Economic and social cohesion in the European Union: rhetoric and reality

ABSTRACT

Analysts have many arguments to underline that the European integration project, which celebrates in March 2022 65 years from the signing of the Treaties of Rome, has passed the test of time, proving its capacity to fulfill many of its strategic goals. However, in spite of the numerous achievements, one of the objectives that has been only partially accomplished aims the economic, social and territorial cohesion. The aim of this paper is to study the convergence patterns in the European Union between 1995 and 2020, taking into consideration the economic and social dimensions. In this respect, we have tried to determine if the European Union can assure prosperity, as reflected by GDP per capita and also to enhance the citizens' welfare, as shown by households' consumption expenditure and actual individual consumption per capita. To compare the main trends in this respect for the period 1995-2020, we have used beta- convergence, while the degree of economic and social homogeneity in the European Union was examined by sigma-convergence. Estimating cross-sectional regressions, we have found evidence in favor of beta- convergence, as the initially less developed Members experienced higher GDP per capita growth rates than the developed ones. The hypothesis is also confirmed for the social indicators, illustrating that the citizens' wellbeing has improved with a higher pace in the Central and Eastern group compared to the wealthy Western Europe. By determining sigma-convergence based on the coefficient of variation, we have illustrated that income and wellbeing divergences generally had a downward trend between 1995 and 2019. However, the Covid-19 pandemic reversed the favorable trend and determined an increase of gaps, mainly in terms of GDP per capita.