Empirical Observations on Economic Convergence across the Western Balkans – How Long Will EU-Catch up Take?

This paper investigates income convergence between the Western Balkans and the European Union over the period 2000–2023, focusing on the role of structural and institutional factors. Using panel data, we estimate a conditional β-convergence model to examine the speed of convergence and the contribution of selected determinants of economic growth. The results provide evidence of income convergence, although the estimated convergence speed points to a prolonged adjustment process. At the estimated rate, halving the income gap would require slightly more than fifteen years. Among the explanatory variables, gross fixed capital formation is the only statistically significant determinant across all specifications, while foreign direct investment exhibits marginal statistical significance. Institutional variables show weak and inconsistent statistical significance across specifications. The findings highlight the role of capital formation in the convergence process and suggest that income disparities between the Western Balkans and the European Union are likely to persist under the estimated convergence dynamics.