Advances in Economics and Business Vol. 5(7), pp. 369 - 381
DOI: 10.13189/aeb.2017.050701
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Causes of the Convergence Slowdown in the Countries of Central and Eastern Europe, 2008-2014


Wojciech Bieńkowski 1, Wojciech Grabowski 2,*
1 Department of Economics and Management, Lazarski University, Poland
2 Department of Economics and Sociology, University of Lodz, Poland

ABSTRACT

In this paper we analyze the growth and real convergence process of the Central and Eastern European countries which joined the European Union in May 2004, namely Poland, the Czech Republic, Slovakia, Hungary, Lithuania, Latvia, Estonia and Slovenia (henceforth CEEC-8), vis-à-vis the European Union (EU) as a whole, individual EU members, and OECD countries (non-EU members). The analyses cover the period from 1995 to present. Results of testing beta-convergence indicate that in the period 2008-2014 the countries of the CEEC-8 group converged to Mediterranean countries but did not converge to rich countries of the European Union or non-EU OECD countries. We estimate parameters of the dynamic panel model to identify the causes of the convergence slowdown of CEECs. According to the results of the estimation, the low level of innovation in the countries under consideration was the main cause of both the slower TFP growth and the convergence slowdown.

KEYWORDS
Growth, Convergence, TFP Determinants, Dynamic Panel Model

Cite this paper
Wojciech Bieńkowski , Wojciech Grabowski . "Causes of the Convergence Slowdown in the Countries of Central and Eastern Europe, 2008-2014." Advances in Economics and Business 5.7 (2017) 369 - 381. doi: 10.13189/aeb.2017.050701.