CONVERGENCE OF WESTERN BALKAN COUNTRIES TOWARDS THE EU AVERAGE: EMPIRICAL EVIDENCE

Međunarodna naučna konferencija Društveno – ekonomski razvoj i obrazovanje sa akcentom na Republiku Srbiju i Raški okrug, Knj. 3 (pp. 69-77)

 

АУТОР(И) / AUTHOR(S): Lidija Madžar 

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DOI: https://doi.org/10.46793/87143.27.2.069M

САЖЕТАК / ABSTRACT:

The countries of the Western Balkans – Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia – are going through a long process of economic transition and integration into the European Union (EU). Although they share a common historical and institutional heritage, their economic development shows both similarities and significant differences. Their economic development has been accompanied by progress since the beginning of the 2000s, achieving stable but moderate economic growth that was mainly based on household consumption, foreign investments and the service sector. Although the industrial sector of these countries is slowly modernizing, this segment of the economy still has a smaller share in their total gross domestic product (GDP) compared to EU countries. The aim of this article is to determine the most significant indicators of the Western Balkan (WB) countries’ standard of living and economic growth in the period from 2000 to 2024, as well as to assess the strength and pace of their convergence towards the developed EU countries by tracing key indicators of their economic growth and development such as GDP per capita, average annual growth rate, Compound Annual Growth Rate (CAGR), β-convergence parameter and a static σ-convergence parameter. Of all the observed countries of the Western Balkans, Albania experienced the highest average annual growth rate, while the highest CAGR was achieved by Serbia, indicating that this country, on average, grew at the fastest rate and most stably in the long term compared to other WB countries, as well as that it faster caught up with developed EU nations. On the other hand, almost all WB countries, with the exception of Montenegro, achieved an approximately equal β-convergence parameter, indicating a relatively equal pace of their catching up with richer EU countries. Finally, Albania has a highly pronounced divergence of its standards of living from the group average, while North Macedonia is characterized by a more uniform and harmonized growth of its living standard with the group mean.

КЉУЧНЕ РЕЧИ / KEYWORDS:

Western Balkan countries, GDP per capita, average annual growth rate, compound annual growth rate (CAGR), β-convergence, σ-convergence

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