Regional economic growth and convergence in Eastern Mongolia: A panel data–based empirical analysis

Abstract

Uneven regional economic growth and persistent income disparities remain major challenges for sustainable development in many developing economies. These issues are particularly evident in resource-dependent countries with concentrated sectoral structures, where the benefits of economic expansion are unevenly distributed across regions. This study examines regional economic growth, income convergence, and interregional spillover effects in Mongolia’s eastern provinces using panel data from 2000 to 2024. The empirical analysis estimates both absolute and conditional β-convergence models using panel regression techniques. In addition, the study investigates spillover effects to assess how economic growth in the eastern region is interconnected with economic dynamics in other regions of Mongolia. The econometric framework incorporates key determinants of regional growth, including human capital development, industrial structure, financial conditions, and settlement characteristics. The results provide evidence of both absolute and conditional β-convergence within the eastern region, indicating that provinces with lower initial income levels tend to grow faster. However, convergence dynamics appear to be influenced more strongly by national macroeconomic conditions and sectoral cycles than by province-specific characteristics. Human development and industrial activity positively affect regional growth, whereas financial pressures, educational constraints, and weaknesses in settlement structures limit growth performance. The findings highlight the importance of targeted regional policies that strengthen human capital, support economic diversification, and account for spatial interdependencies across regions.