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Behind the Eastern-Western European convergence path: the role of geography and trade liberalization

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  • Adolfo Cristobal-Campoamor

    (ISET, Tbilisi)

  • Osiris Jorge Parcero

    (United Arab Emirates University)

Abstract

This paper proposes a 2-country 3-region economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the period 1990-2005. In contrast to the existing literature, which has favored technological explanations, trade liberalization is the only driving force. The model correctly predicts that in the first half of the period trade liberalization led to divergence in GDP per capita, both between the West and the East and within the East. Consistent with the data, in the second half of the period, this process was reversed and convergence became the dominant force.

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File URL: ftp://147.156.210.157/RePEc/pdf/eec_1112.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1112.

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Length: 33 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:eec:wpaper:1112

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  1. Campos, Nauro F & Coricelli, Fabrizio, 2002. "Growth in Transition: What we Know, What we Don't and What we Should," CEPR Discussion Papers 3246, C.E.P.R. Discussion Papers.
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  17. Faini, Riccardo, 1996. "Increasing returns, migrations and convergence," Journal of Development Economics, Elsevier, vol. 49(1), pages 121-136, April.
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