winter, 4(90), 913 – 939. https://doi.org/10.57017/jaes.v20.4(90).16

Acknowledgments/Funding: This research project was financially supported by Mahasarakham University.

Conflict of Interest Statement: The authors declare that there is no potential conflict of interest in conducting and completing the research.

Data Availability Statement: The data supporting the findings of this study are available from the corresponding author upon reasonable request.

References:

Acemoglu, D., & Robinson, J. A. (2005). Economic origins of dictatorship and democracy. Cambridge University Press. https://doi.org/10.1017/CBO9780511510809

Acemoglu, D., & Robinson, J. A. (2013). Why nations fail: The origins of power, prosperity, and poverty. Crown Currency. https://economics.mit.edu/sites/default/files/inline-files/Schwartz%20Lecture.pdf

Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91(5), 1369-1401. https://doi.org/10.1257/aer.91.5.1369

Afonso, A., & Furceri, D. (2010). Government size, composition, volatility and economic growth. European Journal of Political Economy, 26(4), 517-532. https://doi.org/10.1016/j.ejpoleco.2010.02.002

Aisen, A., & Veiga, F. J. (2013). How does political instability affect economic growth? European Journal of Political Economy, 29, 151-167. https://doi.org/10.1016/j.ejpoleco.2012.11.001

Akın, T. (2019). The effects of political stability on foreign direct investment in fragile five countries. Central European Journal of Economic Modelling and Econometrics, 237-255. https://journals.pan.pl/Content/114896/PDF/mainFile.pdf

Alexandre, F., Bação, P., & Veiga, F. J. (2022). The political economy of productivity growth. European Journal of Political Economy, 75, 102185. https://doi.org/10.1016/j.ejpoleco.2022.102185

AlKathiri, N. (2022). Labour productivity growth and convergence in manufacturing: A nonparametric production frontier approach. Applied Economics, 54(4), 406-429.https://doi.org/10.1080/00036846.2021.1963410

Amna Intisar, R., Yaseen, M. R., Kousar, R., Usman, M., & Makhdum, M. S. A. (2020). Impact of trade openness and human capital on economic growth: a comparative investigation of Asian countries. Sustainability, 12(7), 2930. https://doi.org/10.3390/su12072930

Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277-297. https://doi.org/10.2307/2297968

Barro, R. J. (1996). Determinants of economic growth: A cross-country empirical study. https://doi.org/10.3386/w5698

Barro, R. J., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223-251. https://doi.org/10.1086/261816

Barro, R., & Sala-i-Martin, X. (2004). Economic Growth. 2nd Edition. http://piketty.pse.ens.fr/fles/BarroSalaIMartin2004.pdf

Bazzi, S., & Clemens, M. A. (2013). Blunt instruments: Avoiding common pitfalls in identifying the causes of economic growth. American Economic Journal: Macroeconomics, 5(2), 152-186. https://doi.org/10.1257/mac.5.2.152

Bernard, A. B., & Jones, C. I. (1996). Productivity across industries and countries: time series theory and evidence. The Review of Economics and Statistics, 135-146. https://doi.org/10.2307/2109853

Bertrand, J., Lemoine, J., Negrea, D., & Perri, C. (2024). Attracting Foreign Direct Investments: How Economic Freedom, Strong Institutions and the Rule of Law Make a Difference. Atlantic Council. https://www.atlanticcouncil.org/ wpcontent/uploads/2024/03Attracting-Foreign-Direct-Investments.pdf

Bhattarai, K., & Qin, W. (2022). Convergence in labour productivity across provinces and production sectors in China. The Journal of Economic Asymmetries, 25, e00247. https://doi.org/10.1016/j.jeca.2022.e00247

Bloom, D. E., Canning, D., & Fink, G. (2010). Implications of population ageing for economic growth. Oxford Review of Economic Policy, 26(4), 583-612. https://doi.org/10.1093/oxrep/grq038

Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8

Brown, D. S. (2023). Democracy, Labour’s Share of Income, and Labour Supply: A Time-Series Cross-Sectional Analysis. Political Research Quarterly, 76(2), 961-976. https://doi.org/10.1177/10659129221119206

Bun, M. J., & Windmeijer, F. (2010). The weak instrument problem of the system GMM estimator in dynamic panel data models. The Econometrics Journal, 13(1), 95-126. https://doi.org/10.1111/j.1368-423X.2009.00299.x

Campos, N. & Nugent, J.B. (2002). Who is Afraid of Political Instability? Journal of Development Economics, 67(1): 157-172. https://doi.org/10.1016/S0304-3878(01)00181-X

Caraway, T., Crowley, S., & Cook, M. (2015). Labour and authoritarian legacies. Working through the past: Labour and authoritarian legacies in comparative perspective, 1-24. https://doi.org/10.7591/9780801455483-002

Castellanos-Sosa, F. A. (2020). Labour productivity convergence in Mexico. International Journal of Political Economy, 49(3), 243-260. https://doi.org/10.1080/08911916.2020.1824733

Castelló-Climent, A., & Domenech, R. (2022). Global| Converger hacia la convergencia: el papel del capital humano (No. 22/12). BBVA Bank, Economic Research Department. https://www.bbvaresearch.com/wp-content/uploads/2022/12/WP22_12_Converging_to_convergence_the_role_of_human_capital.pdf

Choudhry, M. T., Marelli, E., & Signorelli, M. (2016). Age dependency and labour productivity divergence. Applied Economics, 48(50), 4823-4845. https://doi.org/10.1080/00036846.2016.1167823

Cooke, F. L., & Wood, G. (2022). Labour-Management Relations in Autocratic Regimes. In Handbook of Labour, Human Resources and Population Economics (pp. 1-28). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-319-57365-6_216-1

Coto-Millán, P., Saavedra, D. P., & De la Fuente, M. (2025). Impact of Logistics on Global Economic Growth: Beta and Sigma Convergence During the Period 2007–2022. Logistics, 9(4), 147. https://doi.org/10.3390/logistics9040147

Cuerva, M. C. (2012). Determinants of labour productivity convergence in the European agricultural sector. Agrociencia, 46(6), 621-635. https://doi.org/10.1007/978-3-319-57365-6_216-1

Daniele, F., Honiden, T., & Lembcke, A. C. (2019). Ageing and productivity growth in OECD regions: Combatting the economic impact of ageing through productivity growth? https://dx.doi.org/10.1787/9dcb3116-en

Dieppe, A., & Matsuoka, H. (2025). Sectoral decomposition of convergence in labour productivity: A Re-examination from a new dataset. Empirical Economics, 68(4), 1829-1859. https://doi.org/10.1007/s00181-024-02692-y

Economist Intelligence Unit (2023). Democracy Index 2023. https://www.eiu.com/n/campaigns/democracy-index-2023

Eder, A., Koller, W., & Mahlberg, B. (2024). The contribution of industrial robots to labour productivity growth and economic convergence: A production frontier approach. Journal of Productivity Analysis, 61(2), 157-181. https://doi.org/10.1007/s11123-023-00707-x

Elouaourti, Z., & Ibourk, A. (2025). A new methodology to track the dynamics of Structural Transformation applied to the case of a Developing Country. Journal of Open Innovation: Technology, Market, and Complexity, 100539. https://doi.org/10.1016/j.joitmc.2025.100539

Feng, Y., Kugler, J., & Zak, P. J. (2000). The politics of fertility and economic development. International Studies Quarterly, 44(4), 667-693. https://www.jstor.org/stable/3014037

Görg, H., & Greenaway, D. (2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2), 171-197. https://doi.org/10.1093/wbro/lkh019

Graafland, J. (2023). Economic freedom and life satisfaction: A moderated mediation model with individual autonomy and national culture. European Journal of Political Economy, 79, 102448. https://doi.org/10.1016/j.ejpoleco.2023.102448

Groznykh, R., Mariev, O., Plotnikov, S., & Fominykh, M. (2020). The role of political stability in foreign direct investment attraction: cross-country analysis. Proceedings of CBU in Economics and Business, 1, 76. https://doi.org/10.12955/peb.v1.22

Hall, P. A. (2015). How growth regimes evolve in the developed democracies. In 22nd International Conference of Europeanists, Paris (Volume 8).https://www.ias.edu/sites/default/files/sss/pdfs/Rodrik/workshop%2014-15/GrowthRegimes6.pdf

Inklaar, R., & Marapin, R. (2025). Accounting for productivity convergence: the role of sectors and structural change. STEG Working Paper. https://pure.rug.nl/ws/portalfiles/portal/1337844954/gd198.pdf

Islam, N. (2003). What have we learnt from the convergence debate? Journal of Economic Surveys, 17(3), 309-362. https://doi.org/10.1111/1467-6419.00197

Khan, K., Batool, S., & Shah, A. (2016). Authoritarian regimes and economic development: an empirical reflection. The Pakistan Development Review, 657-673. http://www.jstor.org/stable/44986008

Kim, W., & Gandhi, J. (2010). Coopting workers under dictatorship. The Journal of Politics, 72(3), 646-658. https://doi.org/10.1017/S0022381610000071

Kinfemichael, B., & Morshed, A. M. (2019). Unconditional convergence of labour productivity in the service sector. Journal of Macroeconomics, 59, 217-229. https://doi.org/10.1016/j.jmacro.2018.12.005

Kpognon, K., & Bah, M. (2019). Does institutional quality contribute to increasing labour productivity in sub-Saharan Africa? An empirical analysis. https://mpra.ub.uni-muenchen.de/id/eprint/98674

Kumar, S., & Russell, R. R. (2002). Technological change, technological catch-up, and capital deepening: relative contributions to growth and convergence. American Economic Review, 92(3), 527-548. https://doi.org/10.1257/00028280260136381

Lähdemäki, S. (2024). Cross-country convergence: to be or not to be, that is the question. Empirical Economics, 67(2), 839-875. https://doi.org/10.1007/s00181-024-02561-8

Le Billon, P. (2005). The resource curses. The Adelphi Papers, 45(373), 11-27. https://doi.org/10.1017/S0043887100008200

Le, A. N. N., Pham, H., Pham, D. T. N., & Duong, K. D. (2023). Political stability and foreign direct investment inflows in 25 Asia-Pacific countries: the moderating role of trade openness. Humanities and Social Sciences Communications, 10(1), 1-9. https://doi.org/10.1057/s41599-023-02075-1

Lin, J. Y. (2003). Development strategy, viability, and economic convergence. Economic Development and Cultural Change, 51(2), 277-308. https://doi.org/10.1086/367535

Liu, X., Zhang, S., & Bae, J. (2017). The nexus of renewable energy-agriculture-environment in BRICS. Applied Energy, 204, 489-496. https://doi.org/10.1016/j.apenergy.2017.07.077

Lopez-Gomez, L. (2024). The role of political institutions in the Eurozone's economic convergence process. Journal of Institutional Economics, 20, e29. https://doi.org/10.1017/S1744137424000213

Lujala, P. (2010). The spoils of nature: Armed civil conflict and rebel access to natural resources. Journal of Peace Research, 47(1), 15-28. https://doi.org/10.1177/0022343309350015

Magee, C. S., & Doces, J. A. (2015). Reconsidering regime type and growth: lies, dictatorships, and statistics. International Studies Quarterly, 59(2), 223-237. https://doi.org/10.1111/isqu.12143

Martín-Retortillo, M., & Pinilla, V. (2015). On the causes of economic growth in Europe: why did agricultural labour productivity not converge between 1950 and 2005? Cliometrica, 9, 359-396.https://doi.org/10.1007/s11698-014-0119-5

Miller, S. M., & Upadhyay, M. P. (2002). Total factor productivity and the convergence hypothesis. Journal of Macroeconomics, 24(2), 267-286. https://doi.org/10.1016/S0164-0704(02)00022-8

Mohammadi, H., Boccia, F., & Tohidi, A. (2023). The Relationship between Democracy and Economic Growth in the Path of Sustainable Development. Sustainability, 15(12), 9607. https://doi.org/10.3390/su15129607

Mulder, P., & De Groot, H. L. (2007). Sectoral energy-and labour-productivity convergence. Environmental and Resource Economics, 36(1), 85-112.https://doi.org/10.1007/s10640-006-9042-y

Naveed, A., & Ahmad, N. (2016). Labour productivity convergence and structural changes: simultaneous analysis at country, regional and industry levels. Journal of Economic Structures, 5, 1-17. https://doi.org/10.1186/s40008-016-0050-y

North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press. https://doi.org/10.1017/CBO9780511808678

Okara, A. (2023). Does foreign direct investment promote political stability? Evidence from developing economies. Economic Modelling, 123, 106249. https://doi.org/10.1016/j.econmod.2023.106249

Patalinghug, J. C. (2025). The Impact of Corruption on Military Spending in the Asia-Pacific Region. Journal of Applied Economic Sciences, 2(88), 232-243. https://doi.org/10.57017/jaes.v20.2(88).05

Polterovich, V., & Popov, V. (2005). Democracy and growth reconsidered: Why economic performance of new democracies is not encouraging. https://mpra.ub.uni-muenchen.de/21606/

Przeworski, A., & Limongi, F. (1993). Political regimes and economic growth. Journal of Economic Perspectives, 7(3), 51-69. https://doi.org/10.1257/jep.7.3.51

Rodríguez-Pose, A., & Ganau, R. (2022). Institutions and the productivity challenge for European regions. Journal of Economic Geography, 22(1), 1-25. https://doi.org/10.1093/jeg/lbab003

Rodrik, D. (1997). Democracy and economic performance. Harvard University, December, 14(1999), 707-38.https://homepage.ntu.edu.tw/~kslin/macro2009/Rodrik_1997.pdf

Rodrik, D. (2000). Institutions for High-Quality Growth: What They Are and How to Acquire Them. Studies in Comparative International Development, 35(3), 3-31. https://doi.org/10.1007/BF02699764

Rodrik, D. (2013). Unconditional convergence in manufacturing. The Quarterly Journal of Economics, 128(1), 165-204. https://doi.org/10.1093/qje/qjs047

Roodman, D. (2009). A note on the theme of too many instruments. Oxford Bulletin of Economics and Statistics, 71(1), 135-158. https://doi.org/10.1111/j.1468-0084.2008.00542.x

Saha, S. K. (2024). Does the impact of the foreign direct investment on labour productivity change depending on productive capacity? Journal of the Knowledge Economy, 15(2), 8588-8620. https://doi.org/10.1007/s13132-023-01444-0

Shahbaz, M. (2012). Does trade openness affect long run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan. Economic Modelling, 29(6), 2325-2339. https://doi.org/10.1016/j.econmod.2012.07.015

Shahzad, A., Mithani, D. A., Al-Swidi, A. K., & Fadzil, F. H. (2012). Political stability and the foreign direct investment inflows in Pakistan. British Journal of Arts and Social Sciences, 9(2), 199-213. https://www.researchgate.net/profile/Arfan-Shahzad/publication/260427432_Political_Stability_and_the_Foreign_Direct_Investment_Inflows_in_Pakistan/links/55f2878408aef559dc493959/Political-Stability-and-the-Foreign-Direct-Investment-Inflows-in-Pakistan.pdf

Shahzad, M., & Azam, A. (2023). Tourism, Economic growth, Environment, Human Capital and Political Instability: Heterogeneous linkages. iRASD Journal of Economics, 5(2), 546-565. https://doi.org/10.52131/joe.2023.0502.0145

Shareef, S., & Kiani, A. (2020). Role of Corruption and its Impact Under Various Regimes: Cross Country Analysis. International Journal of Management Research and Emerging Sciences, 10(3). https://doi.org/10.56536/ijmres.v10i3.99

Sharma, S. D. (2007). Democracy, good governance, and economic development. Taiwan Journal of Democracy, 3(1), 29-62. https://doi.org/10.29654/TJD.200707.0002

Stølan, R. (2012). Political regimes and FDI: An empirical analysis of the attractiveness of hybrid regimes for multinational companies (Master's thesis, Norges teknisk-naturvitenskapelige universitet, Fakultet for samfunnsvitenskap og teknologiledelse, Institutt for sosiologi og statsvitenskap).https://ntnuopen.ntnu.no/ntnu-xmlui/handle/11250/268581

Taymaz, E., Voyvoda, E., & Yılmaz, K. (2021). Transition to democracy, real wages and productivity: The Turkish experience (No. 2111). Working Paper.https://www.econstor.eu/handle/10419/243014

Temoso, O., Koomson, I., & Thomy, B. (2025). Club convergence in regional labor productivity: how do Australian states and territories compare to the US, UK, and Canadian subnational regions? Journal of Productivity Analysis, 63(2), 133-149. https://doi.org/10.1007/s11123-024-00738-y

Turan, B. (2020). Life expectancy and economic development: Evidence from microdata. Review of Development Economics, 24(3), 949-972. https://doi.org/10.1111/rode.12665

Van Noort, S. (2024). Industrialization and Democracy. World Politics, 76(3), 457-498. https://doi.org/10.1353/wp.2024.a933069

Vatsa, P., & Pino, G. (2023). Spatial spillovers and labour productivity convergence in Canada. Economics Letters, 230, 111276. https://doi.org/10.1016/j.econlet.2023.111276

Zhumabekova, M., & Mukanov, B. (2025). Smart Governance and Investment in Green Infrastructure: Analysis of Financial Mechanisms for Sustainable Urban Development. Journal of Applied Economic Sciences, 3(89), 561-572. https://doi.org/10.57017/jaes.v20.3(89).12