Keyword

Real convergence, Beta convergence, Sigma Convergence, Economic growth, GDP per capita

Abstract

The aim of the paper is to analyze the economic convergence of real per capita GDP in the Western European countries with two types of measurement methodology. The first is sigma convergence, based on the coefficient of variation of real per capita GDP. The second is beta convergence, absolute/unconditional and conditional, including economic and socio-political variables, based on the neoclassical growth theory. The hypothesis of the paper is that there has been real economic convergence in Western Europe in at least one analyzed sub-period. The relationships between selected macroeconomic variables and the rate of economic growth are econometrically tested. Both sigma and beta convergence are estimated for the period 1995-2013 and four sub-periods: 1995-2003, 2004-2013, pre-crisis sub-period 2004-2008 and the crisis sub-period 2009-2013. The empirical findings support the hypothesis of economic convergence, i.e. that the poorer countries tend to grow faster than the rich ones in per capita terms, for some periods. However, the countries had a tendency to diverge, confiriming the negative effects of the crisis on per capita GDP growth. Sigma convergence is consistent with beta convergence. According to the results, the half-life of real convergence may take from 12 to 1078 years. Significant dissimilarities between the growth patterns among individual countries show the considerable heterogeneity of growth, i.e. the convergence clubs.


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