Do Public Sector Corruption and Other Macroeconomic Indicators Increase Regional Imbalances in Economic Growth in Asian Countries?

Gross domestic product (GDP) improves the country's economic growth and well-being. This study examines the convergence in per capita gross domestic product (i.e., sigma convergence and beta convergence) of 38 different Asian countries from 2012–2013 to 2023–2024. The convergence of per capita gross domestic product has been estimated by applying the advanced panel data methodology: panel unit root tests on demeaned series and estimation of the static panel regression model. The sigma convergence has been estimated by using the coefficient of variation method. The value of the coefficient of variation increased significantly in Southeast Asian countries, signifying the presence of sigma divergence across the countries, whereas the values of the coefficient of variation significantly decreased in Western Asia, East Asia, and Asia as a whole, signifying the presence of sigma convergence across the countries. The panel unit root tests and panel data regression model for all the sub-continents, as well as Asia as a whole, show evidence in favor of absolute beta convergence. In the case of the Asian continent, the estimated results argued that economic growth has a positive relationship to corruption in recent times, but the economic growth of Western Asian countries has a negative relationship with public sector corruption. It portrays that the GDP growth rates of less developed countries decrease due to high corruption, while the GDP growth rates of East Asian less developed countries improve at higher rates compared to richer countries due to high corruption in the public sector. A few other conditioning variables like total export, life expectancy at birth, and gross capital formation played a significant role in improving the growth rates of per capita gross domestic product of less developed countries in the Asian Continent.