Academic journal article E+M Ekonomie a Management

Growth Disparities among Regions of the Visegrad Group Countries: An Evidence of Their Extent and Nature

Academic journal article E+M Ekonomie a Management

Growth Disparities among Regions of the Visegrad Group Countries: An Evidence of Their Extent and Nature

Article excerpt

Introduction

Uneven regional development is generally understood as a problem of growing importance. Leaders of the European Union (EU) aim to actively address this issue, which can be manifested, for example, by the fact that one of the pivotal long-term and ongoing goals of EU regional policy is to combat regional disparities, which is directly based on Article 174 of the consolidated Treaty on the Functioning of the European Union (EU, 2010). In 2004 the EU extended eastwards, which further enhanced the importance of EU regional policy. Regions of the newly integrated and transformed former Eastern bloc countries had been less developed when compared to the existing EU 15 regions (with the exception of the capital city regions of Bratislava, Budapest and Prague). In terms of GDP per capita, as an indicator of economic performance, many of them have been on the same level as the least developed regions across the EU (Applova, 2014; Eurostat, 2015). These regions have not only become eligible recipients for funding from the European structural funds and from the Cohesion fund, but also the de facto platform for reviewing the effectiveness of redistribution mechanisms in terms of fulfilling the objectives of cohesion policy and partly also the efficiency of the entire European integration project. This fact has been documented by numerous recent studies that have focused on the progress of less developed countries and regions, as well as their inclusion in the EU (Dobrinsky & Havlik, 2014; Cuaresma, Oberhofer, & Vincelette, 2014; Forgo & Jevoak, 2015; Zdrazil, 2014).

This paper focuses on the Visegrad Group countries (the Czech Republic, Hungary, Poland, and Slovakia) that belong among the transformed economies of the former Eastern Bloc and whose regions can be generally regarded as less developed when compared with the regions of the traditional EU countries (EU 15). The aim of this paper is to assess the development of disparities in the economic performance among regions of the Visegrad Group countries, to identify the way in which economic growth factors determine these disparities, and partly to assess whether the integration of Visegrad Group countries into the European Union has affected the development of regional disparities in these countries.

1. A Brief Review of Literature

Of course, the economic theory says that the effects of economic integration are very ambiguous (Baldwin & Wyplosz, 2006; Jovanovich, 2005; Krugman & Venables, 1990). However, most authors do agree that the liberalization of the economic environment, in connection with integration, does at least develop the market, and increase pressure to achieve efficiency and higher living standards. Thanks to this it can generally be regarded as a beneficial phenomenon (Balassa, 1961; Farek & Kraft, 2006; Machlup, 1977). According to some studies the effects resulting from this integration are so unequivocally positive for the participating regions that the fact is indisputable (Olofsdotter & Torstensson, 1998).

On the basis of the standard neoclassical model (Solow, 1956; Solow, 1957) and economic integration theory (Balassa, 1961), relatively less developed countries joining more advanced community should result in the acceleration of the less developed countries' growth and thus their convergence with the more developed countries. The argument in favour of convergence has been derived from neoclassical assumptions, stating that the liberalization of trade and mobility of production factors assumes that the balancing mechanism of price levels and income, or the convergence of (national or regional) economies will be activated (Martin Velazquez & Funck, 2001), both of in terms of nominal and real convergence. It is therefore essentially a classic convergence hypothesis, on the basis of which notional grouping (convergence clubs) arise among regions, within which there is a significant convergence achieved in terms of productivity, and with that living standards (Baumol, Nelson, & Wolff, 1994). …

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