A Study on Forecasting Economic Convergence of India in Comparison to USA, China and Japan

This paper attempts to examine, compare and forecast the per capita GDP of India, the USA, China, and Japan for a period of ten years from 2020 to 2029. It studies the concept of economic convergence which states that the developing economies’ per capita income levels tend to move at a faster rate than that of developed economies. For forecasting, it uses the ARIMA approach. The ARIMA equation varies for each country chosen. The notation for China is ARIMA (2,2,0), for India it is ARIMA (0,2,1), for Japan it is ARIMA (2,1,2) and for USA it is ARIMA (1,1,2). This research paper has estimated the percentage change in GDP per capita for the above countries after every 10 years over the decades starting from 1979 till 2029 (Based on forecasted values of 2029). The research findings suggest that in the group of 4 countries that have been selected, there is a presence of economic convergence pattern, as, during the initial two decades from 1979 - 89 & 1989 -99, the GDP growth rate of the developed nations is much faster than the developing countries, whereas, after 1999, the GDP growth rate of India catches up with that of US and Japan. The GDP growth rates of India after 1999 are much faster as compared to the US & Japan. In the case of China, the catching-up effect takes place after 1989, as after that the GDP growth rate of China is much higher than the growth rates of the US and Japan and in both cases, these trends continue to exist even in 2029. The annual GDP growth rate of these countries according to our forecasted results from 2020 -2029 has also been predicted.