Patterns of the Western Balkans' convergence toward the EU since 2004

Abstract

The Western Balkan states are on the path toward European Union (EU) membership. Before they become full members, they will have to fulfil certain criteria to assimilate into the EU and achieve convergence. In this paper, the authors aim to investigate whether the states converge toward the EU-27+1 after the 2008/2009 financial crisis. To do so, the relationship between the gross domestic product (GDP) per capita growth rate and selected macroeconomic variables is econometrically tested using ordinary least squares (OLS) semilog regression based on cross-sectional data for the 2004–2018 period and three subperiods: 2004–2008, 2009–2013, and 2014–2018. The subdivision is made to test the effects of the 2008/2009 financial crisis on the convergence process. The empirical results show that poorer economies grow faster than richer economies. The convergence rates range between 1.6% and 4.3%. The negative effects of the crisis have been identified only for absolute convergence. This research demonstrates that the conditional conver-gence process is faster, indicating that the countries differ in their structures. The results imply that Western Balkan countries should open their economies to more trade, as this has a positive impact on per capita growth, while the inflation rate, unemployment rate, general government debt, and level of corruption should be decreased.