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Middle Income Convergence Trap Phenomenon in CEE Countries

Author

Listed:
  • Barbara Brixová

    (Technical University of Kosice, Faculty of Economics)

  • Anna Tykhonenko

    (Université Côte d'Azur, CNRS, GREDEG, France)

  • Ľubica Štiblárová

    (Technical University of Kosice, Faculty of Economics)

  • Marianna Siničáková

    (Technical University of Kosice, Faculty of Economics)

Abstract

This study examines the Middle-Income Convergence Trap (MICT) in Central and Eastern European (CEE) countries by analysing their economic trajectories and the factors shaping their convergence with more advanced EU economies. Using data from 1995 to 2022 and an iterative Bayesian clustering approach, the analysis reveals heterogeneous convergence patterns. While countries like Bulgaria and Romania exhibit strong catch-up dynamics, others—such as Slovenia and the Czech Republic—show signs of stagnation, suggesting potential entrapment in the MICT. Further analysis using a dynamic fixed effects model identifies trade openness, human capital, and institutional quality as key drivers of convergence, whereas high public debt is associated with increased stagnation risk. The findings underscore the need for comprehensive policy strategies that promote innovation, enhance education systems, and improve governance. Addressing these structural challenges is essential for sustaining long-term convergence and avoiding the risks associated with the MICT in the CEE region.

Suggested Citation

  • Barbara Brixová & Anna Tykhonenko & Ľubica Štiblárová & Marianna Siničáková, 2025. "Middle Income Convergence Trap Phenomenon in CEE Countries," GREDEG Working Papers 2025-25, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    • Handle: RePEc:gre:wpaper:2025-25
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    More about this item

    Keywords

    middle-income trap; convergence; economic growth; Central and Eastern Europe; Bayesian shrinkage estimator;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • 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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