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Behind the Eastern-Western European convergence path: the role of geography and trade liberalization

Author Info

Listed author(s):
  • Adolfo Cristobal-Campoamor

    (ISET, Tbilisi)

  • Osiris Jorge Parcero

    (United Arab Emirates University)

Abstract

This paper proposes a 2-country 3-region economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the period 1990-2005. In contrast to the existing literature, which has favored technological explanations, trade liberalization is the only driving force. The model correctly predicts that in the first half of the period trade liberalization led to divergence in GDP per capita, both between the West and the East and within the East. Consistent with the data, in the second half of the period, this process was reversed and convergence became the dominant force.

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File URL: ftp://147.156.210.157/RePEc/pdf/eec_1112.pdf
File Function: First version, 2011
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Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1112.

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Length: 33 pages
Date of creation: May 2011
Handle: RePEc:eec:wpaper:1112
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Web page: http://www.estructuraeconomica.es
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Find related papers by JEL classification:
  • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
  • F15 - International Economics - - Trade - - - Economic Integration
  • P2 - Economic Systems - - Socialist Systems and Transition Economies

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  1. Rikard Forslid & Jan I. Haaland & Karen Helene M. Knarvik & Ottar Maestad, 2002. "Integration and transition: Scenarios for the location of production and trade in Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(1), pages 93-117, March.
  2. Kristian Behrens & Carl Gaigné & Gianmarco I.P. Ottaviano & Jacques-François Thisse, 2006. "Is remoteness a locational disadvantage?," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 347-368, June.
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  4. Marius Brülhart & Matthieu Crozet & Pamina Koenig, 2004. "Enlargement and the EU Periphery: The Impact of Changing Market Potential," The World Economy, Wiley Blackwell, vol. 27(6), pages 853-875, 06.
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  6. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
  7. Ali Mansoor & Bryce Quillin, 2007. "Migration and Remittances : Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 6920, April.
  8. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
  9. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
  10. Monfort, Philippe & Nicolini, Rosella, 2000. "Regional Convergence and International Integration," Journal of Urban Economics, Elsevier, vol. 48(2), pages 286-306, September.
  11. Tondl, Gabriele & Vuksic, Goran, 2003. "What makes regions in Eastern Europe catching up? The role of foreign investment, human resources and geography," ZEI Working Papers B 12-2003, University of Bonn, ZEI - Center for European Integration Studies.
  12. Bernard G. Funck & Lodovico Pizzati, 2003. "European Integration, Regional Policy, and Growth," World Bank Publications, The World Bank, number 15144, April.
  13. Olga Alonso-Villar, 2000. "Spatial Distribution of Production and Education," Documentos de trabajo - Analise Economica 0008, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  14. Blanchard, Olivier, 1996. "Theoretical Aspects of Transition," American Economic Review, American Economic Association, vol. 86(2), pages 117-122, May.
  15. Maarten Bosker & Steven Brakman & Harry Garretsen & Marc Schramm, 2010. "Adding geography to the new economic geography: bridging the gap between theory and empirics," Journal of Economic Geography, Oxford University Press, vol. 10(6), pages 793-823, November.
  16. Tito Boeri & Herbert Brücker, 2005. "Why are Europeans so tough on migrants?," Economic Policy, CEPR;CES;MSH, vol. 20(44), pages 629-703, October.
  17. Faini, Riccardo, 1996. "Increasing returns, migrations and convergence," Journal of Development Economics, Elsevier, vol. 49(1), pages 121-136, April.
  18. Takanori Ago & Ikumo Isono & Takatoshi Tabuchi, 2006. "Locational disadvantage of the hub," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(4), pages 819-848, December.
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