The dynamics of regional inequalities and economic growth in Central and Eastern Europe

The processes of economic convergence observed in many developing countries are characterized by reduction of economic differences on the between-country level, which are accompanied by growing internal economic inequalities. This may stem from the fact that in catching-up countries, a more dynamic growth is observed in the economically strongest regions, which is initially reflected in spatial polarization and increasing regional inequalities. However, just as the countries reach higher levels of development, the diffusion of growth-inducing impulses to the remaining areas should lead to the spatial equalizing of the development levels and reducing regional inequalities. The aim of the paper is to determine the relations between the level of economic growth in Central and Eastern European (CEE) countries and observed economic inequalities. The theoretical frame adopted to describe and explain those relations was the so-called Williamson hypothesis in which the relation between the scale of regional inequalities and economic growth is illustrated by a curve shaped like an inverted U. The research procedure was intended to verify Williamson hypothesis by estimating parabolic econometric models. Indicators of economic growth along with measure of regional inequalities (Williamson's coefficient of variation) were used in the regression modeling. The research period spans over the years 1995-2014. In the light of the conducted study of CEE countries, it was possible to observe both convergence symptoms as well as divergence tendencies. It can be thus stated that the analyzed CEE countries followed a similar path to the one observed earlier by Williamson in other developing countries. However, the analyses conducted by the authors on the national and regional levels of CEE countries were equivocal and did not fully support the theoretical assumptions of Williamson's hypothesis.