Income convergence in Central and Eastern Europe

Evidence from cross-country panel data analysis

Bibliographic Data

ID21281835
AuthorsSeboka Alemu (0000-0002-8676-6183, Doctoral School in Economics, University of Szeged, Szeged, Kálvária stg. 1, H-6722, Hungary), Beáta Udvari (0000-0003-3697-9049, University of Szeged), Balazs Kotosz (0000-0002-0277-9228, University of Szeged)
Year2024
Volume74
Issue3
Pages329-357
Publication date2024-10-03
Open AccessYes
TypeARTICLE
VenueActa Oeconomica (JOURNAL)
Journal identifiersISSN: 0001-6373 • E-ISSN: 1588-2659
PublisherAkademiai Kiado Zrt. (PUBLISHER • HU)
DOI10.1556/032.2024.00016
OpenAlexW4403104244
LanguageEN
References cited12

Recent research has suggested that unconditional convergence no longer exists. Thus, this study examined the income convergence among 11 Central and Eastern European (CEE-11) countries that joined the European Union in/after 2004 and Europe's four largest economies (Germany, France, the United Kingdom, and Italy) by using panel data from 1994 to 2019. For this purpose, it employed the beta (β) and sigma (σ) convergence approaches to analyze the dynamics of economic growth. Based on the findings, in 1996, the four largest European economies had a higher capital–labour ratio and GDP growth than CEE-11. However, by 2019, the patterns reversed. As for the regression results, there was strong evidence of unconditional β convergence between 1999 and 2019, at an annual rate of 11%, with the σ convergence and the fixed effect models further supporting income convergence. Moreover, although brief divergence occurred during various financial crises, the overall trend was a significant convergence of CEE-11 with Europe's four largest economies through higher relative GDP growth. This study contributes to the economic growth theory of income convergence across countries and highlights the importance of regional integration in enabling sustainable catch-up growth

Convergence (economics) · Cross country · Development economics · Econometrics · Economics · International economics · Macroeconomics · Panel data · Economic Growth and Productivity · Firm Innovation and Growth · Regional Development and Policy

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