A theoretical review on the structural convergence issue and the relation to economic development in integration areas

Abstract

Abstract The aim of the paper is to provide a consistent literature review on the importance of structural convergence for the countries within the same economic area focusing on two main topics: the structural similarity problem of countries within an integration area and the evolution and development of the union itself (in line with Chenery and Singer’s approach). We aim to synthesize the most referential findings of the literature and project them on the most recent events in the European Union pointing out the relevance of structural convergence and of the continuation of the process under a reassessed form. The relevance of studying the structural convergence process lies in the medium and long term implications related to the synchronization of business cycles, long-run development patterns and of the dynamics of specialization. Moreover, the topic is of high interest both in the context of the future evolution of the European Union and in the decision making process of adopting the Euro in Romania’s case. On the side of theoretical papers, there is a rich literature on structural change that generally recommends that economic structures and the differences between them should be the starting point for analysis and development of theories of economic development. We believe that the preoccupations for this topic should be recalled in the context of the European events and new facets should be explored. Along with the views expressed in the European Commission White Paper, that the form will follow the function, we emphasize the importance of designing the proper institutions at European Union and Eurozone level, but also at national level with taking into consideration the goal of advancing towards structural convergence.