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Real convergence in central, eastern and south-eastern Europe

Piotr Żuk and Li Savelin

No 212, Occasional Paper Series from European Central Bank

Abstract: This paper analyses real income convergence in central, eastern and south-eastern Europe (CESEE) to the most advanced EU economies between 2000 and 2016. The relevance of this topic stems both from the far-reaching implications of real income convergence for economic welfare and the importance of convergence for economic and monetary integration with, and within the European Union. The paper establishes stylised facts of convergence, analyses the drivers of economic growth and identifies factors that might explain the differences between fast- and slow-converging economies in the region. The results show that the most successful CESEE economies in terms of the pace of convergence share common characteristics such as, inter alia, a strong improvement in institutional quality and human capital, more outward-oriented economic policies, favourable demographic developments and the quick reallocation of labour from agriculture into other sectors. Looking ahead, accelerating and sustaining convergence in the region will require further efforts to enhance institutional quality and innovation, reinvigorate investment, and address the adverse impact of population ageing. JEL Classification: E01, F15, O11, O43, O47, O52, O57

Keywords: central; eastern and south-eastern Europe; economic growth; EU accession; middle-income trap; real convergence; Western Balkans (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-tra
Date: 2018-07
Note: 1998795
References: View references in EconPapers View complete reference list from CitEc
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