Economic convergence of Balkan regions towards EU

This paper analyzes convergence of per capita Gross Domestic Product (GDP) of Balkan NUTS3 regions to average GDP of the EU27. Employing stochastic and $\beta $beta-convergence approaches, we find strong evidence supporting convergence across the panel, indicating a robust catch-up trend of the Balkans with EU GDP with a significant break around the Great Recession. However, this pattern is not uniform across all individual regions, with some of them exhibiting divergence (mainly Greece and some regions in Croatia, Albania and Serbia). We also categorize groups of economies sharing similar divergence patterns. Additionally, among the regions that converge, convergence rates vary, with some regions progressing faster (Bulgaria, Montenegro and North Macedonia). Our results suggest the critical necessity for policy interventions to hasten the convergence process by encouraging substantial reforms. If regional disparities are addressed and balanced development is promoted, Balkan countries can achieve more robust integration into the European economic framework.