Integration And Inequalities In The Eastern European Countries

Within the European Union, regional economic performance and economic development respect the principles of the core-periphery model, with core-countries in Northern and Western Europe and periphery-countries as the Southern and Eastern European states. Thus, although treaties and cohesion policies promote balanced development throughout the European Union, it continues to be a divided entity. Despite the efforts of both public institutions at both the national and EU level, and the private sector, inequality still persists and in some cases is increasing. In analyzing the causes of these perpetuating disparities and especially in shaping solutions to ensure balanced development throughout Europe, one should take into account that when joining the European Union, its Member States should be treated as regions of a supranational organization. Hence, it follows that development and growth programs, as well as the allocation of cohesion funds must consider the dissimilar socio-economic and cultural backgrounds encountered in the Member States, the ‘one size fits all’ approach threatening to intensify Europe’s North-South division. Using panel data, this paper provides an empirical study of the inequality determinants, aiming to identify convergence or divergence trends across countries and regions of Eastern Europe. Our findings partially confirm the theory, indicating that, in the long run, the new EU Member States recorded a process of convergence, reducing the gap between rich and poor regions, even if in the short-term, and especially in times of economic crisis, the economic disparities may widen. Moreover, the results highlight that there is potential for boosting GDP per capita in all territorial units analyzed.