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Convergence and growth decomposition: an analysis on Lithuania

Mariarosaria Comunale, Anh Nguyen and Soroosh Soofi-Siavash ()
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Soroosh Soofi-Siavash: Bank of Lithuania

No 17, Bank of Lithuania Discussion Paper Series from Bank of Lithuania

Abstract: We study the behaviour of Lithuania relative to other 25 EU countries, looking specifically at convergence in terms of GDP per capita and its growth accounting components: capital accumulation, labour and its subcomponents, i.e. participation and employment, and the Total Factor Productivity (TFP). We find that Lithuanian Real GDP per capita shows indeed a convergence path similar to the other Baltic States and they all belong to the second club (includes part of the periphery and the other new member states). The convergence paths of labour or capital accumulation do not seem significantly different compared to the ones of other EU members. The Lithuanian transition path in TFP has become plateau after the crisis but this is seemingly not a divergence factor. Two components show noticeable changes in behaviour after 2010: the growth in total factor productivity (TFP) considerably slows down, and the employment-population ratio appears to increase accounting for around one third of the annual GDP growth in Lithuania. In addition, we explore several transition scenarios for Lithuania to the EU-25 average.

Keywords: Lithuania; convergence; economic integration; GDP per capita; TFP; capital; labour (search for similar items in EconPapers)
JEL-codes: O47 F15 F45 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2019-12-13
New Economics Papers: this item is included in nep-cis, nep-eec, nep-ore and nep-tra
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