Transcript Balkan countries

Prof. Ermelinda Meksi
University of Tirana, Faculty of Economics
Convergence Notion
Convergence classical concept:
-The income level of poorer countries of the world should
converge to those of richer ones
Convergence Debate
-There are debates on the convergence, interpretations,
implications, and absorptive capacities within the
neoclassical growth theories and new growth theories
-What conditions and policies the developing economies
have to apply in order to reduce the gap with the
developed world ,“the Word is not flat”?
SCOPE OF PRESENTATION
 To estimate the speed of convergence of Balkan region
(β convergence parameter) with EU
 To estimate if the disparities in the income per capita in
the Balkan and with EU have diminished or not
(σ-convergence )
 To look into the structural change and agriculture sector
convergence
 The way forward for policy makers
Hypothesis raised by the paper
 The Western Balkan Countries are diminishing the
Income Gap with EU;
 Structural Changes are converging with Western
Balkans;
 Public Policies are supporting the fast catch up
process.
Beta convergence in Balkan Countries
Beta = 0,053
Beta = 0,055
Calculations of the authors. Source of data, World Bank database
Sigma convergence
 The estimation of convergence in Balkan countries in terms of income
per capita with each other, through the trend line slope of the
regression of standard deviation of GDP per capita per each year of
the period 1995-2012
Change in the ratio of GDP per capita of Balkan
Countries towards EU GDP per capita
0,70
EU Countries
0,60
0,50
0,40
1995
2013
0,30
0,20
0,10
0,00
ALB
BIH
MKD
MNE
SRB
BGR
HRV
ROM
Calculation of the author, Source of data from the World Bank Database
Convergence gap of western Balkan countries to
Croatia, when accessed EU in 2013
Country
GDP per capita
2013, PPP
(current
international $)
Option I
(Beta as
average
growth
of
No of
converg) Years
Option II
(expected
annual growth
for 2015-2019
according to
IMF
No of
years
Montenegro
14.132
5,3%
8
3,3%
13
Serbia
13.020
5,3%
9,6
2%
13
Macedonia
11.612
5,3%
11,8
3,9%
16
17
Albania
Bosnia and
Herzegovina
10.374
5,3%
14
4,2%
21
9.536
5,3%
15,6
3,8%
Calculation of the author, source of data, World Bank and IMF World Economic Outlook, October 2014.
Convergence gap of Western Balkan Countries to EU
Country
GDP per capita in
2013 in
Expected annual
PPP(current
growth 2015international $)
2019 %
No of years
Montenegro
14.132
3,3
68
Serbia
13.020
3,8
55
Macedonia
11.612
3,9
58
Albania
10.374
4,2
55
9.536
3,8
72
35.501
1,9
Bosnia and
Herzegovina
EU
Calculation of the author, source of data, IMF World Economic Outlook, October 2014 and World Bank
Data. For Serbia is calculated as expected growth the average growth for the period 2000-2010 as the
best years of positive growth considering that for most of the other years the data were fluctuating on
negative values making difficult the application of the same model as in other countries.
Agriculture Added Value in GDP over the years for
Balkan Countries and EU
Agriculture is the main sector affected by development according
to growth theories :
By reducing the contribution to GDP and experiencing the
improvment of productivity due to the use of technology
Convergence in this sector would be assessed in terms of
productivity convergence with developed countries.
Source: World Bank Database
Convergence of Productivity in Agriculture with EU (through
the dispersion of Agriculture value added per worker of EU with each
Balkan country)
Calculation of the author. Source of data: World Bank Database
Findings
 Balkan
countries: Higher growth
convergence rate than EU Countries.
rates
but
slower
 The new members of EU: Higher speed of convergence than
Balkan countries, example:Romania and Bulgaria at the preaccession moment and after the accession to EU.
 The global crisis impact is continuing to be felt in Balkan
countries with lower rates of growth after 2009, increasing the gap
with EU.
 It is necessary, the establishment of strong and reliable
institutions, political stability, promotion of business climate, to
guide the further economic convergence and welfare
Conclusions
- European integration-
best practices- the speed of the
convergence in agriculture
- The case of Slovenia, Bulgaria, Croatia
 Albania, Serbia and Montenegro have productivity in this sector
too far from EU countries,therefore will need more time and
work to achieve the EU average growth
 Balkan countries should implement "benchmarking“ the best
practices- to speed up the convergence
REFLECTIONS


Considering the situation in Greece

The huge pre-gap in particular in agriculture sector existing among Balkan and
EU countries

“The world is not flat" therefore convergence is a dynamic process that requires a
proactive role of the public policies.
 Should we re-estimate new tools and approaches to address: potentials of
development, accumulation of resources, productivity in particular on human
capital,principal players -institution and political factors as well as tools of
collaboration among the concerned countries that may contribute to the convergence?
 Could the distribution of IPA funds for Balkan candidate and potential countries
folloing the principle of merits and not according to the needs of these countries,
weaken the contries lacking qualified human resources in the region?