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Quality of Institutions for Global Knowledge-based Economy and Convergence Process in the European Union

Author

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  • Adam P. Balcerzak
  • Michał Bernard Pietrzak

Abstract

The use of the potential of economic convergence is one of the key challenges of economic policy in the case of the European Union. Due to structural changes that have led to the growing role of knowledge- based economy (KBE), the analysis made in the paper is based on the assumption that the convergence process of the EU countries takes place in the reality of the KBE, thus in order to facilitate it, all the EU members should concentrate on building institutions that are adequate to the conditions of the KBE. In this context, the aim of the study is to verify the potential impact of the quality of institutional system of the EU countries on the convergence process. In this regard, the analytical framework of conditional β-convergence was used with econometric dynamic panel modeling. To measure the quality of institutional system the authors proposed an indicator, designed with TOPSIS method. For this purpose the data were obtained from the Fraser Institute database. Dynamic panel econometric analysis carried out for the European Union countries in the years 2004–2010 confirms that the high quality and adequacy of the institutional system to the conditions of the KBE supports convergence process in the EU.

Suggested Citation

  • Adam P. Balcerzak & Michał Bernard Pietrzak, 2015. "Quality of Institutions for Global Knowledge-based Economy and Convergence Process in the European Union," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 42.
    • Handle: RePEc:eko:ekoeko:42_93
    DOI: 10.17451/eko/42/2015/173
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    File URL: http://ekonomia.wne.uw.edu.pl/ekonomia/getFile/769
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    Cited by:

    1. Michał Bernard Pietrzak & Adam P. Balcerzak, 2016. "Quality of Institutions and Total Factor Productivity in the European Union," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 17(3), pages 497-514, September.
    2. Balcerzak Adam P. & Pietrzak Michał Bernard, 2016. "Quality of Institutions and Total Factor Productivity in the European Union," Statistics in Transition New Series, Statistics Poland, vol. 17(3), pages 497-514, September.

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    More about this item

    Keywords

    institutional economics; quality of institutional system; global knowledge-based economy; conditional β-convergence; dynamic panel analysis;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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