Real Convergence in Central, Eastern and South-Eastern Europe

56 Pages Posted: 25 Jul 2018

See all articles by Piotr Żuk

Piotr Żuk

Independent

Li Savelin

European Central Bank (ECB)

Date Written: July 17, 2018

Abstract

This paper analyses real income convergence in central, eastern and south-eastern Europe (CESEE) to the most advanced EU economies between 2000 and 2016. The relevance of this topic stems both from the far-reaching implications of real income convergence for economic welfare and the importance of convergence for economic and monetary integration with, and within the European Union. The paper establishes stylised facts of convergence, analyses the drivers of economic growth and identifies factors that might explain the differences between fast- and slow- converging economies in the region. The results show that the most successful CESEE economies in terms of the pace of convergence share common characteristics such as, inter alia, a strong improvement in institutional quality and human capital, more outward-oriented economic policies, favourable demographic developments and the quick reallocation of labour from agriculture into other sectors. Looking ahead, accelerating and sustaining convergence in the region will require further efforts to enhance institutional quality and innovation, reinvigorate investment, and address the adverse impact of population ageing.

Keywords: Real convergence, economic growth, middle-income trap, EU accession, central, eastern and south-eastern Europe, Western Balkans

JEL Classification: E01, F15, O11, O43, O47, O52, O57

Suggested Citation

Żuk, Piotr and Savelin, Li, Real Convergence in Central, Eastern and South-Eastern Europe (July 17, 2018). ECB Occasional Paper No. 212. Available at SSRN: https://ssrn.com/abstract=3215693

Piotr Żuk

Independent ( email )

No Address Available

Li Savelin (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
126
PlumX