Spatial effects in the regional convergence of Argentina at

departmental level
Mauricio Rodrigo Talassino (CONICET, UNSTA/CIEDH & UdeSA)
Marcos Herrera Gómez (CONICET & Universidad Nacional de Salta)
Introduction

Convergence implies a long-run tendency towards the equalizations of per capita income or standards of living between different
regions. Although there are discussions about its existence at the international level, Barro and Sala-i-Martin (1992) states that regions
within the same country can have a greater degree of homogeneity, therefore absolute convergence could be expected using
subnational data. During most of the twentieth century, Argentina was an exception to this, where economic persistence among the
regions can be observed. However, it is possible that spillover effects among regions affect the convergence among them. In relation
to this, Erthur and Koch (2007) extend the neoclassical model of Solow (1956) incorporating technological interdependence and
arriving at a theoretical model known as Durbin Space Model (SDM). In this research, this model is estimated for departments of
Argentina, which constitutes the first quantification of spatial effects on regional convergence for the country. Since the techniques
developed to estimate this type of model require a high number of observations, departmental level data (462 observations) available
for the years 1953 and 1959 are used instead of provincial data (24 observations), which are generally used in the literature for
Argentina.

GDP per capita - 1953 Growth 1953-1959

Methodology

Unconditional growth
regression (OLS):

Spatial Durbin Model (ML):

: vector with vector with

departmental GDP per capita.
matrix of spatial weights. If
we consider a variable x,
vector column, for the n
regions, the product Wx is
called spatial lag, with each
element being a weighted
average of the values of x
taken by the neighbors of each
Estimation results
region.
(1) (2) (3) (4)
Dep: (Ln GDPpc)/6
OLS SDM OLS SDM
Constant ( ) 0.2705 *** 0.0682 *** 0.3234 *** 0.1790 ***
(0.0069) (0.0159) (0.0117) (0.0331) Conclutions
Ln GDP pc 1953 ( ) -0.0039 -0.0355 *** -0.0272 *** -0.0343 ***
- There are clusters of
(0.0040) (0.0048) (0.0051) (0.0046)
departments with similar levels
W* (Ln GDP pc)/6 ( ) - 0.0440 *** - 0.0360 *** of GDP per capita.
(0.0065) (0.0113)
- The absence of absolute
W*Ln GDP pc 1953 ( ) - 0.6956 *** - 0.3192 *** convergence at the provincial
(0.0607) (0.0943) level also occurs at the
Provinces fixed effect departmental level in the period
- - 20.6000 *** 79.0500 ***
(test Chi2) 1953-1959.
Direct effect -0.0039 -0.0338 *** -0.0272 *** -0.0337 ***
- By including spatial effects or
(0.0040) (0.0046) (0.0051) (0.0045) controls by provinces, there is
Indirect effect - 0.6193 *** - 0.0361 ** convergence between
(0.0146) (.0156) departments

Total effect -0.0039 0.0281 ** -0.0272 *** 0.0024 - There are significant spatial
(0.0040) (0.0140) (0.0051) (0.0152) effects (spillovers) that
counteract the departmental
222.540
Moran's test (Chi2) *** - 14.0300 *** - convergence…
0
Speed of convergence
0.3943 3.9898 2.9645 3.8405 - The above combined with
(anual %)
175.809 clustering generates that a
Half life (years) 17.3730 23.3818 18.0484 poor (rich) department grows
2
462 observations (departments) slower (faster) because it is
surrounded by porous (rich)
*** p<0.01, ** p<0.05, * p<0.1
departments, which slows the
Weights matrix (W): 2º order queen convergence.
Robust standard errors in parentheses in regression. Standard errors by delta method for
direct, indirect and total effects.