DA LI MEĐUNARODNA TRGOVINA DOPRINOSI DOHODOVNOJ KONVERGENCIJI IZMEĐU EVROPSKE UNIJE I ZEMALJA ZAPADNOG BALKANA?

Abstract

Income convergence is an issue that has occupied the attention of economists for a long time, especially as the main goal of poorer and less developed countries is to catch up with rich ones. Income convergence is the situation when, due to difference in development level, income gap between less developed and developed countries is decreasing. Th e faster growth of less developed countries is a consequence of reduced return on capital, which is the basic premise of the neoclassical growth model. Th e subject of this paper is to test the effect of international trade on income convergence, in the European Union member states and in the Western Balkan states. Regression model was used to test whether international trade affects income convergence. Observed period is from 1995 to 2019. Research results showed that higher volume of international trade leads to income convergence.