Drivers of Convergence in Eleven Eastern European Countries

34 Pages Posted: 20 Apr 2016

See all articles by Jesus Crespo Cuaresma

Jesus Crespo Cuaresma

affiliation not provided to SSRN

Harald Oberhofer

Vienna University of Economics and Business - Department of Economics; Austrian Institute of Economic Research (WIFO)

Karlis Smits

Queen's University

Gallina Andronova Vincelette

The World Bank

Date Written: August 1, 2012

Abstract

This paper investigates the drivers of growth and prosperity in a group of eleven European countries -- Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia, and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and equity markets are somewhat behind. As in the rest of Europe, demographic developments will pose huge challenges for the sustainability of public finance in the EU11 economies. In the next several decades, the EU11 labor force is expected to contract more than labor forces in the rest of the European Union, making it even more urgent that countries in the region reform pension systems, change migration policy, and find incentives to attract talent to the region. Closing the gap with the rest of the European Union in educational attainment levels and improving education quality might significantly soften the constraints imposed by the demographic threats and produce sizable returns in terms of additional income convergence.

Keywords: Labor Policies, Banks & Banking Reform, Emerging Markets, Economic Theory & Research, Environmental Economics & Policies

Suggested Citation

Cuaresma, Jesus Crespo and Oberhofer, Harald and Smits, Karlis and Vincelette, Gallina Andronova, Drivers of Convergence in Eleven Eastern European Countries (August 1, 2012). World Bank Policy Research Working Paper No. 6185, Available at SSRN: https://ssrn.com/abstract=2139289

Jesus Crespo Cuaresma (Contact Author)

affiliation not provided to SSRN

No Address Available

Harald Oberhofer

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
A-1020 Vienna
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Karlis Smits

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada

Gallina Andronova Vincelette

The World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States
+1.202.473.0288 (Phone)

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