Impact of Covid-19 on the convergence of GDP per capita in OECD countries

Abstract

The main objective of this study is to assess the consequences of coronavirus disease 2019 (Covid-19) on the gross domestic product (GDP) per capita in Organisation for Economic Co-operation and Development (OECD) countries. For this purpose, the developments from the convergence theory for panel data were considered, as well as data from the OECD database for the last quarter of 2017 to the third quarter of 2020. This statistical information was, also, analysed through spatial autocorrelation approaches. The findings obtained show that the pandemic, specifically in the first two quarters of 2020, eliminated the signs of convergence verified from the end of 2017 until the end of 2019 in OECD countries, bringing new challenges for the future. In terms of policy recommendations, it is suggested to design instruments by the European Union and international organizations in order to promote a globally balanced development, preventing consequences beyond the socioeconomic.

Keywords: conditional convergence; panel data; policy recommendations; spatial autocorrelation approaches.