Examination of European Union economic cohesion: A cluster analysis approach

In the past years majority of EU members experienced the highest economic decline in their modern history, but impacts of the global financial crisis were not distributed homogeneously across the continent. The aim of the paper is to examine a cohesion of European Union (plus Norway and Iceland) in terms of an economic development of its members from the 1st of January 2008 to the 31st of December 2012. For the study five economic indicators were selected: GDP growth, unemployment, inflation, labour productivity and government debt. Annual data from Eurostat databases were averaged over the whole period and then used as an input for a cluster analysis. It was found that EU countries were divided into six different clusters. The most populated cluster with 14 countries covered Central and West Europe and reflected relative homogeneity of this part of Europe. Countries of Southern Europe (Greece, Portugal and Spain) shared their own cluster of the most affected countries by the recent crisis as well as the Baltics and the Balkans states in another cluster. On the other hand Slovakia and Poland, only two countries that escaped a recession, were classified in their own cluster of the most successful countries