The Effects of the Crisis on the Convergence Process of the Western Balkan Countries towards the European Union

Dzenita Siljak and Sandor Nagy
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Dzenita Siljak: PhD in Economics, EU studies expert

Society and Economy, 2018, vol. 40, issue 1, 105-124

Abstract: The aim of the paper is to analyze economic convergence of the Western Balkan countries towards the European Union member states with two types of measurement methodology, sigma and beta convergence. Sigma convergence measures the dispersion of real per capita GDP among the countries and beta convergence is based on the neoclassical growth theory. The main hypothesis of the paper is that the recent financial crisis has negatively affected the convergence process of the Western Balkan countries towards the twenty-eight member states of the European Union (EU-28). The relationship between selected macroeconomic variables and the rate of per capita GDP growth are econometrically tested. Sigma and beta convergence are estimated for the period 2004-2013 and two sub-periods: 2004-2008 and 2009-2013. The empirical findings support the hypothesis of economic convergence. The negative effects of the crisis on per capita GDP growth are confirmed, resulting in a slower convergence process. Dissimilarities between the growth patterns of the analyzed groups show the considerable heterogeneity of growth, i.e. the convergence clubs.

Keywords: real convergence; European Union; Western Balkans; economic growth; club convergence (search for similar items in EconPapers)
JEL-codes: F15 O47 O52 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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