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The Economic Convergence Performance of Central and Eastern European Countries

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  • Christian Amplatz

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    Abstract

    A critical discussion of a comparative growth analysis about Central and Eastern European (CEE) countries is performed. The main conclusion is that there was economic convergence for most CEE accession candidates, but not between them and Western Europe. Results do justify a separation into first and second-wave accession countries, but also undermine differences in Central and Eastern Europe between accession and non-accession countries. This paper critically examines theories and empirical studies for three types of convergence, namely β,σ and club convergence. Each can be in absolute terms or conditional to the long-term equilibrium (steady state) for each country. Empirical results are provided for all types of convergence from 1996 to 2000, both with population-weighted and non-weighted data. The analysis is performed for differently framed country subgroups considering even Western Europe for better comparability. Once absolute convergence is found through a unit root test about a standard deviation time series of cross-sectional income per capita, the regression coefficient for initial income per capita with the average growth over the sample period as dependent variable (β convergence) establishes the speed of this process. The same method applies to the conditional version by using the distance of the income from the corresponding steady state instead of the level of GDP. Then Markov chain probability matrixes (club convergence) provide information about the past behaviour of the whole cross-sectional income distribution over time, but also about intra-mobility of single countries. Copyright Kluwer Academic Publishers 2003

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    File URL: http://hdl.handle.net/10.1023/B:ECOP.0000038266.65181.6a
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    Bibliographic Info

    Article provided by Springer in its journal Economics of Planning.

    Volume (Year): 36 (2003)
    Issue (Month): 4 (December)
    Pages: 273-295

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    Handle: RePEc:kap:ecopln:v:36:y:2003:i:4:p:273-295

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    Web page: http://www.springerlink.com/link.asp?id=113294

    Related research

    Keywords: β and σ convergence; Central and Eastern Europe; club convergence; comparative growth analysis; Eastern Enlargement of the EU; economic convergence;

    References

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    1. Danny Quah, 1992. "Empirical Cross-Section Dynamics in Economic Growth," FMG Discussion Papers dp154, Financial Markets Group.
    2. Johnson, Paul, 1999. "A Nonparametric Analysis of Income Convergence Across the US States," Vassar College Department of Economics Working Paper Series 46, Vassar College Department of Economics.
    3. Ben-David, Dan, 1995. "Trade and Convergence Among Countries," CEPR Discussion Papers 1126, C.E.P.R. Discussion Papers.
    4. Oswald, Andrew, 1997. "Happiness and Economic Performance," The Warwick Economics Research Paper Series (TWERPS) 478, University of Warwick, Department of Economics.
    5. Quah, Danny, 1993. " Galton's Fallacy and Tests of the Convergence Hypothesis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 427-43, December.
    6. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
    7. Jones, Charles I, 1997. " Convergence Revisited," Journal of Economic Growth, Springer, vol. 2(2), pages 131-53, July.
    8. Galor, Oded, 1996. "Convergence? Inferences from Theoretical Models," CEPR Discussion Papers 1350, C.E.P.R. Discussion Papers.
    9. Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
    10. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
    11. Robert E. Hall & Charles I. Jones, 1996. "The Productivity of Nations," NBER Working Papers 5812, National Bureau of Economic Research, Inc.
    12. Frank, Robert H, 1997. "The Frame of Reference as a Public Good," Economic Journal, Royal Economic Society, vol. 107(445), pages 1832-47, November.
    13. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
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    Cited by:
    1. Claus-Friedrich Laaser & Klaus Schrader, 2005. "Baltic Trade with Europe: Back to the Roots?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 15-37, July.
    2. Morten Hansen, 2005. "The Irosh Growth Miracle: Can Latvia Replicate?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 3-14, July.
    3. Rasmus Kattai & John Lewis, 2005. "Hooverism, Hyperstabilisation or Halfway-House? Describing Fiscal Policy in Central and Eastern European EU Members," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 38-47, July.
    4. Torres Solé, Teresa & Allepuz Capdevila, Rafael, 2009. "El desarrollo humano: perfiles y perspectivas futuras /Profiles and Prospects of the Human Development," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 545-562, Agosto.
    5. Virmantas Kvedaras, 2005. "Explanation of Economic Growth Differences in the CEE Countries: Importance of the BOP Constraint," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 48-65, July.
    6. Stoyan Totev, 2010. "Economic Integration and Convergence of EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 68-86.
    7. Stoyan Totev, 2010. "Economic Integration and Conversion in the EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 3-23.

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