Converging Economies of a Diverging Union: A Sub-systemic Analysis of Income Inequalities and Economic Growth across the E.U. Member States

Abstract

The effects of the recent economic recession of 2008 on a global scale revealed a high degree of economic dependency between all sovereign states of the European Union. Some research has been conducted on the impact of the great recession on developing countries, yet very few have examined the consequences of the economic recession on income disparity, and its effect on income convergence across the peripheral and core states of the E.U. In this paper we rely on the theoretical grounds of world system theory to explain the structural arrangements of the Union, and we test for unconditional β- convergence between the advanced and less advanced European countries. Results from our analysis are similar to former studies of economic growth stating that less advanced economies tend to grow at a faster pace than the advanced ones. Specifically we found that lagging E.U. economies tend to grow at a 2.5% higher pace than most advanced economies within the Union.