The income gap between the old and new EU member states has been closing steadily in the last two decades. This is what the coefficient of variation of the gross domestic product per capita shows by purchasing power parity. This is one of the most common indicators used to measure the income convergence between different countries and regions.
The analysis of Georgi Angelov, senior economist at Open Society Institute – Sofia, shows that the GDP coefficient of variation by purchasing power parity (PPP) shrank almost twofold – from about 45% in the late 90s to nearly 25% in 2016. The difference in the GDP per capita between the richest and the poorest EU country also decreased by half and even severe crises do not reverse this trend, but only slow it down.
This improvement is due to the maintenance of a high economic growth in the new EU member states. In 19 of the last 22 years the new states have been overtaking the old ones in terms of economic growth which is in average three times higher. The new EU member states already produce a GDP amounting to EUR 1.3 trillion a year. The poorest countries of the region (Bulgaria and Rumania) have had the highest economic growth in the last years, which helps to bridge the income gap between the new member states themselves and confirms the income convergence.
If the current growth rates persist, Angelov forecasts, for slightly over two decades all new member states, including Bulgaria, will reach 90% of the average GDP per capita by PPP in the EU. During this period they will still need the European support, including financial, he writes. The Western Balkans, however, are in a much worse situation – with no European prospect, they will hardly be able to catch up with the EU countries soon.
The complete text of the analysis When will Eastern Europe catch up with Western Europe on income?
