This article analyses the stochastic convergence of income per capita between the Western Balkan (WB) and the Central and Eastern European (CEE) countries compared to developed EU countries (EU15). Research Design & Methods: Stochastic convergence implies that all shocks in country's income relative to the average income of the group are only temporary. In order to test stochastic convergence, the tests of the unit root were used. The Augmented Dickey-Fuller (ADF) test is supplemented with the Zivot-Andrews (ZA) unit root test, which allows for the structural breaks in time series of income per capita. Findings: Results confirm the existence of stochastic convergence of income per capita toward the EU15 average in the cases of the Czech Republic,

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Using the data on foreign direct investment during transition in

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