Using indicators to monitor real convergence

The study of differences in economic welfare and their determinants is important in order to assess alternative growth patterns and to examine the effects of economic integration. In the case of the Spanish economy, these questions are of particular interest in the current context of participation in Stage Three of EMU. Having concluded the process of nominal convergence and attained macroeconomic stability, the benefits of this participation should now materialise, mainly in the form of increases in per capita income to approach the levels of the most advanced EU countries (a process known as real convergence). This type of analysis is also necessary to identify the potential growth possibilities of the Spanish economy, since the path of per capita income is very closely related to the structural determinants of competitiveness. This article presents a set of indicators of real convergence that provide information on the differences in the levels of per capita income between Spain and the other EU economies, as well as their main determinants. These indicators were included at the end of May under the heading “Summary indicators” on the Banco de España’s website. This article makes an initial presentation of these indicators and briefly describes the basic features of the real convergence of the Spanish economy in recent decades. This line of analysis will be expanded and elaborated upon in forthcoming studies, which will attempt to incorporate the most up-to-date information.