Convergence of real GDP per capita in the EU15: how do the accession countries fit in?
In: ENEPRI working paper, 25
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In: ENEPRI working paper, 25
World Affairs Online
In: Post-communist economies, Band 28, Heft 2, S. 129-145
ISSN: 1465-3958
We analyse the Sigma convergence (standard deviation divided by average) of purchasing power adjusted GDP per capita and GDP per hour worked in the European Union. We also link the development in income distribution as measured by Gini coefficients to convergence. With short pauses, there has been a long term trend of GDP per capita convergence in the European Union after 1960. The Great Recession was a shock to the development, and convergence within the EU-15 has suffered considerably. The largest relative declines have occurred in Cyprus, Greece, Italy, Portugal and Spain. On the other hand, the ex-transition countries have mostly continued their catching up. Historically, convergence in the EU has been faster when aggregate GDP growth has been faster. We also find that income disparities measured by Gini coefficients are negatively related to GDP per capita levels. Convergence was not correlated with changes in income distribution in 2000–2011 except for a group of six catching-up countries where we find a positive relation. We also find that there has occurred Sigma convergence in national Gini coefficients
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Economic relations between the European Union and the accession countries of Central and Eastern Europe (CEE) were liberalised by Europe Agreements after the early 1990s. Free trade and investment have the potential of changing the structure of countries' trade although with some restrictions set by, inter alia, the quantity and quality of the available factors of production. The accession countries have lower labour costs coupled with a relatively well-educated labour force. We analyse the factor intensity (skilled/unskilled labour and capital) of the accession countries' comparative advantage in the internal market in 1993-2002. Most accession countries' comparative advantage remains less skillintensive than that of the EU15 countries. A movement towards a more skillintensive comparative advantage is shown to have been positively correlated with higher growth rates in the EU15 and the CEE countries. ; Taloussuhteet Euroopan unionin sekä Keski- ja Itä-Euroopan (KIE) EU-hakijamaiden välillä liberalisoitiin Eurooppa-sopimuksilla 1990-luvun alun jälkeen. Vapaa kauppa ja investoinnit saattavat muuttaa maiden välisen ulkomaankaupan rakennetta, joskin rajoitteita tuovat muun muassa tarjolla olevien tuotannontekijöiden määrä ja laatu. KIE-maissa on EU15-maita alemmat työvoimakustannukset sekä suhteellisen koulutettu työvoima. Tässä tutkimuksessa analysoidaan KIE-maiden suhteellisen edun panosintensiivisyyttä (koulutettu/kouluttamaton työvoima sekä pääoma) niiden viennissä EU15-alueelle vuosina 1993-2002. Useimpien KIE-maiden suhteellinen etu on painottunut alemman osaamisintensiivisyyden tuotteisiin kuin EU15-maiden vastaava suhteellinen etu. Siirtymä kohti osaamisintensiivisempiä tuotteita on korreloinut positiivisesti nopeamman talouskasvun kanssa EU15- ja KIE-maissa. – EU ; itälaajeneminen ; suhteellinen etu ; panosintensiivisyys
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We analyse trade between Central and Eastern European (CEE) countries and the European Union during 1993-1998 using three methods.First, we calculate the share of intra-industry trade to determine the extent to which two countries trade in similar products.Second, we calculate similarity indices to determine the extent to which the structure of the exports of two countries is similar to a third country.Third, we calculate the revealed comparative advantage of CEE countries in the EU internal market and analyse the results in a two-dimensional space showing relative labour-skills and capital-intensity.We also depict how the factor intensity of comparative advantage has changed since 1993.With this last approach, we find that the comparative advantage of various CEE countries have developed in quite different directions. Some countries have evolved comparative advantage in industries requiring much skilled labour, while others have moved in the opposite direction.This differentiation is also reflected in degrees of capital intensity.A few CEE countries have not shifted in this two-dimensional space.
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This study analyses the trade of Hungary and the Czech Republic with the European Union in 1997.After a general introduction, the focus turns to the extent of intra-industry trade (IIT) and its horizontal and vertical components.The extent of IIT is also analysed in light of the flows of foreign direct investment (FDI) from the European Union to Hungary and the Czech Republic.This is followed by an analysis of revealed comparative advantage (RCA) in trade between the EU and the two Central European countries.The CN4-digit trade data is divided into two groups according to whether a country enjoys a revealed comparative advantage in a given market area or not.Statistical tests are performed to determine the extent to which the RCA structures of each pair of countries are dependent.The analysis also takes into account the volumes of trade flows.
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Digitised version produced by the EUI Library and made available online in 2020.
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Using a neo-classical growth model, we analyse the real and nominal GDP per capita convergence of 21 emerging market economies (EMEs) of Central and Eastern Europe towards the EU15 average by 2050. We estimate the countries' initial capital stocks and project future investment as a function of the GDP per capita gap, among other things, in order to have converging physical capital intensities in the long run. Due to standard β-convergence in the model, catching up will continue at a decelerating speed. Also nominal convergence in prices that will lead to a real appreciation of the EME currencies with respect to the euro is projected as a function of the GDP-per-capita gap vis-à-vis the EU15. We also discuss whether the level of human capital in the EMEs is likely to allow for full catching up. We argue that the EU membership of most of the EMEs is likely to improve their economic, investment and business environments and lead to economic and other policies that support long-term convergence. According to the results, the EMEs will not quite catch up with the EU15 by 2050. However, our analysis of the uncertainty related to the growth rates and calculations of a confidence band for the results, as well as a qualitative assessment of other factors (politics, institutions, human capital) that have not been taken into account in the model explicitly lead us to conclude that some of the EMEs are likely to catch up with the EU15 average during the course of the next couple of decades.
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This paper examines the causal link between foreign investment and firm performance in six small open economies in the European Union. Specifically, using micro data for manufacturing and services over the period 2001–2009, we analyse the effects of foreign mergers and acquisitions on labour productivity and employment growth up to five years after acquisition. Our results indicate that foreign investors tend to acquire larger firms in both manufacturing and services. Other characteristics of acquired firms differ across countries and between manufacturing and services. Taken together, our estimates suggest that foreign investment had stronger effects on firm performance in services in comparison to manufacturing.
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Economic convergence of the new member states (NMS) of the EU towards the old EU countries (EU-15), not only in terms of real income, but also in nominal terms, is of paramount importance for the whole of the EU. We build a dynamic CGE model, starting from the Balassa-Samuelson two-sector framework, but modify and enlarge it with forward-looking investment, consumption, and labour mobility behaviour to address several other issues like welfare and sustainability in terms of foreign indebtedness. At the same time we evaluate the impact of convergence on the EU-15 countries also, by endogenising offshoring and the related FDI flows from them to the NMS. Thereby we identify various effects of relocation and globalisation on the EU-15 enlarging the standard set of effects of globalisation and demonstrate the key role of their dynamic nature in the process of convergence. We find that in a general equilibrium setting fears of large adverse effects of a relocation of EU-15 manufacturing to the NMS are not well founded. In contrast, offshoring appears to be a win-win case for both the EU-15 and the NMS in terms of real income. The convergence of the NMS is fairly rapid, but will involve a persistent rapid inflation rate.
BASE
Economic convergence of the new member states (NMS) of the EU towards the old EU countries (EU-15), not only in terms of real income, but also in nominal terms, is of paramount importance for the whole of the EU. We build a dynamic CGE model, starting from the Balassa-Samuelson two-sector framework, but modify and enlarge it with forward-looking investment, consumption, and labour mobility behaviour to address several other issues like welfare and sustainability in terms of foreign indebtedness. At the same time we evaluate the impact of convergence on the EU-15 countries also, by endogenising offshoring and the related FDI flows from them to the NMS. Thereby we identify various effects of relocation and globalisation on the EU-15 enlarging the standard set of effects of globalisation and demonstrate the key role of their dynamic nature in the process of convergence. We find that in a general equilibrium setting fears of large adverse effects of a relocation of EU-15 manufacturing to the NMS are not well founded. In contrast, offshoring appears to be a win-win case for both the EU-15 and the NMS in terms of real income. The convergence of the NMS is fairly rapid, but will involve a persistent rapid inflation rate.
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