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European integration, productivity growth and real convergence: Evidence from the new member states

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  • Kutan, Ali M.
  • Yigit, Taner M.

Abstract

We estimate the determinants of labor productivity growth in 8 new European Union (EU) member states that joined the Union in 2004. Our focus is on the impact of globalization and EU integration efforts on labor productivity growth. Previous studies test the impact of trade using either exports or trade openness. We also test the impact of imports separately on labor productivity growth. Using panel data for 1995-2006 period, we find that globalization has mixed effects. FDI and exports improve productivity, but imports hurt it. Regarding domestic variables, we find that human capital is the most important source of labor productivity growth in the new member states. There is also considerable adjustment of labor productivity towards EU15 levels, indicating significant "catching up" and hence real convergence. Policy implications of the findings are also discussed.

Suggested Citation

  • Kutan, Ali M. & Yigit, Taner M., 2009. "European integration, productivity growth and real convergence: Evidence from the new member states," Economic Systems, Elsevier, vol. 33(2), pages 127-137, June.
  • Handle: RePEc:eee:ecosys:v:33:y:2009:i:2:p:127-137
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    Cited by:

    1. Aleberto Alesina & Guido Tabellini & Francesco Trebbi, 2017. "Is Europe an Optimal Political Area?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 169-234.
    2. Valerija Botric, 2013. "Output Convergence between Western Balkans and EU-15," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 5(1).
    3. Antonelli, Cristiano & Gehringer, Agnieszka, 2015. "Knowledge externalities and demand pull: The European evidence," Economic Systems, Elsevier, vol. 39(4), pages 608-631.
    4. Balcilar, Mehmet & Kutan, Ali M. & Yaya, Mehmet E., 2017. "Testing the dependency theory on small island economies: The case of Cyprus," Economic Modelling, Elsevier, vol. 61(C), pages 1-11.
    5. Crespo Cuaresma, Jesus & Havettová, Miroslava & Lábaj, Martin, 2013. "Income convergence prospects in Europe: Assessing the role of human capital dynamics," Economic Systems, Elsevier, vol. 37(4), pages 493-507.
    6. Sensoy, Ahmet & Eraslan, Veysel & Erturk, Mutahhar, 2016. "Do sovereign rating announcements have an impact on regional stock market co-movements? The case of Central and Eastern Europe," Economic Systems, Elsevier, vol. 40(4), pages 552-567.
    7. Maite Alguacil & Andrea Éltetó & Valeriano Martínez–San Román, 2015. "International R&D spillovers in Central and Eastern Europe. The role of capital imports and local conditions," Working Papers 2015/12, Economics Department, Universitat Jaume I, Castellón (Spain).
    8. Weber, Enzo, 2011. "Foreign and domestic growth drivers in Eastern Europe," Economic Systems, Elsevier, vol. 35(4), pages 512-522.
    9. Marcin Grela & Aleksandra Majchrowska & Tomasz Michałek & Jakub Mućk & Agnieszka Stążka-Gawrysiak & Grzegorz Tchorek & Marcin Wagner, 2017. "Is Central and Eastern Europe converging towards the EU-15?," NBP Working Papers 264, Narodowy Bank Polski, Economic Research Department.
    10. Kravtsova, Victoria & Radosevic, Slavo, 2012. "Are systems of innovation in Eastern Europe efficient?," Economic Systems, Elsevier, vol. 36(1), pages 109-126.
    11. Mihaela Simionescu, 2014. "Testing the Convergence Hypothesis in the European Union," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 222-229, May.
    12. Iwasaki, Ichiro & Tokunaga, Masahiro, 2014. "Macroeconomic Impacts of FDI in Transition Economies: A Meta-Analysis," World Development, Elsevier, vol. 61(C), pages 53-69.
    13. Tariq Mahmood, 2015. "Mediating Effect of Advertising Expenditure on Labour Productivity - A Case of Manufacturing Industries in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(1), pages 1-15.
    14. Mihaela Simionescu, 2015. "The Impact Of Economic Crisis On Inflation Convergence In The European Union. A Panel Data Approach," Journal Articles, Center For Economic Analyses, pages 37-46, June.

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