EU ENTRANTS, CANDIDATES AND ASPIRANTS: HOW LARGE ARE THE DIFFERENCES AND HOW QUICKLY COULD THEY BE REDUCED?

This paper attempts to answer three questions on the status of real economic convergence in central and eastern Europe. First, how large are the differences, measured by key macroeconomic indicators, between the new member states that joined the EU in 2004, the four EU candidates (Bulgaria, Croatia, Romania and Turkey) and the EU “aspirants” from southeast Europe (Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro). Second, how long could it take the EU candidates and aspirants to overcome these differences and catch up with the new member states? And third, how long could it take the 16 countries in central and eastern Europe to catch up with living standards in Greece, Italy, Portugal and Spain? Due to the complexity of cross-country comparisons, answers to these questions are only illustrative. It is shown that differences in terms of macroeconomic indicators between the EU candidates and the new member states are not as large as is often thought. However, the starting position of countries in southeast Europe is considerably less favourable. Second, at the average speed of reforms exhibited by the new member states over the past 15 years, it would take between 1½ and 7½ years for the EU candidates and aspirants to reach the level of transition observed in the new member states at the time they joined the EU. Converging to real per capita incomes of four southern members of EU-15 would take considerable longer: between 25 and 50 years for the new member states (with the exception of Slovenia) and EU candidates; and 65 years or longer for the southeast European countries.