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From convergence to divergence? Some new insights into the evolution of the European Union

Lucía Bolea, Rosa Duarte and Julio Sánchez Chóliz

Structural Change and Economic Dynamics, 2018, vol. 47, issue C, 82-95

Abstract: The promotion of economic, social, and territorial cohesion has been one of the main pillars of the construction of the European Union. This general principle has been manifest in the objectives of achieving a higher level of economic convergence, territorial competitiveness, and fostering employment creation in EU countries. The recent economic crisis has implied profound changes, not only in the path of growth but also in the structural and technological characteristics of EU countries, with these elements highly conditioning their inter-dependencies, economic outcomes, and convergence. This paper analyzes the role that the evolution of economic structures has played in the evolution of recent convergence in Europe expanding the traditional measures of economic convergence extended to a multi-regional input-output framework. Our study shows a trend towards convergence among EU countries and a significant breakpoint with the arrival of the economic crisis in 2008. Moreover, we observe a continuous change in the role of different components, raising the participation of trade (intra and extra European trade) in income for most of the countries and sectors analyzed. In addition, the different behavior of services, in particular, knowledge intensive services in the EU countries notably condition income generation in countries. Nevertheless, our results show that despite services economy explains significantly income growth in Europe over the period 2000–2014, income growth in Eastern Europe countries has notably relied on the positive reliance of manufacturing sectors (particularly medium and low technology sectors), and the expansion of conventional services, with a lower representativeness of the knowledge intensive sectors. Domestic and intra-EU markets are dominant, although also with an increasing share of extra-EU exports. The opposite can be said for central EU economies, which a smoother evolution over the period but a clear dominance of the knowledge intensive services and, in some cases, the high and medium-high technology industry.

Keywords: Convergence; European Union; Multiregional input-output; Global value chain (search for similar items in EconPapers)
Date: 2018
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