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JSPES,
Vol. 47, No. 1-2 (Spring-Summer 2022)
pp. 106-113
Within Economic Blocks, Countries and States Tend to Diverge
(Not Converge)
Jorge Sá
Ana Lúcia Luís
Instituto Superior de Gestăo
(ISG), Portugal
When
countries form an economic block, they team up in order to
benefit each other’s economies. The deals can range from just
lower tariffs to something much more complex, as with the
European Union (EU). There is considerable literature which
indicates the trend toward convergence among members as one of
the advantages of economic blocks. It is expected that benefits
will be surplus to disadvantages and that integration in a block
will lead to convergence. The expectation is that within
economic unions, there is not only a general increase in
welfare, but also economic convergence, greater income
similarity among its members: since it is far easier to copy
than to innovate, regardless of the type of innovations, the
dissemination of innovations would create similar standards
among all within an economic block. This article presents
empirical evidence for the opposite, that within economic
blocks, be they of countries or federal states, they tend to
diverge, not converge. Analysis of EU countries and federal
states of the U.S. shows a trend towards divergence.
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