Convergence in ASEAN

We examine and establish the likelihood of convergence among the ten member countries of the Association of Southeast Asian Nations (ASEAN). Using a novel a non-linear, time-varying factor convergence estimation methodology, we find that overall income convergence is already ongoing among ASEAN members. But potential remains for convergence clubs which converge at different speeds to a common steady-state income level to emerge. Likely counterintuitively, our main finding is that the existing income differences observed among ASEAN member countries are transitory than deterministic. We discuss what our results entail for policy and argue that further examination into the type of convergence dynamics and the extent of risk-sharing is necessary to better our understanding about convergence in ASEAN and in general.