BETA CONVERGENCE AMONG THE FORMER SOCIALIST COUNTRIES

Abstract

The aim of the paper is to analyze the convergence process among the former Communist countries, the CEE-countries, the Western Balkans and the Eastern Partnership countries. Beta convergence is based on the neoclassical growth theory and tests the hypothesis that poor countries tend to grow faster than rich countries, in per capita terms, and can be absolute and conditional. There are two main hypotheses of this research. The first hypothesis is that the recent financial crisis negatively affected the absolute convergence process among the analyzed countries. The second hypothesis is that the recent financial crisis negatively affected the conditional convergence process among the countries. The relationships between the selected macroeconomic variables and per capita GDP growth rate are econometrically tested. Beta convergence is estimated for the period 2004-2016 and sub-periods; 2004-2008, the pre-crisis period and 2009-2013, the period of crisis. The empirical findings support the economic convergence hypothesis.