Beta convergence in the export volumes in EU countries

Abstract

This paper investigates the β -convergence in the trade volumes of EU countries. We focus on a different approach to convergence analysis, namely trade's contribution to convergence. Neoclassical growth theory assumes there will be a convergence process among the economies, even in absence of trade. Trade relations might, however, speed up this process. We use panel data for trade volumes of 26 EU countries and test the presence and the speed of β -convergence pattern on SITC sectors 6 and 7 trade categories. The implied speeds of unconditional convergence of the export volume per capita are about 0.05-0.06 (implying half-lives around 12-13 years). When accounting for the country- or time-period specific effects, we can observe relatively high convergence rates (with half-lives somewhere around 2-4 years).

Keywords

• trade
• convergence
• export