Prague Economic Papers 2008, 17(1):23-39 | DOI: 10.18267/j.pep.317

Real convergence in the new eu member states

Borut Vojinovię1, ®an Jan Oplotnik2
1 Business School Maribor, Pre¹ernova 1, 2000 Maribor, Slovenia (borut.vojinovic@guest.arnes.si).
2 Faculty of Economics and Business, EPF Maribor, Razlagova 14, 2000 Maribor, Slovenia (zan.oplotnik@uni-mb.si).

This paper presents the analysis of unconditional b and s convergence among the ten European countries that accessed the European Union in 2004. Unconditional b convergence means that the less developed countries (with lower GDP per capita) grow faster than the more developed countries (with higher GDP per capita). s convergence exists when income differentiation among economies decreases over time. Our results confirm the existence of both types of convergence in the second half of the 1990s and the 2000s. The poorer New EU Member States grew generally faster than the richer New EU Member States. As a result, the income gap among these countries has decreased (although it still remains quite large). The convergence occurred at the rate of 2.87% in the years 1995-2006 and 3.23% in 1996-2006. This result is very similar to the results of other analyses on the subject.

Keywords: European Union, economic growth, transitional economies, economic convergence
JEL classification: F02, F43, O11, O19

Published: January 1, 2008  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Vojinovię, B., & Oplotnik, ®.J. (2008). Real convergence in the new eu member states. Prague Economic Papers17(1), 23-39. doi: 10.18267/j.pep.317
Download citation

References

  1. Aghion, P., Howitt, P. (1992), "A Model of Growth through Creative Destruction". Econometrica, 60, pp. 323-351. Go to original source...
  2. Barro, R. J. (1989), "Economic Growth in a Cross Section of Countries". NBER Working Papers, No. 3120. Go to original source...
  3. Barro, R. J., Sala-I-Martin, X. (1990), "Economic Growth and Convergence across the United States". Cambridge, NBER Working Paper No. 3419. Go to original source...
  4. Barro, R. J., Sala-I-Martin, X. (2003), Economic Growth. Cambridge; London : The MIT Press.
  5. Baumol, W. J. (1986), "Productivity Growth, Convergence, and Welfare: What the Long-Run Data Show". American Economic Review, (76), pp. 1072-1085.
  6. Baumol, W. J. (1994), "Multivariate Growth Patterns: Contagion and Common Forces as Possible Sources of Convergence", in Baumol, W., Nelson, R. R., Wolf, E. J., eds., Convergence of Productivity. New York : Oxford University Press, pp. 62-85.
  7. Ben-David, D. (1996), "Trade and Convergence Among Countries". Journal of International Economics, 40, pp. 279-98. Go to original source...
  8. Cass, D. (1965), "Optimum Growth in an Aggregative Model of Capital Accumulation". Review of Economic Studies, 32, pp. 233-240. Go to original source...
  9. Demelo, M., Denizer, C., Gelb, A., Tenev, S. (1997), "Circumstance and Choice: The Role of Initial Conditions and Policies in Transition Economies". Washington : International Finance Corporation.
  10. Diamond, P. A. (1965), "National Debt in a Neoclassical Growth Model". American Economic Review, 55, pp. 1126-1150.
  11. EEAG (2004), "Report on the European Economy 2004". Munich : CESifo.
  12. European Commission (2001), "The Economic Impact of Enlargement". Enlargement Paper No. 4.
  13. European Commission (1995), "White Paper: Preparation of the Associated Countries of Central and Eastern Europe for Integration into the Internal Market of the Union". EUR-OP (COM(95)163), Luxembourg.
  14. Fischer, S., Sahay, R. (2000), "The Transition Economies after 10 years". IMF Working Paper, No. 00/30. Go to original source...
  15. Havrylyshyn, I., Ivorski, I., Van Rooden, R. (1998), "Recovery and Growth in Transition Economies 1990-97: A Stylized Regression Analysis". IMF Working Paper, No. 98/141. Go to original source...
  16. Kaitila, V. (2004), "Convergence of Real GDP per Capita in the EU15. How Do the Accession Countries Fit In?" European Network of Economic Policy Research Institutes Working Paper, No. 25.
  17. Koopmans, T. (1965), On the Concept of Optimal Economic Growth: The Econometric Approach to Development Planning. Amsterdam : North Holland.
  18. Kutan, A. M., Yigit, T. M. (2005), "Real and Nominal Stochastic Convergence: Are the New EU Members Ready to Join the Eurozone?" Journal of Comparative Economics, 33, pp. 387-400. Go to original source...
  19. Krugman, P. (1991), Geography and Trade. Cambridge, MA : MIT Press.
  20. Lucas, R. E. (1988), "On the Mechanics of Economic Development". Journal of Monetary Economics, 22, pp. 3-42. Go to original source...
  21. Mankiw, N. G., Romer, D., Weil, D. N. (1992), "A Contribution to the Empirics of Economic Growth". The Quarterly Journal of Economics, May. Go to original source...
  22. Matkowski, Z., Próchniak, M. (2007), "Economic Convergence Between the CEE-8 and the European Union". Eastern European Economics, 45 (1), pp. 59-76. Go to original source...
  23. Matkowski, Z., Rapacki, R. (2006), "The Economic Situation and the Progress of Market Reforms", in Rosati D., ed., New Europe. Report on Transformation XVI Economic Forum. Warsaw, Poland, Krynica, 6-9 September 2006, Foundation Institute for Eastern Studies, 2006, pp. 99-212.
  24. Quah, D. T. (1996), "Empirics for Economic Growth and Convergence". European Economic Revue, 40, pp. 1353-75. Go to original source...
  25. Ramsey, F. P. (1928), "A Mathematical Theory of Saving". Economic Journal, 38, pp. 543-559. Go to original source...
  26. Rey, S. J., Montouri, B. D. (1998), "US Regional Income Convergence: A Spatial Econometric Perspective". Regional Studies, 33, pp. 145-156. Go to original source...
  27. Romer, P. M. (1986), "Increasing Returns and Long-Run Growth". Journal of Political Economy, 94, pp. 1002-1037. Go to original source...
  28. Romer, P. M. (1990), "Endogenous Technological Change". Journal of Political Economy, 98, pp. S71-S102. Go to original source...
  29. Sachs D. J., Warner, A. M. (1995), "Economic Convergence and Economic Policies". NBER Working Paper, No. 5039. Go to original source...
  30. Sala-I-Martin, X. (1996), "Regional Cohesion: Evidence and Theories of Regional Growth and Convergence". European Economic Review, 40, pp. 1325-52. Go to original source...
  31. Solow, R. (1956), "A Contribution to the Theory of Economic Growth". Quarterly Journal of Economics, 70, pp. 65-94. Go to original source...
  32. Swan, T. (1956), "Economic Growth and Capital Accumulation". Economic Record, 32, pp. 334-361. Go to original source...
  33. Varblane U., Vahter P. (2005), "An Analysis of the Economic Convergence Process in the Transition Countries". University of Tartu (unpublished).
  34. Viner, J. (1950), The Custom Union Issue. New York : Canergie Endowment for International Peace.
  35. Vojinovič, B. (2006), "Convergence, Growth, Welfare and European Integration: Rate of Income Convergence in the New Members of the European Union; Empirical Assessment". Presented at the 9th EACES Conference, Brighton (UK), 7-9 September 2006.
  36. Wagner, M., Hlouskova, J. (2002), "The CEEC10's Real Convergence Prospects". Washington, CEPR Discussion Paper, No. 3

This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.