Nominal and Real Convergence of European Union and Western Balkan Countries: A Panel Data Analysis
Purpose: In view of the fact that the economic future of the region is the European Union, this research paper studies the economic progress of the Western Balkan countries towards the EU, based on the performance of macroeconomic indicators. The purpose of the research paper is to analyse the macroeconomic indicators of the Western Balkan countries, the assessment of the economic growth per capita during the period 2000-2020, the expectations for the future, and the measurement of the economic progress of such countries towards the European path. Design/Methodology/Approach: Through panel data using several econometric models, the consideration of the Maastricht criteria in achieving convergence between the Western Balkan countries and the European Union countries, is examined. Using the indicator of economic growth and the GDP per capita in purchasing power parity, the direct significance of the Maastricht criteria in the real convergence between these countries is measured. Findings: Empirical results showed that there is a relationship between real and nominal convergence, with the nominal convergence being considered a prerequisite for achieving real convergence. Practical Implications: The agenda for the idea of European expansion should become a genuine economic policy based on economic parameters measured and analyzed with research and scientific methods. As the study highlights different aspects of economic growth promoters, the quality of institutions is one of the critical indicators that mobilize macroeconomic factors to ensure economic growth in WB countries. Originality/Value: This paper provides a fine scientific and research example in analyzing the convergence process. The results can serve as a good guide for policymakers in navigating the right path to EU membership.