Economic Growth and Income Convergence in Transition : Evidence from Central Europe

The paper examines the evolution of income per capita for a sample of high-income transition countries in the period 1991-2007. The analysis focuses on the dynamics of income per capita convergence throughout the period. We review patterns of income dispersion in Central Europe in a historical perspective and examine the dynamics of convergence over time. We present the model of beta and sigma convergence in augmented Solow model with human capital accumulation. Our evidence suggests that high-income transition countries experienced a period of robust convergence as the income per capita differential, relative to the U.S level, diminished substantially over time. The increase in the stock of human capital contributed substantially to the speed of real convergence