Real convergence in some Central and Eastern European countries

Gracia, Fernando Pérez de; Cuñado, Juncal

doi:10.1080/00036840500427718

Cited by 12 publications

(4 citation statements)

References 49 publications

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“…They further argue that the positive effect of EU membership on growth is relatively higher for poorer countries. Cunado and Perez de Gracia (2006) analyze real convergence in five Central and East European countries (both towards the German and the US economies) in a time series testing framework between 1950-2003. They reject the hypothesis of real convergence for the whole period considered.…”

Section: Related Literaturementioning

confidence: 99%

The evolution of economic convergence in the European Union

2014

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Reproduction permitted only if source is stated.ISBN 978-3-86558-941-5 (Printversion) Non-technical summary Western European countries took major steps toward economic integration in recent decades, including the liberalization of capital and labor markets and the foundation of the European Economic and Monetary Union (EMU). The 1992 Maastricht Treaty set an agenda for macroeconomic convergence prior to entering the monetary union, and the European Commission has put forward numerous policy initiatives aimed at the reduction of regional economic disparities and improving competitiveness among EU members. Meanwhile, in Central and Eastern European countries (CEEC) important political and institutional changes were undertaken in the 1990s. These involved sizable macroeconomic adjustment processes, e.g., transition from planned to market economy, liberalization of prices, and privatization of state assets.Starting from the hypothesis that closer economic integration between countries may lead to increased real income per capita convergence, this paper investigates convergence in real incomes per person between the 27 current member states of the EU for the time horizon 1970-2010. We employ an empirical convergence test derived from a neoclassical growth model augmented with endogenous technological progress which differs across countries and over time. The model implies that the transition path of each economy toward the steady state level of per capita real income depends on country-specific technological growth rates. This approach enables us to study various types of economic transition behavior, e.g., temporary divergence followed by catching-up and convergence. In addition, the convergence test is applied in an iterative manner in order to identify convergent country groups, or so-called 'convergence clubs'.Our results offer important insights on the economic catch-up exhibited by the new EU members in light of the institutional changes and macroeconomic adjustment processes experienced in recent decades. The main results can be summarized as follows. We do not find overall real income per capita convergence in the EU. This result is robust to any time horizon considered. Instead, we discover country groups that converge to different income levels in the long-run. Regional linkages seem to play a significant role in determining the formation of convergence clubs. Yet, eurozone countries belong to distinct subgroups, thus clustering is not necessarily related to EMU membership. Moreover, there is a clear separation between the CEEC and the old EU members in the long run, suggesting that, even though the CEEC have exhibited higher real income growth than the EU average over the last 40 years, catching up was not sufficient in order to eliminate cross-country real income per capita differences. Finally, we observe a South-East vs. North-West division of European economies by the mid-nineties.Our results draw attention to the lack of growth-enhancing structural reforms in EU countries, posing a threat to the achi...

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Section: Related Literaturementioning

confidence: 99%

The evolution of economic convergence in the European Union

2014

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“…It is necessary to take into account spatial interactions due to geographical spillovers. Indeed, ignoring the spatial dimension of the convergence process implies treating spatial units as individual points (Canova, ; Cunado & Garcia, ; Reinhold & Lauridsen, ). Thus, the impact of spatial proximity becomes more visible in small areas.…”

Section: Convergence: From Global To Local Analysismentioning

confidence: 99%

Development policy and regional economic convergence: The case of Tunisia

Labidi

2019

Regional Science Policy & Practice

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Regional disparities continue to be a major concern for the regional policies and regional development of developing countries. Unfinished reforms and the growth of regional disparities imply the need of intervention for economic convergence. Prominent recent studies on economic convergence have mainly focused on the regions of developed countries.This article assesses the speed of economic convergence of the Tunisian economy during the period 1985-2016. The economic performance of a region is influenced by the activities of neighbouring regions. Regional interdependence is determined by a preliminary diagnosis of autocorrelation within the 24 Tunisian spatial units. Spatial autocorrelation is explicitly introduced in the convergence regression of observed growth. This makes it possible to correct the problems resulting from the inefficiency of the estimators and to quantify, according to the model of the correlation detected, the speed of regional economic convergence. Our results suggest that convergence does exist, but at a slow speed. Therefore, appropriate public policies can rapidly change the speed of convergence and enable the least developed territories to catch up economically. KEYWORDS development policy, patterns of development, policy making, regional convergence, regional development JEL CLASSIFICATION

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“…Traditionally the Zivot and Andrews (1992), Perron (1997) tests are used under this circumstances or the iterative equivalent of Chow (1960) proposed by Andrews (1993) and Andrews and Ploberger (1994) and their extensions to the multi-break scenario (see Perron, 1998 or Bai andPerron, 2003 etc.). In the convergence literature, the Lee and Strazicich (2003) two-breaks LM test has been used by Bruggemann and Trenkler (2007) and Cunado and Perez de Garcia (2006) 1 5…”

Section: Structural Changes and Asymmetric Adjustmentsmentioning

confidence: 99%

Real Convergence in the New Member States: Myth or Reality?

Ingianni¹,

Žďárek²

2009

JEI

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The paper analyses the process of real convergence of the New Member States of the European Union. Its importance is underlined in connection with a successful catching-up and a special attention is paid to the countries involved in the fifth European enlargement, with the exception of Cyprus and Malta. We note that, over the last decade, these economies experienced robust economic growth, which had a stronger impact on the convergence process within the EU8 group than to EU15. Our assumptions are investigated empirically by a comparison of beta and sigma-convergence analysis with time-series based stationarity and cointegration tests.

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Real convergence in some Central and Eastern European countries

Cited by 12 publications

References 49 publications

The evolution of economic convergence in the European Union

The evolution of economic convergence in the European Union

Development policy and regional economic convergence: The case of Tunisia

Real Convergence in the New Member States: Myth or Reality?

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