East Central European Regional Club Convergence in the New Millenium

The study analyses economic convergence in the NUTS3 regions of eight East Central European (ECE) countries (Poland, Czechia, Slovakia, Hungary, Slovenia, Croatia, Romania and Bulgaria) that joined the European Union in 2004. In our analysis, we reject the hypothesis of global income convergence for the period 2001–2019, arguing for the presence of geographical convergence clubs with different steady states. We also attempt to describe the factors that influence the formation of these clubs. In our analysis, we first used the log t-test to classify the 201 regions of ECE into seven convergence clubs with own steady states. The results indicate a 'multi-speed' East Central Europe in terms of income, which shows and predicts strong spatial polarisation and persistence across the region. Our further results suggest that the initial and structural factors impacting club formation are mainly influenced by initial development, changes in the active population, agglomeration characteristics and spatial interactions and, finally, economic structure. The paper demonstrates the validity of the East Central European club convergence hypothesis for the first two decades of the new millennium.