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Are future enlargement candidate countries converging with the EU?

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Abstract

The paper addresses the issue of convergence with the EU for nine countries: Albania, Bosnia and Herzegovina, Georgia, Moldova, Serbia, the Former Yugoslav Republic of Macedonia, Turkey, Montenegro and Ukraine. All that are at different stages of EU candidacy that could eventually lead to full membership. Some are officially recognized as candidate countries while others are at the stage of an association agreement. The presence of convergence is examined in terms of two macroeconomic indices: GDP per capita and GDP per person employed. Panel unit root tests as well as univariate unit root tests are estimated for the period 1997–2016. In broad terms, the empirical findings reported herein indicate a lack of convergence with the EU irrespective of the metric used. However, they indicate a process of in-group convergence mostly in terms of GDP per person employed.

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Notes

  1. The corresponding 1997–2016 average is 8.9% for Bulgaria and 9.5% for Romania.

  2. For 2016, in PPPs and constant 2011 international $ as the data in Table 3.

  3. It should be noted here that there is no formal criterion that can be used in order to choose among the three models (Altinay 2005). However, Ben-David and Papell (1997) report that if a trend is present in a series then using in the estimations a model without trend is possible to fail to capture important data characteristics. Most of the series used in analysis here do not exhibit an upward or downward trend. Nevertheless, we also estimate Model C (not reported for reasons of brevity but available from the authors upon request) but the general findings and concomitant conclusion dot not change in any substantive manner.

  4. It is possible to correct for possible serial correlation by including an additional term in the model such as \(\Delta \widetilde{S}_{t - 1}\) (Amsler and Lee 1995).

  5. ZA for the Zivot and Andrews (1992) test, LP for the Lumsdaine and Papell (1997) test and LS for Lee and Strazicich (2003) test as presented in the preceding section.

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Acknowledgements

The authors are grateful to two anonymous referees for spotting flaws and inconsistencies in earlier versions and for their insightful detailed comments and constructive suggestions that helped improve the paper. They also wish to sincerely thank Junsoo Lee and Constantinos Katrakilidis for their assistance with the panel LM unit root test code.

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Authors and Affiliations

  1. Laboratory of Economic Policy and Strategic Planning, Department of Economics, University of Thessaly, Vólos, Greece

    Christos Kollias

  2. Department of Accounting and Finance, University of Macedonia, Thessaloníki, Greece

    Petros Messis

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  1. Christos Kollias
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  2. Petros Messis
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Correspondence to Christos Kollias.

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Kollias, C., Messis, P. Are future enlargement candidate countries converging with the EU?. Empirica 47, 453–473 (2020). https://doi.org/10.1007/s10663-019-09442-9

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