Economic performance, social progress and institutional reform in European neighbouring countries

Abstract

The objective of this article is to analyse the recent evolution of European Neighbouring countries (ENC) in different dimensions related to economic performance (measured in a broader sense), social progress and institutional reforms. With this aim, we design and build a composite indicator to measure these different dimensions. Next, the index is used to characterise the relative evolution of neighbouring countries compared to a wide sample of developed and developing economies. We also test whether a convergence process has taken place in these different dimensions controlling for the potential effect of the European Neighbourhood Policy. The obtained results show different trends according to the considered dimensions and heterogeneous effects at the country level. From a policy perspective, these results reinforce the validity of the bilateral action plans that have characterized ENP recognising the different starting point and particular characteristics of each neighbouring country.