Convergence and cluster structures in EU area according to fluctuations in macroeconomic indices

Convergence and cluster structures in EU area according to fluctuations in macroeconomic indices Mircea Gligor1, * 1National College “Roman Voda” Roman-5550, Neamt, Romania, Euroland e-mail: mrgligor@yahoo.com * Corresponding author Marcel Ausloos 2 2 GRAPES, B5, Sart Tilman, University of Liege, Belgium, Euroland e-mail: Marcel.Ausloos@ulg.ac.be Abstract: The cluster analysis methods are used in order to perform a comparative study of 15 EU countries in relation with the fluctuations of some basic macroeconomic indicators. The statistical distances between countries are calculated for various moving time windows, and the time variation of the mean statistical distance is investigated. The decreasing of the mean statistical distance between EU countries is reflected in the correlated fluctuations of the basic ME indicators: GDP, GDP/capita, Consumption and Investments. This empirical evidence can be seen as an economic aspect of globalization. The Moving Average Minimal Length Path (MAMLP) algorithm allows to search for a cluster-like structures derived both from the hierarchical organization of countries and from their relative movement inside the hierarchy. It is found that the strongly correlated countries with respect to GDP fluctuations can be partitioned into stable clusters. Some of the highly correlated countries, with respect to GDP fluctuations, display strong correlations also in the Final Consumption Expenditure, while others are strongly correlated in Gross Capital Formation. On the other hand, one notices the similitude of the classifications regarding GDP and Net Exports fluctuations as concerns the squared sum of the correlation coefficients (so called country “sensitivity”). The final structure proves to be robust against the constant size time window moving over the scanned time interval. The policy implications of the above empirical results concern the economic clusters arising in the presence of Marshallian externalities and the relationships between trade barriers, R&D incentives and growth that must be accounted in elaborating a cluster-promotion policy. KEYWORDS: statistical distances, minimal length path, convergence, clustering JEL Classification: C1, C22, C23, O52, O57 2 1 Introduction The problem of studying the economic growth patterns across countries is actually a subject of great attention to economists. An important reason for the increasing interest in this problem is that “persistent disparities in aggregate growth rates across countries have, over time, led to large differences in welfare” (Durlauf and Quah, 1999). The intellectual payoffs of comparative studies may be high: moreover various patterns of growth can be inferred from the statistical data, the statistical methodology itself might be considerably enriched. On the other hand, it is well known that a general question facing researchers in many areas of inquiry is how to organize observed data into meaningful structures, that is, to develop taxonomies. In this sense, cluster analysis is an exploratory data analysis tool which aims at sorting different objects into groups in a way that the degree of association between two objects is maximal if they belong to the same group and minimal otherwise. The term “cluster analysis” (first used by Tryon, 1939) refers to a number of different algorithms and methods for grouping objects of similar kinds into respective categories. The paper is built upon these two considerations. Consider first the two groups of issues of actually increasing interest in economic growth literature: the first refers to the economic convergence of countries and regions, while the second pertains to the country differentiation, or clustering, as a result of the disparities in their growth rates. (I) As regards to the first sort of issues, it is of interest to examine whether the economic convergence of EU-15 countries may be empirically argued starting from the time evolution of the basic macroeconomic indicators. Moreover, whether this phenomenon (in so far as it does) occurs continuously or intermittently, and what is the role the time window size in studying it; another point is whether the phenomenon may be related to the emergence of cooperation in social/ecological systems; (II) Concerning the second sort of issues, it is worth to call in question the most appropriate methodology from which a robust country clustering structure can be derived and if this cluster-like structure has any economic support; moreover, it would be of interest to investigate the possible connections between the country clustering and the speciation in ecological/ biological systems.

The economic convergence has a particular place in the increasing literature of economic growth during the last few years. The OECD Economic Survey of the Euro Area (2004) promoted the idea of the convergence in economic development as a prime policy goal of the European Union. The same document includes obs

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