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What Happened to the Economic Convergence of Central and Eastern Europe After the Global Financial Crisis?

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Abstract

During the boom years 2000–2007, the new Central and East European (CEE) members of the European Union (EU) had more than twice as high economic growth as the 15 countries that were members of the EU before 2004. From 2010, however, their growth rates have been mediocre though still higher than those of the older EU members. This paper investigates seven structural benchmarks, fiscal burden, tax system, labor markets, education, pensions, governance, and research and development. The CEE countries are continuing to perform quite well in all these regards apart from research and development. Another cause of concern is large emigration. Thus, growth of GDP per capita instead of GDP growth looks much better for the CEE countries. No middle-income trap is apparent.

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Fig. 1

Source: Eurostat, available at: http://appsso.eurostat.ec.europa.eu/nui/show.do

Fig. 2

Source: Eurostat, available at: http://appsso.eurostat.ec.europa.eu/nui/show.do

Fig. 3

Source: EU-15: Organization for Economic Cooperation and Development (OECD) Tax Database. Retrieved 2016-06-04. Available at: http://stats.oecd.org//Index.aspx?QueryId=58204. All others: KPMG Corporate Tax Rates Table, 2016. Available at: http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx

Fig. 4

Source: For EU-28: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfsq_ergan&lang=en; For USA: http://stats.oecd.org/

Fig. 5

Source: EU: Eurostat Statistical Database, available at http://ec.europa.eu/eurostat/web/products-datasets/-/tps00065; USA: National Center for Education Statistics, available at http://nces.ed.gov/programs/digest/d15/tables/dt15_104.10.asp. Retrieved 2016-06-09

Fig. 6

Source: EU: Eurostat, available at http://appsso.eurostat.ec.europa.eu/nui/show.do; USA: OECD, available at https://stats.oecd.org/Index.aspx?DataSetCode=SOCX_AGG

Fig. 7

Source: Fraser Economic Freedom Index, http://www.freetheworld.com/release.html

Fig. 8

Source: Eurostat, R&D Expenditure, http://ec.europa.eu/eurostat/statistics-explained/index.php/R_%26_D_expenditure

Fig. 9

Source: Eurostat (2017)

Fig. 10

Source: IMF, World Economic Outlook Database, October 2017

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Notes

  1. Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. The CEE-11 are shown in black in the figures and the other EU-28 in gray, and the average for each group is indicated in the figure. For all figures, the data are ordered in ascending or descending order.

  2. All averages in this paper are unweighted, that is, giving all countries equal weight, since our interest is the economic policy of each country rather than their economic weight.

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Acknowledgements

I have greatly benefited from research assistance from Alvaro Weis and from the lively discussion at the Dubrovnik conference. I did one similar presentation at the Atlantic Council in Washington and another at the European Commission in Brussels. I want to thank the editors Paul Wachtel and Nauro Campos for their comments.

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    Anders Åslund

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Åslund, A. What Happened to the Economic Convergence of Central and Eastern Europe After the Global Financial Crisis?. Comp Econ Stud 60, 254–270 (2018). https://doi.org/10.1057/s41294-018-0060-x

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