Middle Income Convergence Trap Phenomenon in CEE Countries

Barbara Brixová, Anna Tykhonenko, Ľubica Štiblárová and Marianna Siničáková
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Barbara Brixová: Technical University of Kosice, Faculty of Economics
Anna Tykhonenko: Université Côte d'Azur, CNRS, GREDEG, France
Ľubica Štiblárová: Technical University of Kosice, Faculty of Economics
Marianna Siničáková: Technical University of Kosice, Faculty of Economics

No 2025-25, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: This study examines the Middle-Income Convergence Trap (MICT) in Central and Eastern European (CEE) countries by analysing their economic trajectories and the factors shaping their convergence with more advanced EU economies. Using data from 1995 to 2022 and an iterative Bayesian clustering approach, the analysis reveals heterogeneous convergence patterns. While countries like Bulgaria and Romania exhibit strong catch-up dynamics, others—such as Slovenia and the Czech Republic—show signs of stagnation, suggesting potential entrapment in the MICT. Further analysis using a dynamic fixed effects model identifies trade openness, human capital, and institutional quality as key drivers of convergence, whereas high public debt is associated with increased stagnation risk. The findings underscore the need for comprehensive policy strategies that promote innovation, enhance education systems, and improve governance. Addressing these structural challenges is essential for sustaining long-term convergence and avoiding the risks associated with the MICT in the CEE region.

Keywords: middle-income trap; convergence; economic growth; Central and Eastern Europe; Bayesian shrinkage estimator (search for similar items in EconPapers)
JEL-codes: F02 F15 O47 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2025-07
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2025-25

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