Convergence in Per Capita Income across Regions in Bangladesh

This paper examines per capita income convergence across six divisions – Dhaka, Chittagong, Rajshahi, Khulna, Sylhet, and Barisal − in Bangladesh using annual data covering 1977-2000. The methodology uses ordinary least squares as well as time series approach, specifically unit root and cointegration techniques. The findings, however, do not provide enough evidence in favor of the convergence hypothesis even though the regions have similar socio-economic background, physical infrastructure, and access to the same financial system, administrative institutions, and technology. The series of income deviations from the benchmark fail to reject the null of non-stationarity in most cases. However, the presence of cointegration between various economic factors and the leading regions suggests the presence of long-run equilibrium relationship among them. Therefore, proper attention in terms of providing infrastructural as well as technological and financial support to the lagging regions may b