Convergence of EU countries according to economic complexity

Lenka Maličká

Article ID: 3123
Vol 8, Issue 3, 2024

VIEWS - 250 (Abstract) 155 (PDF)


The economic complexity approach presents a shift from quantitative to qualitative measures of economic performance, while economic complexity refers to the accumulation of know-how. Economic complexity is considered a predictor of economic growth and research evidences a positive relationship between economic complexity and economic growth. In the EU countries, economic convergence is observed. Hence the question of economic complexity convergence arises, too. The paper aims to analyze the convergence of 27 EU countries considering their economic complexity from 1999 to 2021 computing the beta convergence. Using the Barro-type regressions, the econometric estimations focus on four indices of economic complexity—the economic complexity index published by Harvard’s Growth Lab, and economic complexity indices on research, trade, and technology published by the Observatory of Economic Complexity. The absolute beta convergence is observed in the EU except for the economic complexity index referring to trade. When including the dummy referring to the location of EU countries in the West or East of the EU considering their wealth, the conditional beta convergence is observed except for the trade-economic complexity index, again. When altering the condition of location by the GDP per capita and other controls, the conditional beta convergence of economic complexity in the EU is observed when estimating both fixed-effect models and dynamic panel data models based on the system generalized method of moments (GMM) estimator.


economic complexity; economic complexity index; beta convergence; European Union

Full Text:



Adam A, Garas A, Katsaiti M, et al. (2023). Economic complexity and jobs: An empirical analysis. Economics of Innovation and New Technology, 32(1): 25-52.

Allington NF, McCombie JS (2007). Economic growth and beta-convergence in the East European Transition Economies. In: Arestis P, Baddeley M, McCombie JSL (editors). Economic Growth: New Directions in Theory and Policy. Edward Elgar: Cheltenham, UK, Northampton, MA, USA, 200-222.

Avom D, Ndoya H (2022). Does country stability spur economic complexity? Evidence from panel data. Applied Economics Letters. doi: 10.1080/13504851.2022.2133890

Balland P-A, Rigby, D (2017). The Geography of Complex Knowledge. Economic Geography 93(1): 1-23. doi: 10.1080/00130095.2016.1205947

Barro RJ, Lee JW (1994). Sources of Economic Growth. Carnegie-Rochester Conference Series on Public Policy 40(1): 1-46.

Barro RJ, Sala-i-Martin X (1992). Convergence. Journal of Political Economy 100(2): 223–51. doi: 10.1086/jpe.1992.100.issue-2

Beyaert C, García-Solanes M (2014). Output gap and non-linear economic convergence. Journal of Policy Modeling 36(1): 121-135. doi: 10.1016/j.jpolmod.2013.11.001

Blundell R, Bond S (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics 87: 115–143.

Borsi MT, Metiu N (2015). The evolution of economic convergence in the European Union. Empirical Economics 48: 657–681. doi:10.1007/s00181-014-0801-2

Díaz Dapena A, Rubiera-Morollon F, Paredes D (2019). New Approach to Economic Convergence in the EU: A Multilevel Analysis from the Spatial Effects Perspective. International Regional Science Review 42(3–4): 335–367.

Cabral R, Castellanos-Sosa FA (2019). Europe’s income convergence and the latest global financial crisis. Research in Economics 73(1): 23–34. doi: 10.1016/j.rie.2019.01.00

Capello R, Nijkamp P (2009). Introduction: Regional growth and development theories in the twenty-first century—Recent theoretical advances and future challenges. In: Capello R, Nijkamp P (editors). Handbook of Regional Growth and Development Theories. Cheltenham: Elgar. pp. 1–16.

Chapsa X, Tsanana E, Katrakilidis C (2015). Growth and Convergence in the EU-15: More Evidence from the Cohesion Countries. Procedia Economics and Finance 33: 55–63. doi: 10.1016/S2212-5671(15)01693-7

Cieślik A, Wciślik DR (2020). Convergence among the CEE-8 economies and their catch-up towards the EU-15. Structural Change and Economic Dynamics 55: 39–48. doi: 10.1016/j.strueco.2020.07.006

Colak O (2015). Convergence Revisited: Case of EU and Eastern Europe. Regional Science Inquiry 7(1): 69–81

Eurostat (2023). Eurostat database. European Commission. Luxembourg. Available online: (accessed on 25 August 2023).

Fawaz F, Rahnama-Moghadamm M (2019). Spatial dependence of global income inequality: The role of economic complexity. The International Trade Journal 33(6): 542–554. doi: 10.1080/08853908.2018.1535336

FitzGerald J (2013). Financial crisis, economic adjustment and a return to growth in the EU. Revue de l'OFCE, 127: 275–302. doi: 10.3917/reof.127.0275

Goecke H, Huether M (2016). Regional Convergence in Europe. Intereconomics 51(3): 165–171.

Hartmann D, Guevara M R, Jara-Figueroa C, Aristar´an M, Hidalgo CA (2017). Linking economic complexity, institutions, and income inequality. World Development, 93:75–93.

Harvard’s Growth Lab (2023). The Atlas of Economic Complexity. Available online: (accessed on 25 August 2023).

Hausmann R, Hidalgo CA, Bustos S et al. (2011). The Atlas of Economic Complexity: Mapping Paths to Prosperity. Available online: (accessed on 12 August 2023).

Hausmann R, Hidalgo CA, Bustos S, et al. (2014). The Atlas of Economic Complexity: Mapping Paths to Prosperity. Cambridge, MA: MIT Press.

Hidalgo CA, Hausmann R (2009). The Building Blocks of Economic Complexity. Proceedings of the National Academy of Sciences 106(26): 10570–10575.

Horváth, D, Maličká, L, Gazda, V (2013). Towards a Proability Transition Matrix Model of the Tax Competition. Economic Computation and Economic Cybernetics Studies and Research 47(4): 1–14.

Islam N (1995). Growth Empirics: A Panel Data Approach. The Quarterly Journal of Economics 110(4): 1127–1170

Kalotay K (2017). Post-crisis Crossroads for FDI in CEE. In: Szent-Iványi B (editor). Foreign Direct Investment in Central and Eastern Europe. Studies in Economic Transition. Palgrave Macmillan, Cham. doi: 10.1007/978-3-319-40496-7_2

Khan H, Khan U, Khan MA (2020). Causal Nexus between Economic Complexity and FDI: Empirical Evidence from Time Series Analysis. The Chinese Economy 53(5): 374–394. doi: 10.1080/10971475.2020.1730554

Le TTM, Niem LD, Kim T (2022). Economic Complexity and Economic Development in ASEAN Countries. International Economic Journal 36(4): 556–568. doi: 10.1080/10168737.2022.2142643

Makrevska Disoska E, Tevdovski D, Toshevska-Trpchevska K, et al. (2020). Evidence of innovation performance in the period of economic recovery in Europe. Innovation: The European Journal of Social Science Research 33(3): 280–295. doi: 10.1080/13511610.2018.1524288

Mao Z, An Q (2021). Economic Complexity Index and Economic Development Level under Globalization: An Empirical Study. Journal of Korea Trade 25(7): 41–55. doi: 10.35611/jkt.2021.25.7.41

Matkowski Z, Próchniak M (2007). Economic Convergence Between the CEE-8 and the European Union. Eastern European Economics 45(1): 59–76. doi: 10.2753/EEE0012-8775450103

Mendez C (2020). Classical Sigma and Beta Convergence Analysis in R: Using the REAT 2.1 Package. R Studio/RPubs. Available online: (accessed on 25 August 2023).

Monfort M, Cuestas JC, Ordóñez J, (2013). Real convergence in Europe: A cluster analysis. Economic Modelling 33: 689-694. doi: 10.1016/j.econmod.2013.05.015

Monfort M, Ordóñez J, Sala H (2018). Inequality and Unemployment Patterns in Europe: Does Integration Lead to (Real) Convergence? Open Economies Review 29: 703–724. doi: 10.1007/s11079-018-9488-x

Moonen T, Cark G, Nunley J (2019). The Story of Your City: Europe and its Urban Development, 1970 to 2020. European Investment Bank. Luxembourg. doi:10.2867/460398

Nadoveza Jelić O, Gardijan Kedžo M. (2018). Efficiency vs effectiveness: An analysis of tertiary education across Europe. Public Sector Economics 42 (4): 381–414. doi: 10.3326/pse.42.4.2

Nagy SG, Šiljak D (2022). Is the European Union still a convergence machine? Acta Oeconomica 72(1): 47–63. doi:10.1556/032.2022.00003

Pina Á, Sicari P (2021). Enhancing regional convergence in the European Union. OECD. OECD Economics Department Working Papers No. 1696. doi: 10.1787/253dd6ee-en

Rapacki R, Próchniak M (2019). EU Membership and Economic Growth: Empirical Evidence for the CEE Countries. The European Journal of Comparative Economics, 16(1): 3–40.

Sala-i-Martin X (1996). The Classical Approach to Convergence Analysis. The Economic Journal 106(437): 1019–1036. doi:10.2307/2235375

Schetter U (2021). A Structural Ranking of Economic Complexity, Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics. ZBW—Leibniz Information Centre for Economics, Kiel, Hamburg. Available online: (accessed on 25 August 2023).

Simoes AJG, Hidalgo CA (2011). The Economic Complexity Observatory: An analytical tool for understanding the dynamics of economic development. In: Workshops at the Twenty-Fifth AAAI Conference on Artificial Intelligence 2011; 24 August 2011; San Francisco, USA.

Soyyiğit S, Michalski B (2022). The Economic Complexity of the Visegrád Countries and the Role of Trade with Germany. Central European Economic Journal 9(56): 219–236. doi:10.2478/ceej-2022-0013.

Observatory of Economic Complexity (2023). Multidimensional economic complexity rankings. Available online (accessed on 25 August 2023).

Özgüzer GE, Oğuş-Binatlı A (2016). Economic Convergence in the EU: A Complexity Approach, Eastern European Economics 54(2): 93–108. doi: 10.1080/00128775.2015.1126787

Paulus A, Figari F, Sutherland H (2017). The design of fiscal consolidation measures in the European Union: distributional effects and implications for macro-economic recovery. Oxford Economic Papers 69(3): 632–654. doi: 10.1093/oep/gpw054

Pinheiro FL, Balland P–A, Boschma R, Hartmann D (2022). The dark side of the geography of innovation: relatedness, complexity and regional inequality in Europe. Regional Studies. doi: 10.1080/00343404.2022.2106362

Pugliese E, Tacchella A (2021). Economic Complexity Analytics: Country factsheets. Publications Office of the European Union, Luxembourg. doi: 10.2760/368138

Strielkowski W, Höschle F (2016). Evidence for economic convergence in the EU: The analysis of past EU enlargements. Technological and Economic Development of Economy 22(4): 617–630. doi: 10.3846/20294913.2014.890138

The World Bank (2023). World Bank Open Data. Available online: (accessed on 25 August 2023).

UNESCO Institute for Statistics (2023). United Nations Educational, Scientific and Cultural Organization. Available online: (accessed on 25 August 2023).

Vojinović B, Oplotnik ŽJ, Próchniak M (2010). EU enlargement and real economic convergence, Post-Communist Economies 22(3): 303–322. doi: 10.1080/14631377.2010.498681

Yalta AY, Yalta T (2021). Determinants of Economic Complexity in MENA Countries. Journal of Emerging Economies and Policy 6(1): 5–16.

Zhu S, Li R (2017). Economic complexity, human capital and economic growth: empirical research based on cross-country panel data. Applied Economics 49(38): 3815–3828. doi: 10.1080/00036846.2016.1270413



  • There are currently no refbacks.

Copyright (c) 2024 Lenka Maličká

License URL:

This site is licensed under a Creative Commons Attribution 4.0 International License.