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Is the European Union still a convergence machine?

Author

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  • Sándor Gyula Nagy

    (Department of World Economy, Institute of International, Political and Regional Studies, Corvinus University of Budapest, Fővám tér 8, Budapest, H-1093, Hungary)

  • Dženita Šiljak

    (Faculty of Business and Administration, International University of Sarajevo, Bosnia and Herzegovina)

Abstract

We investigate whether the European Union can be considered as a convergence machine after the 2008/2009 financial crisis. To do so, we econometrically test the relationship between the per capita GDP growth rate and macroeconomic variables in the period of 2004–2018, further subdivided into three periods: 2004–2008, 2009–2013 and 2014–2018. We hypothesize that the 2008/2009 financial crisis had a negative effect on the σ and β-convergence process. Our results support the convergence hypothesis, namely that the poor countries tend to grow faster than the rich countries. The convergence rates ranged between 1.71% and 4.51%. The negative effects of the crisis on convergence have been identified only for the absolute convergence. Our findings demonstrate that economic openness, inflation and government integrity have a positive impact on growth. The effects of unemployment have not been identified.

Suggested Citation

  • Sándor Gyula Nagy & Dženita Šiljak, 2022. "Is the European Union still a convergence machine?," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 72(1), pages 47-63, March.
    • Handle: RePEc:aka:aoecon:v:72:y:2022:i:1:p:47-63
    DOI: 10.1556/032.2022.00003
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    Cited by:

    1. Matthew I. Ogbuagu & Saibu M. Olufemi & Ogunniyi B. Matthew, 2026. "Financial Flows, Economic Integration and Macroeconomic Convergence in Africa: An Interactive and Threshold Effects," Annals of Data Science, Springer, vol. 13(1), pages 191-214, February.
    2. Evans Yeboah, 2025. "Economic growth in 26 European Union Economies: evidence from conditional convergence," Future Business Journal, Springer, vol. 11(1), pages 1-22, December.

    More about this item

    Keywords

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    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

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