pandemic and progress: how covid-19 redefined the economic catch-up dynamics

This study investigates how the covid-19 pandemic affected economic catch-up dynamics across 194 countries, categorized by income groups, using a catch-up index relative to the united states (usa) and g7 economies. to assess shifts in economic convergence, the study compares each country’s average catch-up index before and after the pandemic. pre-pandemic periods (2001–2019, 2010–2019, 2014–2019) are contrasted with the post-pandemic phase (2020–2023), revealing varied trajectories shaped by income level, resilience, and benchmark selection. a clustering approach identifies six country groups with distinct recovery paths. low-income countries experienced growing divergence from the usa, though less so from the g7. lower-middle-income countries showed mixed results: nations like vietnam and bangladesh made significant gains, while structurally fragile economies such as angola and haiti lagged. upper-middle-income countries remained relatively stable, while high-income countries diverged from the usa but converged with the g7. these outcomes highlight the uneven impact of global shocks on economic progress. correlation analysis shows that governance factors like control of corruption and regulatory quality are key for convergence in low- and upper-middle-income economies. in contrast, covid-19 mortality rates negatively influenced lower-middle-income countries. despite strong institutions, high-income countries faced setbacks, with innovation emerging as crucial for maintaining convergence with advanced economies. the study culminates in policy recommendations that emphasize the enhancement of institutional quality, investment in digital infrastructure, and the promotion of global cooperation as key strategies to mitigate the asymmetric effects of future shocks.