An Empirical Analysis of Income Convergence in the European Union

Applied Economics Letters (Impact Factor: 0.23). 01/2010; 18(1001). DOI: 10.1080/13504851.2011.560104
Source: RePEc


In this paper, we investigate the convergence process within the European Union (27 countries). More particularly, we study the convergence process of the new entrants from Central and Eastern Europe and of the 15 Western countries between 1990 and 2007. Applying a panel approach to the convergence equation derived by Mankiw et al. (1992) from the Solow model, we highlight the existence of heterogeneity in the European Union and show that new entrants and former members of the European Union can be seen as belonging to significantly differ ent groups of convergence. The existence of heterogeneity in the European Union or the Eurozone might affect their stability as the recent Greece’s sovereign debt crisis illustrates it.

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Available from: Laurent Cavenaile
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    • "They found evidence of accelerating speed of convergence which indicates effective integration going on among the new member states as well as between new and old member states. Cavenaile and Dubois (2011) tested a similar question, but came to a different answer; according to them, the Western European countries and the new entrants from Central and Eastern Europe (CEE) display significantly different rates of convergence, thus supporting the idea of heterogeneity within the European Union. Lindenblatt and Feuerstein (2012) applied a test for sigma-convergence on retail food prices before and after the Eastern enlargement and concluded that prices within the EU as a whole as well as within the eight post-communist countries that joined the EU in 2004 converged significantly after enlargement, whereas prices within the old member states diverged slightly. "
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    ABSTRACT: The paper focuses on the effects of EU's Eastern Enlargement of 2004 on trade convergence within the EU and among the new member states from Central and Eastern Europe (CEE-8). Using sigma-convergence approach, it fi nds evidence of convergence of exports and imports per capita as well as of productivity levels associated with the member states' export baskets. Convergence of territorial and commodity structures of trade has not occurred; conversely, divergence has been observed, leading to the possible conclusion that multinational companies have adjusted their production structure in facilities across the EU to achieve higher economies of scale. Correlation analysis shows that revealed comparative advantages of the old and new member states have come closer to each other. As an example, the paper also offers a brief comparison of trade development in two CEE-8 countries, Latvia and Slovakia, after their entry into the EU.
    Full-text · Article · Dec 2015 · Society and Economy
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    • "Union over the 1995-2006 period, but argue that the convergence rate within the former group is higher. Cavenaile and Dubois (2011) provide evidence for betaconvergence of real income per capita for the EU-27 over the 1990-2007 period. "
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    ABSTRACT: This paper tests, in the context of the EU countries, the evidence presented by Hidalgo and Hausmann (2009) that economic complexity indicator is a good predictor of economic growth. Our results suggest that a group of countries in the EU with an economic complexity exceeding a certain threshold tends to converge to the levels of income corresponding to their measured complexity. On the other hand, current account deficits in interaction with economic complexity have important effects on growth for a second group of countries with lower levels of complexity. We also find that income convergence is faster within the first group. Therefore, we argue that convergence is much faster for countries whose economic complexity exceeds a certain threshold.
    Full-text · Technical Report · Oct 2015
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    • "El cuadro 1.1 muestra que a nivel internacional se ha encontrado evidencia muy variada, predominando la existencia de divergencia absoluta, convergencia condicional para países de áreas económicas comunes y convergencia heterogénea o clubes de convergencia. Similarmente, Azomahou et al. (2011), Cavenaile and Dubois (2011) y Crespo- Cuaresma et al. (2008) encuentran convergencia entre estados de la Unión Europea. Estos últimos casos constituyen una especie de " hibrido " , dado que no son trabajos de convergencia regional, pero sí a nivel de regiones económicas que engloban a varios países. "
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    ABSTRACT: El trabajo presenta un análisis empírico sobre la convergencia para América Latina durante el periodo 1960-1998, por medio de estimaciones de datos de panel. La evidencia encontrada no indica la presencia de convergencia absoluta ni condicional, ni tampoco la existencia de clubes de convergencia. A su vez, los resultados de las estimaciones realizadas con efectos fijos muestran que no existe convergencia condicional, lo que sugiere que cada economía converge a su propio estado estacionario.
    Full-text · Article · Jan 2014
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