Is there a trade convergence between South East European and Central European economies

Abstract

Given the importance of trade performance to overall economic fundamentals, the question arises as to the extent that South East European Countries (SEEC) have successfully followed the successful transition path of Central and Eastern European Countries (CEEC). To address this issue, we use similarity indicators to calculate possible convergence between the export structures of SEEC and CEEC from 2007-2008 to 2018-2019. We then compute the value of the similarity coefficients of SEEC and CEEC export structures and compare them with EU import structures, and intra-industry trade for both SEEC and CEEC. Next, we calculate the qualitative changes of both SEEC and CEEC merchandise trade through the tendency of technology-intensive products. The results of these two groups are compared to determine whether SEEC trade performance is converging to that of the CEEC. The results show structural improvements and an above-average increase in SEEC trade since 2007. However, given the simultaneous, moderate qualitative trade progress in the CEEC, the convergence between these two groups is insufficient to close the gap in the foreseeable future.