Luis Garicano asks this very question in his recent post. He relies on projections from the 2025 IMF World Economic Outlook.
On the positive side, the economies of Eastern European countries are likely to integrate with the US.
While we’ve spent a decade complaining about Europe’s stagnation, a real positive convergence story is emerging on the eastern edge of the continent. Poland entered the millennium at 34% of America’s per capita GDP; By 2030, the IMF estimates this will reach 67%. Romania increased from 27% to 60%. Lithuania increased from 29% to 69%. Bulgaria went from 23% to 53%. Citizens of these countries are still significantly poorer than Americans. But they have closed a large part of the gap along the global border. Throughout Central and Eastern Europe, the EU has served as a powerful convergence machine for countries willing to use it.
In contrast, Western and especially Southern-European economies are likely to lag behind the US.
Meanwhile, on the other end of the continent, the picture is almost a mirror image. Portugal slipped from 64% to 57%. Spain fell from 72% to 61%. The rich laggards are more impressive: France fell from 86% of the US level to 71%, and Italy from 93% to 68%.
Of course, these are just estimates, but declining productivity and aging population could be extremely problematic for Western Europe. Do you agree with the IMF’s forecasts?
