In Queensland there has been a rising concern that rural areas have been increasingly marginalised despite the growth in income seen in the rest of the state. This dissertation examines the convergence hypothesis in the context of Queensland Local Government Areas. No previous study has ever attempted to test this hypothesis for this context. After constructing a consistent data set, we examine the classical convergence approach in Queensland for the 1976-2006 period. Our findings suggest that absolute convergence occurred over the whole period. However, this result was predominantly driven by strong levels of convergence between 1976 and 1991. In actual fact, non-convergence occurred between 1991 and 2006. Spatial tests reveal, however that the absolute convergence models are mis-specification through omitted variables, and spatial modelling is needed.
We successfully show that the classical convergence model with the inclusion of interaction terms can adequately describe the convergence behaviour of Queensland regions, including spatial processes. In particular, we are able to show that convergence clubs exist as spatial clusters, and we are able to determine the factors driving club membership in our convergence equations. The marginal effects of these equations give valuable policy insights and suggest that traditional models, which have not included interaction terms, are overly simplistic.
In support of previous studies, we find that mining has been an industry responsible for higher steady state growth rates, while agriculture has had an overall negative effect. Similarly, employment has a positive effect in all instances, but more so in non-port regions, while non-university based qualifications only contributed to higher steady states in low income areas. Importantly, we find that high proportions of single parent families negatively affects growth outcomes, especially in high rental areas, suggesting that socio-economic factors represent a constraint on steady state growth.
Surprisingly, we find that the proportion of Indigenous persons in the population had an overall positive effect on steady state growth outcomes, suggesting the gap between Aboriginal communities and non-Aboriginal communities has fallen, despite the extensive literature suggesting that Aboriginal communities have lagged behind.