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Dispersion and Convergence in Regional Incomes

Is there a tendency for convergence in regional per capita incomes? How severe are disparities in regional incomes?

The answers to these questions are relevant for policy makers in choosing how to address disparities in regional per capita incomes and to the Bank when giving policy advice. If convergence is judged to be sufficiently fast, then no interventions may be considered necessary, if too slow, then direct interventions to reduce dispersion in subnational regional incomes may be a priority. With the increasing concerns about ensuring the widespread benefits of economic growth, there has been a resurgence of interest in this topic. In this section we present the results from a number of econometric studies on interregional convergence and statistical information on dispersion in interregional incomes for both developed and developing countries. In addition we provide selected readings on techniques for analyzing and measuring convergence.