CONDITIONAL CONVERGENCE IN THE DEVELOPING COUNTRIES OF EUROPE BEFORE THE FINANCIAL CRISIS

Abstract

According to many economists, financial liberalization in developing countries is one of the major determinants of the conditional convergence step. Due to rising of available funds, financial liberalization leads to more rapid growth, but also to a higher incidence of crises. In fact, most of the fastest-growing countries of the developing world have experienced boom-bust cycles. It is obvious that liberalization leads to faster growth because it eases financial constraints. However, in this study, it is examined whether the current case in European developing countries is available for a sustainable growth or not.