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Manufacturing productivity in the EU: Why have Central and Eastern European countries converged and Southern EU countries have not?

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  • Petrović, Pavle
  • Gligorić Matić, Mirjana

Abstract

This paper shows that CEE countries converge in manufacturing productivity to more developed EU countries, while southern EU countries have failed to converge. Large investments in CEE manufacturing sectors, particularly in the Visegrad group, and the related catch–up effect are the main convergence drivers. We also found that the relative importance of growth drivers varies across the CEE countries and over the time, revealing some regularity and explaining the recent slowdown in convergence pace. In contrast, low manufacturing investments in Portugal, Greece, and Spain, and weak institutions in Italy and Greece caused their lagging behind in productivity growth. The findings stem from robustly estimated growth regressions for a panel of EU countries over the period 1995–2019.

Suggested Citation

  • Petrović, Pavle & Gligorić Matić, Mirjana, 2023. "Manufacturing productivity in the EU: Why have Central and Eastern European countries converged and Southern EU countries have not?," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 166-183.
    • Handle: RePEc:eee:streco:v:65:y:2023:i:c:p:166-183
    DOI: 10.1016/j.strueco.2023.02.012
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