Convergence Analysis: Sigma Convergence among Regions of Armenia

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: Despite being small-size and compact country – with only 200 kilometers stretch from far East to West – the economy of Armenia faces significant spatial differentiation in income levels and is characterized by high concentrations of population, economic and business activities in the capital city with peripheral regions lagging behind economic activity and wages. By using the data on monthly average wages of the Marzes (provinces) this paper seeks to empirically test the hypothesis of income level (wages) divergence in the country using the method of Sigma convergence. By estimating the trend line of the dispersion (coefficient of variation) in monthly average wages among the regions of Armenia I come to a conclusion that income levels between the regions of Armenia tend to converge over the analyzed time frame. This finding, however, should be interpreted with caution due to the revealed two sub-periods of divergence among the regions in wages.

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