Process Of Economic Convergence Research Articles

Is the European integration speeding up the economic convergence process of the Central and South-Eastern European countries? A shock perspective

In the current context of continuous reassessment of the sustainability of the single currency and gradual enlargement of the euro area during the last decade, the objective of this research is to obtain new insights into the factors that determine the synchronisation of shocks in the Central and South-Eastern European countries vis-a-vis the euro area. The research contributes to the previous work by making a novel use of error correction model in a dynamic panel context which is extended by adding several important omitted variables related to the trade structure and policy coordination. We find that an increase in trade intensity, intra-industry trade and financial integration leads to less frequent asymmetric shocks. On the other hand, divergent fiscal policies are estimated in some model specifications to increase the shock divergence process, although the estimated impact is rather small to counteract the positive effects associated with trade and financial integration. The identified relationships in this research are affected by the significant trade and growth slowdown in the crisis period; while the global economic turmoil has boosted a demand shock convergence, its impact on the supply shocks is in the opposite (diverging) direction.

Serbia and geoeconomic globalization

Serbia takes part in the process of the economic globalization through the process of economic convergence towards Europe. Currently this economic convergence with the EU nations represents the most important aspect of the economic globalization for Serbia. Otherwise, the national states, regardless of their size, can influence the economic globalization, if they have the national strategy for the regionalization, harmonization, and governance of the global processes. Serbia has opportunities to be an important world oil and gas crossroads. For Serbia it is interesting not only what will happen with oil and gas sector in the future, but also what kind of (geo)politics will follow it. Moreover, as a modern transport 'backbone', Corridor 10 might at the same time stimulate the development and connection of the remaining Serbian road and railway infrastructure with the neighborhood, as well as the entire economy as a whole. The reform agenda is comprehensive and neglecting important challenges such as creating institutions will result in deeper crises in the future. Growth will only take place if the society creates the institutions and policies that encourage innovation, investment, and education. The rise in competitiveness of the Serbian economy is becoming increasingly important for at least two reasons - one being the expected EU accession, and the other being the persistent high current account deficits and increased foreign debt jeopardizing macroeconomic stability. Serbia does not have the luxury of postponing this work on longer-term issues.

La demografía importa: convergencia y cambio estructural por defecto en las regiones y provincias españolas, 1959-1999

Este trabajo analiza los fenómenos de convergencia y cambio estructural registrados en las regiones y provincias españolas a lo largo de las últimas cuatro décadas, argumentando que las variables demográficas tuvieron un peso destacado en los mismos. En concreto, se muestra que el declive demográfico (en términos absolutos o relativos) contribuyó en numerosas provincias al establecimiento de patrones de convergencia y cambio estructural por defecto. Por ello, este proceso de convergencia económica no puede ser considerado como un óptimo paretiano.

On the Empirical Evidence of the Intertemporal Current Account Model for the Euro Area Countries

In this paper we present a novel approach to the empirical validation of the intertemporal approach to the current account. We develop a calibrated model highlighting the role of consumption smoothing and capital accumulation in the economic convergence process. After solving the model, we derive the theoretical values for the euro area countries’ current account, testing to what extent they match reality. The model explains most of the dispersion in the current account and saving ratio, though cannot equally well capture differences in the investment ratios. The conclusion that we draw is that consumption smoothing, based on expectations of economic convergence, is driving the current account of the euro area countries over medium-term horizons. Capital accumulation appears to play a less pronounced role. JEL Classification: D91, F36, F41

Earnings conservatism: panel data evidence from the European Union and the United States

This paper focuses on earnings conservatism, and provides new evidence based on procedures that account for variability at the firm level, drawing a comparison between the European Union and the United States. A key finding is that the estimated responsiveness of earnings to bad news is substantially higher when unobserved firm‐specific effects are modelled. Furthermore, it is shown that accounting has become more conservative not only in the U.S. but also in the EU when taken as a whole, and there is little evidence of marked differences in the asymmetric timeliness of earnings between the two. Indeed, any changes in this property of earnings are likely to be attributable to a common factor that influences firms similarly in both locations, and not necessarily to the process of economic convergence that has taken place in the EU.

An Analysis of the Economic Convergence Process in the Transition Countries

The paper is analysing the process of economic convergence of transition countries during the period 1995-2004. Within the analysed period unconditional B-convergence across the transition economies existed. We could also discover the reduction of dispersion of income levels between accession countries (sigma-convergence). Comparative analyses of the new EU member states (NMS) economic convergence with the previous entrants into EU (Ireland, Greece, Spain, and Portugal) revealed that NMS have been much more successful in their convergence process before joining EU. Analyses of the macroeconomic, human capital, infrastructure indicators of the current accession countries compared with the previous cohesion countries indicated that the new members have been much better prepared to the enlargement. This allows drawing conclusion that the NMS face an opportunity to obtain much more rapid convergence process than expected by previous analyses, which have seriously undervalued the positive role of the pre-accession harmonisation process of NMS with the implementation of the major economic reforms in order to guarantee macroeconomic stability.

Welfare state development in the context of European integration and economic convergence: situating Ireland within the European Union context

English Convergence towards the European Community average on key economic dimensions was the dominant objective of Ireland’s entry into the Community in 1973 and is now central to the admission aspirations of the applicant countries. This article outlines key aspects of Ireland’s economic convergence and the associated policy choices. It examines whether its welfare state is converging towards the European Union average in expenditure and selected distributional outcomes and discusses its welfare regime characterisation. The simultaneous processes of economic convergence and maintenance of traditional social policy patterns are identified, as are differences between the economic development and distributional roles of the state.

An Application of Convergence Theory to Japan's Post-WWII Economic “Miracle”

The author provides an interpretation of the post-World War II economic “miracle” of Japan as a process of economic convergence within the framework of the neoclassical Solow-Swan model of economic growth. He shows how the predictions of the Solow-Swan model are qualitatively consistent with the actual economic record of Japan in the decades following World War II. The article is intended to help in the teaching of economic growth and the Japanese economic miracle, either as part of a macroeconomics course or in an advanced elective course in economic growth and development or in Japan's modern economic history.

Aggregate convergence and sectoral specialization in innovation

Over the last 20 years OECD countries have converged in terms of their innovations, in parallel to the process of economic convergence and catching up in technology. However, this has not led to a similarity in the sectoral strengths of the majority of countries. Applying a measure of ‘technological distance’ between pairs of countries based on patents, it is shown that nations have increased their technological specialization (i.e. their sectoral differences) over the 1980s. An apparent paradox is pointed out, as countries converge by becoming more different and grow by becoming more specialized.