INTERNATIONAL POLICY ANALYSIS Convergence in Crisis European Integration in Jeopardy MICHAEL DAUDERSTÄDT October 2014 „ „ Convergence in terms of economic growth, income and social conditions requires more rapid growth in economically weaker countries. Economic integration is no guarantee of convergence because it facilitates capital and labour mobility, as well as concentration processes. Catch-up processes in poorer countries can succeed or fail, depending on the relevant framework. „ „ Since 1999 Europe has had considerable success with convergence. In particular, the Central and Eastern European new member states have made real progress. However, on the southern periphery growth has been weaker and as a consequence of austerity policy has collapsed to such an extent that now divergent development has set in. „ „ By international comparison growth in the European Union(EU) is more or less at the level of comparably developed countries(such as the United States), but far behind that of catching-up economies(for example China). The EU’s social development is proceeding more quickly, however. Convergence within Europe is better than in other areas of integration and within nation-states. „ „ Enhanced convergence is not likely to happen as a result of either scaling back integration or deeper federalisation. It is not easy for the EU to lend direct support to real convergence and the productivity growth needed for that. However, in order to prevent divergence it can and should cushion the effects of monetary shocks and give the member states more leeway as regards economic policy.