REAL CONVERGENCE AND EUROPEAN INTEGRATION WITH FOCUS ON THE NEW MEMBER STATES

In: Scientific annals of economics and business, Heft Special Issue, S. 215-228

Abstract

Our paper aims to analyse the dynamics of real economic convergence and the impact of several macroeconomic and institutional factors on this process, within the EU countries for the period 1995-2018. Employing cross-sectional and panel data techniques, this paper examines both the level and dynamics of absolute and conditional convergence within the EU28 countries and identifies key drivers of economic growth within the EU28 and subsequent groups (the EU15 versus New EU Member States group), by taking into consideration the impact of the recent global economic crisis. We find that the real convergence process is quite uneven and unstable over the 1995-2018 period. Our results confirm the negative effects of the recent global economic crisis on per capita GDP growth, suggesting a weakening of the convergence process at the EU28 level, especially at the level of New EU Member States. In addition, we find that investment, the openness of the economy and the quality of the institutional framework represent the main drivers of real convergence within the EU countries.