Test of Income Convergence in D-8 Countries (Sigma Convergence, Theil Indices and Panel Data Unit Root Tests Approaches)

Income convergence or income similarity is defined as per capita income gap between two trading partner. less income gap shows income convergence and more income gap shows income divergence. Income convergence plays an important role in the expansion of trade relations، so that countries with more income adaption have the similar demand patterns and thus have economic reasoning in creating trade and the formation of trade blocks. This study examined the existence of income convergence or divergence in D-8 countries during the period of 1965-2009. To this end، three methods; sigma convergence، Theil indices and panel data unit root tests were used. The results of these approaches indicate that there are income divergence among the members of this group.