Promoting social cohesion and convergence

EU convergence: Geographical dimension, impact of COVID-19 and the role of policy

Report
Published
22 March 2023
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Executive summary
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Author(s): 
Alcidi, Cinzia; Corti, Francesco; Postica, Doina; Di Salvo, Mattia; Maftei, Anamaria

Key findings

  • Despite the EU regaining positive momentum following the economic crisis of 2008–2013, EU convergence had not reached its pre-crisis pace by 2020, even though economic, social and institutional gaps among the EU Member States narrowed steadily until right before the outbreak of the COVID-19 pandemic.
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  • Despite the EU regaining positive momentum following the economic crisis of 2008–2013, EU convergence had not reached its pre-crisis pace by 2020, even though economic, social and institutional gaps among the EU Member States narrowed steadily until right before the outbreak of the COVID-19 pandemic.
  • At regional level, there was upward convergence in the EU between 2004 and 2019, although this took place at a slower pace than at country level. This trend was mainly driven by central and eastern European Member States experiencing fast growth of their capital regions. However, southern European regions suffered economic stagnation and a more general deterioration in social and institutional conditions, underscoring the need for upward convergence to remain at the core of EU policy action.
  • The COVID-19 crisis had a significant impact on EU convergence, and although it did not reverse the trend of strong upward convergence, it did accelerate patterns of divergence that were emerging, such as increasing differences in GDP per capita. This underlines that it will be critical for the EU to have policy tools that adapt to large economic shocks and to deep social changes linked to the EU’s green and digital transition.
  • The Recovery and Resilience Facility (RRF) is the EU’s unprecedented response to drive the transformation of Member States’ economies after the COVID-19 pandemic. An analysis of the RRF plans of four countries reveals that this key instrument is contributing to reforms and investments that would have otherwise remained an aspiration, and although convergence is not in itself an objective of the RRF, it is a potential by-product of Member States’ recovery plans.
  • The implementation of the RRF is emerging as an important basis for forward thinking on alternative ways to support upward convergence. The new findings explore various options for achieving this goal, such as further strengthening traditional cohesion policies, building a centralised reform–investment model or developing an integrated approach that combines stronger cohesion policies with a centralised reform–investment model. These will be key elements for EU policymakers to consider as part of the debate on supporting economic and social convergence.
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Abstract

Historically, the political debate around EU convergence has gathered momentum in the aftermath of a crisis. In the wake of the COVID-19 pandemic, the purpose of this report is to take stock of the last two decades of convergence trends. The study begins with an empirical investigation of economiRead more

Historically, the political debate around EU convergence has gathered momentum in the aftermath of a crisis. In the wake of the COVID-19 pandemic, the purpose of this report is to take stock of the last two decades of convergence trends. The study begins with an empirical investigation of economic, social and institutional convergence over 2004–2019 at both Member State and regional levels. The analysis is then extended to 2020 and 2021 to examine the impact of the pandemic. The study confirms overall upward convergence, driven by the central and eastern European Member States, which the pandemic appears to have slowed but not stopped. The analysis of trends is followed by an assessment of the potential impact of the Recovery and Resilience Facility (RRF) on convergence and a discussion of different policy scenarios to support upward convergence, based on the current experience with the RRF and the ongoing debate about the future of EU cohesion policy.

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Formats

  • Report

    Number of pages: 
    104
    Reference no.: 
    EF22016
    ISBN: 
    978-92-897-2312-1
    Catalogue no.: 
    TJ-07-23-025-EN-N
    DOI: 
    10.2806/706661
    Permalink: 
    eurofound.link/ef22016
    Catalogue info

    EU convergence: Geographical dimension, impact of COVID-19 and the role of policy

    Author(s): 
    Alcidi, Cinzia; Corti, Francesco; Postica, Doina; Di Salvo, Mattia; Maftei, Anamaria
    Topics: 
    Social policies; Promoting social cohesion and convergence; COVID-19; Labour market policies; Measuring convergence; Inequality

    Formats

    Cite this publication: 

    Eurofound (2023), EU convergence: Geographical dimension, impact of COVID-19 and the role of policy, Publications Office of the European Union, Luxembourg.

  • Executive summary

    Reference no.: 
    EF22016
    Catalogue info

    EU convergence: Geographical dimension, impact of COVID-19 and the role of policy

    Author(s): 
    Eurofound

    Available for download in 1 language

    Download

  • Tables and graphs

    The report contains the following lists of tables and figures.

    List of tables

    Table 1: Economic, social and institutional indicators used in the convergence analysis
    Table 2: Unconditional beta-convergence in the EU, by indicator and time period, 2004–2019
    Table 3: Conditional convergence in income inequality, 2004–2008, 2008–2013 and 2013–2019
    Table 4: APE on probability of convergence in income inequality
    Table 5: Conditional convergence in the AROPE rate, 2005–2008, 2008–2013 and 2013–2019
    Table 6: APE on the probability of convergence in the AROPE rate
    Table 7: WGI pairwise correlations
    Table 8: Unconditional beta-convergence in the NUTS 2 regions, by indicator and period, 2004–2019

    Table A1: Income inequality convergence (2004–2008, 2008–2013, 2013–2019)
    Table A2: AROPE conditional convergence (2005–2008, 2008–2013, 2013–2019)
    Table A3: Performance of four countries in relation to the European Pillar of Social Rights Social Scoreboard 2020

    List of figures

    Figure 1: Beta-convergence – GDP per capita (PPS), EU27, 2004–2019
    Figure 2: Sigma-convergence – GDP per capita (PPS), in the EU27 and by geographical cluster, 2004–2019
    Figure 3: Beta-convergence – adjusted household disposable income per capita (PPS), EU27, 2009–2019
    Figure 4: Sigma-convergence – adjusted household disposable income per capita (PPS), in the EU27 and by geographical cluster, 2009–2019
    Figure 5: Beta-convergence – income quintile share ratio, EU27, 2004–2019
    Figure 6: Sigma-convergence – income quintile share ratio, in the EU27 and by geographical cluster, 2004–2019
    Figure 7: Predicted probabilities of convergence in income inequality, by value added in the agricultural sector, in the EU27 and by geographical cluster
    Figure 8: Beta-convergence – compensation of employees per hour worked, EU27, 2004–2019
    Figure 9: Sigma-convergence – compensation of employees per hour worked, in the EU27 and by geographical cluster, 2004–2019
    Figure 10: Beta-convergence – employment rate, EU27, 2004–2019
    Figure 11: Sigma-convergence – employment rate, in the EU27 and by geographical cluster, 2004–2019
    Figure 12: Beta-convergence – unemployment rate, EU27, 2004–2019
    Figure 13: Sigma-convergence – unemployment rate, in the EU27 and by geographical cluster, 2004–2019
    Figure 14: Beta-convergence – NEET rate, EU27, 2004–2019
    Figure 15: Sigma-convergence – NEET rate, in the EU27 and by geographical cluster, 2004–2019
    Figure 16: Beta-convergence – early school-leavers rate, EU27, 2004–2019
    Figure 17: Sigma-convergence – early school-leavers rate, in the EU27 and by geographical cluster, 2004–2019
    Figure 18: Beta-convergence – AROPE rate, EU27, 2005–2019
    Figure 19: Sigma-convergence – AROPE rate, in the EU27 and by geographical cluster, 2005–2019
    Figure 20: Predicted probabilities of convergence in the AROPE rate by income inequality levels, in EU27 and by geographical cluster
    Figure 21: Beta-convergence – government effectiveness, EU27, 2004–2019
    Figure 22: Sigma-convergence – government effectiveness, in the EU27 and by geographical cluster, 2004–2019
    Figure 23: Sigma-convergence in quality of governance indicators, 2004–2019
    Figure 24: Beta-convergence – GDP per capita, NUTS 2 regions, 2004–2019
    Figure 25: GDP per capita in NUTS 2 regions – transition maps and matrix and distribution of classes, 2004–2008
    Figure 26: GDP per capita in NUTS 2 regions – transition map and matrix and distribution of classes, 2008–2013
    Figure 27: GDP per capita in NUTS 2 regions – transition map and matrix and distribution of classes, 2013–2019
    Figure 28: GDP per capita growth (%) in CEE countries, by region, 2004–2019
    Figure 29: Beta-convergence – employment rate, NUTS 2 regions, 2004–2019
    Figure 30: Employment rate in NUTS 2 regions – transition map and matrix and distribution of classes, 2004–2008
    Figure 31: Employment rate in NUTS 2 regions – transition map and matrix and distribution of classes, 2008–2013
    Figure 32: Employment rate in NUTS 2 regions – transition map and matrix and distribution of classes, 2013–2019
    Figure 33: Beta-convergence – EQI, NUTS 2 regions, 2010–2019
    Figure 34: EQI in NUTS 2 regions – transition map and matrix and distribution of classes, 2010–2013
    Figure 35: EQI in NUTS 2 regions – transition map and matrix and distribution of classes, 2013–2019
    Figure 36: Beta-convergence – GDP per capita, EU27, 2013–2019 and 2013–2021
    Figure 37: Sigma-convergence – GDP per capita (€), EU27, 2004–2021
    Figure 38: Beta-convergence – employment rate, EU27, 2013–2019 and 2013–2021
    Figure 39: Sigma-convergence – employment rate (%), EU27, 2004–2021
    Figure 40: Beta-convergence – government effectiveness, EU27, 2013–2019 and 2013–2020
    Figure 41: Sigma-convergence – government effectiveness, EU27, 2004–2020
    Figure 42: Total number of social reforms in Croatia, Germany, Italy and Spain, by policy area
    Figure 43: Breakdown of investment by policy areas in Croatia, Germany, Italy and Spain (% of total RRF funds)

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Research carried out prior to the UK’s withdrawal from the European Union on 31 January 2020, and published subsequently, may include data relating to the 28 EU Member States. Following this date, research only takes into account the 27 EU Member States (EU28 minus the UK), unless specified otherwise.

Part of the series

  • COVID-19

    Eurofound’s work on COVID-19 examines the far-reaching socioeconomic implications of the pandemic across Europe as they continue to impact living and working conditions. A key element of the research is the e-survey, launched in April 2020, with five rounds completed at different stages during 2020, 2021 and 2022. This is complemented by the inclusion of research into the ongoing effects of the pandemic in much of Eurofound’s other areas of work.

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