Recent research has suggested that unconditional convergence no longer exists. Thus,
this study examined the income convergence among 11 Central and Eastern European (CEE-11)
countries that joined the European Union in/after 2004 and Europe's four largest economies
(Germany, France, the United Kingdom, and Italy) by using panel data from 1994 to
2019. For this purpose, it employed the beta (β) and sigma (σ) convergence approaches
to analyze the dynamics of economic growth. Based on the findings, in 1996, the four
largest European economies had a higher capital–labour ratio and GDP growth than CEE-11.
However, by 2019, the patterns reversed. As for the regression results, there was
strong evidence of unconditional β convergence between 1999 and 2019, at an annual
rate of 11%, with the σ convergence and the fixed effect models further supporting
income convergence. Moreover, although brief divergence occurred during various financial
crises, the overall trend was a significant convergence of CEE-11 with Europe's four
largest economies through higher relative GDP growth. This study contributes to the
economic growth theory of income convergence across countries and highlights the importance
of regional integration in enabling sustainable catch-up growth.
