Differentiation in economic development of Central and Eastern European countries and regions

Abstract

The object of this article are processes of economic development in Central and Eastern Europe (CEE). The purpose of the article was to identify the changes in the dynamics and in the level of economic development of countries and regions of CEE. This was examined on the basis of analyzes of GDP indicators (real GDP growth rate, GDP per capita). The results show that CEE countries are still at a relatively low level of development in comparison to the EU-15, but their relatively strong economic growth and modernization of the economic structure gradually eliminate the difference. This proves that in case of the CEE countries take place the external convergence processes. However, drivers of economic growth and development in CEE countries are primarily capital regions with a high concentration of businesses and financial institutions, as well as highly industrialized regions which level of economic development in recent years has improved significantly compared to the EU average. Simultaneously, the dynamics of development of other regions in the CEE countries was not such impressive what caused deepening interregional differentiations in each country of CEE. It shows that within CEE countries divergence processes take place. The results of the study can be utilised by cohesion policy. In conditions of external convergence and internal divergence of CEE countries, cohesion policy should support processes of regional development in CEE by financing investment projects in the most underdeveloped regions in order to enable them to use their endogenous resources. Cohesion policy should also support regions in which living conditions have been deteriorating. Extremely important is building the foundations of a harmonious regional development in each country of CEE which means supporting their most delayed regions.