IDEAS home Printed from https://ideas.repec.org/a/bas/econst/y2021i7p3-18.html
   My bibliography  Save this article

The Effects of the Crisis on Convergence between the Eastern Partnership and EU-15 States

Author

Listed:
  • Dzenita Siljak
  • Sandor Gyula Nagy

Abstract

This paper aims to investigate the effects of the 2008/2009 financial crisis on the convergence process of the Eastern Partnership (EaP) countries towards the core countries of the European Union (EU-15). To do so, we econometrically test the relationship between the per capita GDP growth rate and selected macroeconomic variables in the period 2004–2018 and three sub-periods: the pre-crisis, the crisis, and the post-crisis period. We hypothesize that the financial crisis had a negative impact on the absolute and conditional convergence process in the analyzed group of countries. The convergence rates are estimated using ordinary least squares (OLS) semi-log regression based on cross-sectional data. The empirical results show that the EaP countries converge towards the EU-15 Member States and that the convergence rates range between 1.6% and 4.3%. Negative effects of the financial crisis on the convergence process are confirmed only for absolute convergence. The two groups of countries form separate clusters, which indicates a considerable heterogeneity of growth. According to the results of this research, the EaP countries should focus on opening their economies to more trade, increase macroeconomic stability and decrease corruption, because improvement in these areas should lead to a faster convergence process.

Suggested Citation

  • Dzenita Siljak & Sandor Gyula Nagy, 2021. "The Effects of the Crisis on Convergence between the Eastern Partnership and EU-15 States," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 3-18.
    • Handle: RePEc:bas:econst:y:2021:i:7:p:3-18
    as

    Download full text from publisher

    File URL: https://www.iki.bas.bg/Journals/EconomicStudies/2021/2021-7/1_Dzenita-Siljak_f-F.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Laurent Cavenaile & David Dubois, 2011. "An empirical analysis of income convergence in the European Union," Applied Economics Letters, Taylor & Francis Journals, vol. 18(17), pages 1705-1708.
    2. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    3. Rumen Dobrinsky & Peter Havlik, 2014. "Economic Convergence and Structural Change: the Role of Transition and EU Accession," wiiw Research Reports 395, The Vienna Institute for International Economic Studies, wiiw.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Yin, Ling & K. Zestos, George, 2003. "Economic Convergence in the European Union," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 188-213.
    6. Cinzia Alcidi, 2019. "Economic Integration and Income Convergence in the EU," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(1), pages 5-11, January.
    7. Żuk, Piotr & Savelin, Li, 2018. "Real convergence in central, eastern and south-eastern Europe," Occasional Paper Series 212, European Central Bank.
    8. Klaus Masuch & Edmund Moshammer & Beatrice Pierluigi, 2017. "Institutions, public debt and growth in Europe," Public Sector Economics, Institute of Public Finance, vol. 41(2), pages 159-205.
    9. Goran Popovic & Ognjen Eric & Stanko Stanic, 2020. "Trade Openness, Institutions and Economic Growth of the Western Balkans Countries," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 16(3), pages 173-184.
    10. Aralica Zoran & Svilokos Tonci & Bacic Katarina, 2018. "Institutions and Firms’ Performance in Transition Countries: The Case of Selected Cesee Countries," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 68-80, June.
    11. Ryszard Rapacki & Mariusz Prochniak, 2009. "Real beta and sigma convergence in 27 transition countries, 1990-2005," Post-Communist Economies, Taylor & Francis Journals, vol. 21(3), pages 307-326.
    12. Żuk, Piotr & Polgár, Éva Katalin & Savelin, Li & Diaz del Hoyo, Juan Luis & König, Paul, 2018. "Real convergence in central, eastern and south-eastern Europe," Economic Bulletin Articles, European Central Bank, vol. 3.
    13. Gaetano Carmeci & Luciano Mauro, 2002. "TheConvergence of the Italian Regions and Unemployment: Theory and Evidence," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 509-532, August.
    14. Olcay COLAK, 2015. "Convergence Revisited: Case Of Eu And Eastern Europe," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 69-81, June.
    15. Mateusz Pipień & Sylwia Roszkowska, 2019. "The heterogeneity of convergence in transition countries," Post-Communist Economies, Taylor & Francis Journals, vol. 31(1), pages 75-105, January.
    16. Tjaša Redek & Andrej Sušjan, 2005. "The Impact of Institutions on Economic Growth: The Case of Transition Economies," Journal of Economic Issues, Taylor & Francis Journals, vol. 39(4), pages 995-1027, December.
    17. P. Bisciari & D. Essers & E. Vincent, 2020. "Does the EU convergence machine still work ?," Economic Review, National Bank of Belgium, issue i, pages 23-64, June.
    18. Uberti, Luca J., 2018. "Corruption in transition economies: Socialist, Ottoman or structural?," Economic Systems, Elsevier, vol. 42(4), pages 533-555.
    19. Matkowski, Zbigniew & Prochniak, Mariusz & Rapacki, Ryszard, 2016. "Real Income Convergence between Central Eastern and Western Europe: Past, Present, and Prospects," EconStor Conference Papers 146992, ZBW - Leibniz Information Centre for Economics.
    20. Istvan Benczes & Balazs Szent-Ivanyi, 2015. "The European Economy in 2014: Fragile Recovery and Convergence," Journal of Common Market Studies, Wiley Blackwell, vol. 53, pages 162-180, September.
    21. Vojinović, Borut & Acharya, Sanjaya & Próchniak, Mariusz, 2009. "Convergence Analysis Among the Ten European Transition Economies," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 50(2), pages 17-35, December.
    22. Monica Raileanu Szeles & Nicolae Marinescu, 2010. "Real convergence in the CEECs, euro area accession and the role of Romania," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(1), pages 181-202, June.
    23. Nexhat Kryeziu & Esat Durguti, 2019. "The Impact of Inflation on Economic Growth: The Case of Eurozone," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 8(1), pages 01-09, January.
    24. Enrico Piero Marelli & Maria Laura Parisi & Marcello Signorelli, 2019. "Economic convergence in the EU and Eurozone," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(7), pages 1332-1344, November.
    25. Dzenita SILJAK & Sándor Gyula NAGY, 2018. "Economic convergence of the Eastern Partnership countries towards the EU-13," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 169-185, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Siljak Dzenita & Nagy Sándor Gyula, 2019. "Do Transition Countries Converge towards the European Union?," TalTech Journal of European Studies, Sciendo, vol. 9(1), pages 115-139, June.
    2. Dzenita SILJAK & Sándor Gyula NAGY, 2018. "Economic convergence of the Eastern Partnership countries towards the EU-13," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 169-185, December.
    3. Sándor Gyula Nagy & Dzenita Siljak, 2019. "Economic convergence of the Western Balkans towards the EU-15," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 11(1), pages 41-53, February.
    4. Ana-Maria Holobiuc, 2020. "Income Convergence in the European Union: National and Regional Dimensions," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2020(2), pages 45-65.
    5. Piotr Adamczyk & Mateusz Pipień, 2022. "On the Role of Portfolio Indicators of the Capital Flows in the Convergence Processes – An Application of Systems of Regression Equations in the Case of Selected CEE Countries," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 14(3), pages 303-333, September.
    6. Agnieszka Głodowska & Bożena Pera, 2019. "On the Relationship between Economic Integration, Business Environment and Real Convergence: The Experience of the CEE Countries," Economies, MDPI, vol. 7(2), pages 1-19, June.
    7. Maciej Stefański, 2020. "To What Extent does Convergence Explain the Slowdown in Potential Growth of the CEE Countries Following the Global Financial Crisis?," KAE Working Papers 2020-058, Warsaw School of Economics, Collegium of Economic Analysis.
    8. Dimitar Eftimoski, 2020. "Some new insights on economic convergence and growth in Central, Eastern, and Southeastern Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 863-884, November.
    9. Ovidiu Stoica & Angela Roman & Delia-Elena Diaconașu, 2019. "Real Convergence and European Integration with Focus on the New Member States," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(si), pages 215-228, December.
    10. Eftychia Tsanana & Constantinos Katrakilidis, 2014. "Do Balkan economies catch up with EU? New evidence from panel unit root analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 641-662, November.
    11. Goran Radosavljeviæ & Mihajlo Babin & Miloš Eriæ & Jelisaveta Lazareviæ, 2020. "Income convergence between Southeast Europe and the European Union," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(2), pages 499-519.
    12. Siljak Dzenita, 2018. "Beta Convergence among Former Socialist Countries," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 72-83, December.
    13. E. Tsanana & X. Chapsa & C. Katrakilidis, 2016. "Is growth corrupted or bureaucratic? Panel evidence from the enlarged EU," Applied Economics, Taylor & Francis Journals, vol. 48(33), pages 3131-3147, July.
    14. Lichner, Ivan & Lyócsa, Štefan & Výrostová, Eva, 2022. "Nominal and discretionary household income convergence: The effect of a crisis in a small open economy," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 18-31.
    15. Xanthippi Chapsa & Athanasios L. Athanasenas & Nikolaos Tabakis, 2019. "Real Convergence in EU-15: A Comparative Analysis of North versus South Europe," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 3-21.
    16. Kadigi, Reuben M.J. & Robinson, Elizabeth & Szabo, Sylvia & Kangile, Joseph & Mgeni, Charles P. & De Maria, Marcello & Tsusaka, Takuji & Nhau, Brighton, 2022. "Revisiting the Solow-Swan model of income convergence in the context of coffee producing and re-exporting countries in the world," LSE Research Online Documents on Economics 115636, London School of Economics and Political Science, LSE Library.
    17. Ana-Maria Holobiuc, 2020. "Real Convergence in the European Union: An Empirical Approach," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 126-133, December.
    18. Matkowski, Zbigniew & Prochniak, Mariusz & Rapacki, Ryszard, 2016. "Real Income Convergence between Central Eastern and Western Europe: Past, Present, and Prospects," EconStor Conference Papers 146992, ZBW - Leibniz Information Centre for Economics.
    19. Grafström, Jonas & Jaunky, Vishal, 2017. "Convergence of Incentive Capabilities within the European Union," Ratio Working Papers 301, The Ratio Institute.
    20. Ana-Maria Holobiuc, 2021. "Real Convergence in the European Union. Bridging the Gap between the New and Old Member States," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2021(2), pages 29-50.

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bas:econst:y:2021:i:7:p:3-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Diana Dimitrova (email available below). General contact details of provider: https://edirc.repec.org/data/ikbasbg.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.