Marcello Signorelli, Ph.D., Faculty of Political Sciences, University of Perugia, via Pascoli, 20, Perugia, 06123, Italy and Enrico Marelli, Ph.D, Faculty of Economics, University of Brescia, Italy, via San Faustino 74/B, 25122 Brescia (Italy), Brescia, 25122, Italy.
The purpose of the paper is to assess nominal and real convergence within the EU countries. The first part of the paper summarizes the different meanings of real convergence and nominal convergence for a group of countries that are proceeding toward a deeper economic integration, ultimately ending with an economic and monetary union. This theoretical framework is then applied to the case of the EU. We review the long run (1990-2007) evolution of nominal convergence by referring to Maastricht’s criteria for both current EMU’s members and for the remaining EU countries. Real convergence is mainly related to per-capita incomes, by considering both sigma and beta convergence approaches. The empirical part of the paper investigates more deeply four aspects of real convergence for five groups of countries (all of them now belonging to the EU27 group), i.e.: (a) EMU members, (b) EU countries adhering to ERM-II agreements, (c) EU members, (d) countries being formally candidates to EU membership (i.e. countries that in the ‘90s or before 2004/2007 had started accession egotiations), (e) non-EU members (i.e. countries that in the ‘90s were not yet candidates to EU). The four aspects of real convergence refer respectively to: (i) convergence in labour productivity, (ii) convergence in economic structures (on the basis of synthetic indices of specialisation), (iii) trade integration with the EU, i.e. ratios (to gdp) of trade (imports and exports) with the EU27 group, (iv) output correlations, which are relevant to assess the short-run business cycles synchronisation. From this analysis – mainly based on panel regressions – we can infer whether nominal convergence, for example the satisfaction of Maastricht’s criteria by EMU’s countries, may help in achieving real convergence. Some conclusions might be drawn also with reference to the hypothesis of “endogeneity of OCA’s criteria”.
Policy conclusions may be particularly relevant for Eastern EU countries in their process of convergence toward the EMU