This paper contains a short panel data set with 69 cross-sectional countries and 5 periods length covering the years 1990-2015. The time period consideration is similar to the one utilized on Forbes (2000) paper, using five-year panels to avoid any short run disturbances due to business cycles and shock-related influences. I am using GMM since I have a lagged dependent variable (income) and I have read papers about it which recommend using it. I have been struggling with the regiondummies and the period dummies to estimate the regression. I created the region dummy with the output below:

tabulate region1, gen(regiondummy)

Region dummy | Freq. Percent Cum.
--------------------------------+-----------------------------------
Asia | 70 20.29 20.29
Europe | 55 15.94 36.23
Latin America and the Caribbean | 95 27.54 63.77
Middle East and North Africa | 30 8.70 72.46
North America | 15 4.35 76.81
Oceania | 15 4.35 81.16
Sub-Saharan Africa | 65 18.84 100.00
--------------------------------+-----------------------------------
Total | 345 100.00
and the period dummy:
tabulate Period, gen(Perioddummy)

Period | Freq. Percent Cum.
------------+-----------------------------------
1 | 69 20.00 20.00
2 | 69 20.00 40.00
3 | 69 20.00 60.00
4 | 69 20.00 80.00
5 | 69 20.00 100.00
------------+-----------------------------------
Total | 345 100.00

when I ran the regression with both dummies, they drop Period 1 and 2 and I am not sure why this happens. I know it drops the regions as well because they do not change in time? I would appreciate any help.

. xtabond Growth GDP GINI EDUCATION PPPI regiondummy* Perioddummy*, lags(1) artests(2)
note: regiondummy1 dropped from div() because of collinearity
note: regiondummy2 dropped from div() because of collinearity
note: regiondummy3 dropped from div() because of collinearity
note: regiondummy4 dropped from div() because of collinearity
note: regiondummy5 dropped from div() because of collinearity
note: regiondummy6 dropped from div() because of collinearity
note: regiondummy7 dropped from div() because of collinearity
note: Perioddummy1 dropped from div() because of collinearity
note: regiondummy6 dropped because of collinearity
note: Perioddummy1 dropped because of collinearity
note: Perioddummy2 dropped because of collinearity

Arellano-Bond dynamic panel-data estimation Number of obs = 146
Group variable: country1 Number of groups = 55
Time variable: Period
Obs per group:
min = 1
avg = 2.654545
max = 3

Number of instruments = 14 Wald chi2(8) = 87.55
Prob > chi2 = 0.0000
One-step results
------------------------------------------------------------------------------
Growth | Coef. Std. Err. z P>|z| [95% Conf. Interval]
-------------+----------------------------------------------------------------
Growth |
L1. | -.0359517 .0837034 -0.43 0.668 -.2000072 .1281039
|
GDP | -5.23e-06 6.66e-07 -7.86 0.000 -6.54e-06 -3.93e-06
GINI | -.0000231 .0005334 -0.04 0.965 -.0010685 .0010223
EDUCATION | -.0399015 .0157948 -2.53 0.012 -.0708587 -.0089443
PPPI | -.012411 .0121955 -1.02 0.309 -.0363136 .0114917
regiondummy1 | 0 (omitted)
regiondummy2 | 0 (omitted)
regiondummy3 | 0 (omitted)
regiondummy4 | 0 (omitted)
regiondummy5 | 0 (omitted)
regiondummy7 | 0 (omitted)
Perioddummy3 | .014034 .0036619 3.83 0.000 .0068568 .0212111
Perioddummy4 | .0256401 .0045572 5.63 0.000 .0167082 .0345721
Perioddummy5 | .0297034 .0055404 5.36 0.000 .0188445 .0405623
_cons | .1252553 .0258666 4.84 0.000 .0745576 .175953
------------------------------------------------------------------------------
Instruments for differenced equation
GMM-type: L(2/.).Growth
Standard: D.GDP D.GINI D.EDUCATION D.PPPI D.Perioddummy2
D.Perioddummy3 D.Perioddummy4 D.Perioddummy5