Wiener Institut für
Internationale
Wirtschaftsvergleiche
The Vienna Institute for
International Economic
Studies
www.wiiw.ac.at
A comparative perspective:
Convergence, integration and spillovers
Robert Stehrer
The Vienna Institute for International Economic Studies – wiiw
Rahlgasse 3, A-1060 Vienna
www.wiiw.ac.at
Productivity: A challenge to the Slovenian economy
14 June 2017, Ljubljana, Slovenia.
2
Overview
 EU-CEE convergence process
 EU specialisation patterns
 Spillovers matter

3
GDP per capita at PPP, 2016, EU28=100
100
90
80
70
60
50
40
30
20
10
0
Sources: wiiw Annual Database incorporating national and Eurostat statistics, wiiw estimates, Eurostat, EC - Winter Report 2017.

4
GDP per capita at PPP, EU28=100
Slovenia
EU-CEE
Leader
100
90
80
70
60
50
40
30
20
10
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
0
Sources: wiiw Annual Database incorporating national and Eurostat statistics, wiiw estimates, Eurostat, EC - Winter Report 2017.

5
GDP per capita at PPP, 1991=1
Slovenia
EU-CEE
EU-28 average
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Sources: wiiw Annual Database incorporating national and Eurostat statistics, wiiw estimates, Eurostat, EC - Winter Report 2017.

6
Convergence process derailed?
2000-2007
2012-2016
4.5
4.5
Estonia
4.0
4.0
3.5
Lithuania
Latvia
3.5
3.0
3.0
Romania
2.5
Slovakia
Croatia
Bulgaria EU-CEE
2.0
2.5
Czech
Republic
1.5
Hungary
Poland
1.0
0.5
Cyprus
Slovenia
Malta
20
40
60
80
Hungary
EU-CEE
Slovakia
Poland
Bulgaria
Slovenia
Estonia
0.5
Croatia
0.0
-0.5
-0.5
0
1.5
1.0
y = -0.0315x + 3.5396
R² = 0.3536
0.0
Czech
Lithuania
Republic
Latvia
Romania
2.0
100
0
20
40
60
80
Sources: wiiw Annual Database incorporating national and Eurostat statistics, wiiw estimates, Eurostat, EC - Winter Report 2017.

100
7
Convergence process derailed?
2009-2016
2011-2016
2010-2016
4.5
4.5
4.5
3.5
3.5
Lithuania
2.5
1.5
Latvia
Estonia
Poland
Romania
Slovakia
EU-CEE
Czech
Hungary
Bulgaria
Republic
2.5
Slovenia
0.5
0.5
Croatia
1.5
-0.5
3.5
Lithuania
Latvia
Estonia
Czech
Romania
Poland
EU-CEE Republic
Hungary
Slovakia
Bulgaria
Croatia
1.5
Slovenia
0.5
-0.5
0
20
40
60
80
100
2012-2016
-0.5
0
20
40
60
80
100
0
2013-2016
4.5
4.5
3.5
3.5
3.5
1.5
0.5
Czech
Republic
Romania
Latvia Slovenia
Lithuania
Poland
Bulgaria EU-CEE
Hungary
Slovakia
2.5
Czech
Lithuania
Republic
Latvia
Romania
Hungary
EU-CEE
Slovakia
Poland
Bulgaria
Slovenia
Estonia
1.5
0
20
40
60
80
100
60
80
100
Czech
EU-CEE
Poland Republic
Bulgaria Latvia Slovakia
HungarySlovenia
Croatia Lithuania
1.5
Estonia
0.5
-0.5
-0.5
40
Romania
2.5
Croatia Estonia
0.5
Croatia
20
2014-2016
4.5
2.5
Lithuania
Latvia
Czech
Romania
Republic
EU-CEE
Poland
Estonia
Slovakia
Bulgaria Hungary
Slovenia
Croatia
2.5
-0.5
0
20
40
60
80
100
0
20
40
60
80
Sources: wiiw Annual Database incorporating national and Eurostat statistics, wiiw estimates, Eurostat, EC - Winter Report 2017.

100
8
 Convergence process derailed?
 Macro-economic turbulences
 Conditional convergence
 Middle-income trap

9
 Role of productivity driving industries
 Manufacturing
 Business services
 European patterns of specialisation and spillovers

10
1.75
2
Central European Manufacturing Core
IRL
1.5
HUN
CZE
ROU
1.25
DEU
SVNSVK
FIN
1
AUT
POL
BGR
SWE
ITA
LTU
Slovenia
.75
BEL
EST
NLD
PRT
ESP MLT
DNK
.5
GRC FRA
GBR
LVA
CYP LUX
.5
.75
1
1.25
1.5
relative manufacturing index 1995
1.75
2
Source: wiiw Handbook, 2014
Source: WIOD, wiiw-calculations (FIW Research Report 2014: The Central European Manufacturing Core)
Note: The relative manufacturing specialisation index is the ratio of Member State’ share in EU wide manufacturing
value added over their share in EU GDP. A higher index value indicates stronger specialisation in manufacturing.

11
Specialisation dynamics across Europe
Source: Stehrer et al. (2014), Study on the relation between industry and services in terms of productivity
and value creation, Study for the Directorate-General for Enterprise and Industry, 2nd interim report.

12
R&D Stocks by Sector of Countries Covered in the OECD
ANBERD Dataset
1.00E+09
8.00E+08
6.00E+08
4.00E+08
2.00E+08
Own R&D stock in 1995
Change in own R&D stock, 1995-2005

20
65t67
36t37
50t52
17t19
21t22
26
25
60t64
15t16
27t28
23
29
24
71t74
-2.00E+08
34t35
0.00E+00
30t33
Estimated R&D Stocks in millions US$
1.20E+09
13
Share of G5 in domestic R&D stock by industry
(in % of total R&D expenditures of ANBERD)
G5: DEU, FRA, GBR, JPN, USA,

14
Role of business services
(Use of BS in manufacturing in % of gross output; NACE Rev. 2 classification
Source: Stehrer et al. (2014), Study on the relation between industry and services in terms of productivity and value
creation, Study for the Directorate-General for Enterprise and Industry, Final report..

15

Source: Stehrer et al. (2014), Study on the relation between industry and services in terms of productivity and value
creation, Study for the Directorate-General for Enterprise and Industry, Final report..
16
Spillover effects matter
 Integration into EU-VCs had positive impacts on growth and
productivity
 Productivity and R&D spillovers have contributed significantly
to productivity growth in CEECs
 Positive impacts on productivity growth from imported
business services
 Impact of spillover also dependent on absorptive capacities of
countries

17
Conclusions
 Convergence process derailed but maybe re-emerging (but
less strong)
 Position in European (Global) value chain and division of
labour matters (e.g. EU manufacturing core)
 Spillover effects from international integration matter
 ‚Allocative efficiency‘ must be seen
- in an international context (position in value chains and
upgrading potentials)
- as a dynamic concept (technology and knowledge
upgrading, patterns of specialisation)
