Generolo Jono Žemaičio Lietuvos karo akademija

The main objective of the currents study is to investigate and explore the antecedents of the convergence in ASEAN countries. Foreign direct investment, trade, government size, population are examined as the antecedents of the economic convergence in ASEAN countries. Examining the phenomena of absolute convergence among ASEAN countries is another set goal of this research. Achieving this goal obviously requires different approach, methodology wise. Cross section regression-based studies have utilized what is called ‘regression to mean’ to examine absolute convergence across countries traditional unit root testing procedure developed by Dickey and Fuller (1979) is employed to test for convergence hypothesis. Employing ADF test also serves two purposes: 1) the methods has to be used to provide input for performing simulations to apply SURADF procedure. Developed by Blundell and Bond (1998), system GMM uses additional moment conditions to serve as an improvement in terms of performance of estimators in the models developed in Arellano and Bond (1991). The implication of this finding is that economies that are more open in terms of trade and with high level of government participation are more likely to show high level of convergence to the group average real GDP per capita than economies that less open to trade with little government participation as measured by government final consumption expenditure as a percentage of GDP.