Real convergence in Central and Eastern Europe. A comparative analysis of countries and regions

One of the fundamental pillars of the European Union aims the convergence of economic performances between countries and regions. This objective has proved to be increasingly difficult to achieve with the expansion of the regional group towards the Central and East of the continent. The aim of this paper is to study real convergence in the New Member States from Central and Eastern Europe, by taking into consideration the evolution of GDP per capita between 2000 and 2018. In this respect, we have conducted a comparative analysis between countries and regions using β- and σ-convergence. By applying cross-sectional regressions, we have identified a strong relationship between the initial level of income of the Central and Eastern European countries and the subsequent growth rates, the average catching-up speed reaching 3.6%. Moreover, β-convergence was accompanied by a reduction of income divergences between Central and Eastern European Members. In contrast, our analysis suggests a weaker process of convergence between regions compared to countries, the convergence rate reaching 1.7% per year. Furthermore, by studying the intra-national patterns, we have illustrated that the capital regions have consolidated their relative position in the majority of the Central and Eastern Member States to the detriment of the other territorial units. Consequently, the paper suggests that convergence across countries was accompanied by an increase of intra-national disparities between regions in Central and Eastern Europe.