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Is Central and Eastern Europe converging towards the EU-15?

Author

Listed:
  • Marcin Grela

    (Narodowy Bank Polski)

  • Aleksandra Majchrowska

    (Narodowy Bank Polski, University of Lodz)

  • Tomasz Michałek

    (Narodowy Bank Polski)

  • Jakub Mućk

    (Narodowy Bank Polski)

  • Agnieszka Stążka-Gawrysiak

    (Narodowy Bank Polski)

  • Grzegorz Tchorek

    (Narodowy Bank Polski, University of Warsaw)

  • Marcin Wagner

    (Narodowy Bank Polski)

Abstract

This paper is about the real convergence of six Central and Eastern European economies – Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Slovakia – towards the more advanced EU-15 economies. Our major goal is to analyse empirically which factors have driven growth and convergence in the region in the last two decades. The results of our analysis based on a panel of 26 EU countries in 1997–2014 suggest that the real convergence was driven by both traditional (core) and ‘new growth theory’ growth factors (among other things, by innovation activity and trade). We demonstrate that the post-transition growth model prevailing in the CEE region, based on a large inflow of foreign capital (mainly in the form of FDI) has reached its limits. The CEE countries’ growth and convergence will now be driven mainly by factors affecting structural competitiveness, especially innovation activity, institutional environment and policies (or lack thereof) targeted at diminishing the influence of demographic developments on the labour market outcomes.

Suggested Citation

  • Marcin Grela & Aleksandra Majchrowska & Tomasz Michałek & Jakub Mućk & Agnieszka Stążka-Gawrysiak & Grzegorz Tchorek & Marcin Wagner, 2017. "Is Central and Eastern Europe converging towards the EU-15?," NBP Working Papers 264, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:264
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    2. Zoltan Arokszallasi & Juraj Kotian & Katarzyna Rzentarzewska, 2018. "Digitalization and higher R&D readiness – way to foster income convergence in CESEE," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3-18, pages 34-42.
    3. Sándor Gyula Nagy & Dzenita Siljak, 2019. "Economic convergence of the Western Balkans towards the EU-15," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 11(1), pages 41-53, February.
    4. Ewa Cichowicz & Ewa Rollnik-Sadowska, 2018. "Inclusive Growth in CEE Countries as a Determinant of Sustainable Development," Sustainability, MDPI, vol. 10(11), pages 1-23, October.
    5. Maras Marin, 2022. "The spillover effect of European Union funds between the regions of the new European Union members," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(1), pages 58-72, June.
    6. Hałka, Aleksandra & Leszczyńska-Paczesna, Agnieszka, 2019. "Price convergence in the European Union – What has changed?," Economic Modelling, Elsevier, vol. 79(C), pages 226-241.

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    More about this item

    Keywords

    real convergence; growth; Central and Eastern Europe; EU; panel data analysis;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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