There is vast disparity in public expenditure on science, technology and environment (STE) across various Indian states. Public expenditure on STE is crucial in maintaining symmetric growth, social cohesion and sustainable development. Literature on this topic is scarce, which prompted the investigation of club convergence of STE public expenditure. In particular, the purpose of this paper to study the club convergence of STE public expenditure in the case of 20 Indian states during the period from 1987–1988 to 2019–2020.
This study applies the clustering algorithm to identify club convergence, advanced by the Phillips and Sul test, which enables identification of multiple steady states or club convergence, unlike beta and sigma convergences.
The findings of this paper show that all Indian states do not converge towards single steady states. This suggests a disparity in STE public expenditure across Indian states. Moreover, the findings favour three clubs that have their own unique transition paths. The results of this study are supported by the robustness check.
The findings suggest that the allocation of public expenditure on STE can be made based on club convergence to achieve social cohesion, sustainable development and millennium development goals across states.
Although several previous studies have investigated the convergence of public expenditure by considering either aggregate public expenditure or health/education expenditure, literature on the convergence hypothesis of STE public expenditure, particularly across Indian states, is scarce. Moreover, this paper is unique, as it examines multiple steady states or club convergence. Finally, this paper contributes to policymaking by suggesting which states should be given a push to achieve social cohesion and sustainable development.
