National and Regional Convergence in the European Union

Catching-up of Member States and their Counties in the European Union

Abstract

The study reviews and compares the catching-up trend of 17 European Union member states over the past three decades. It can be observed that the economies of the less
developed countries have grown faster, thus significantly reducing the development disparities within the European Union. It can be seen that the pace of economic growth has been significantly faster in countries with a higher long-term average growth rate of investment, especially if infrastructure and commercial real estate investment growth rates, furthermore machinery and equipment investment growth rates accelerated the most. Although not so significantly, the degree of openness of the national economies to the external economy has been also positively correlated with the country’s catching-up rate: the catching-up was faster, where the volume of foreign trade to GDP ratio increased. Furthermore, in countries where the share of foreign firms in GDP production and in total employment was higher, the catching-up effect was even more spectacular (certainly due to imports of advanced technologies). The study also analyses and compares how regional income disparities between counties have evolved in 15 Member States in the light of the trade-off convergence theory.