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The unequal distribution of economic activities, transposed in economic, social and territorial disparities is the general characteristic of the European economy. Gaps increased in the context of European Union (EU) enlargement towards Eastern and Central Europe and of the economic crisis, thus bringing new differentiations among member states’ economies. The main aim of the chapter is to emphasise the centre-periphery differentiations in the European economy, by using a composite index of peripherality, in order to better understand the determinants of growth and convergence in Central and Eastern European countries and to reach normative conclusions for increasing Cohesion Policy (CP) effectiveness. The first part of the chapter provides a short overview of the main theories and models of the peripherality analysis and the relationships between the centre and the periphery, in order to find out how this analysis relates to the research in the field. The second part provides a comparative analysis of the evolution of European economies during 2003–2014, in order to find out whether the EU enlargement process stabilised the EU core-periphery pattern or, on the contrary, the process of core-periphery structural convergence occurred. The third part includes the suggested model of analysis (methodology, data, and main results) from a multidisciplinary perspective, underlining the centre-periphery differentiations on the two axes, North–South and West–East. The results have been interpreted in conclusions, with a focus on their relevance for the European CP challenges.

The last enlargements of the European Union (EU) shifted the geographical focus of the periphery from the south to the east, upgrading the position of many southern European countries and regions, which were already in a process of convergence with the EU average. The current financial/economic crisis, however, which has particularly hit southern European countries, revitalized the traditional core-periphery division, known as the North-South divide. In parallel, the relocation of economic activity (industrial production and services) within the EU territory, from western-core countries to the eastern periphery, raised the competitiveness and economic significance of many areas in the new, vis-a-vis the old, periphery, leading to the emergence of a number of new centres in its metropolitan regions. A number of questions are raised in the context of the above development, such as: Which factors underlie the differences in growth paths and ‘resilience’ between the eastern vis-à-vis the southern periphery? How important has the industrial relocation from the West to the East been? And what has been the general impact of the EU’s Cohesion Policy? What would the implications of a possible further expansion towards the EU’s ‘Eastern Neighbours’ be on its core-periphery pattern? This chapter approaches critically some of the above issues, adopting a qualitative methodology with the use of graphical presentations. In its conclusions, the chapter examines the appropriateness of the new economic geography’s theoretical interpretation.

Managing the diversity of the enlarged European Union (EU) is a central task for European policies. It is argued that this diversity leads to the development of a core-periphery pattern, separating cores of economic strength from peripheral regions being on the margins and lagging behind with mainly rural areas playing the peripheral part. This chapter describes the approach taken by the FP7 EU research project RUFUS – Rural Future Networks. It concentrated on rural regions and tried to work out the implications of the diversity of European rural areas by creating an interdisciplinary typology. The RUFUS typology is based on nine economic, social and ecological indicators and included regions (NUT3 level) from 10 European countries. A factor and cluster analysis was performed leading to a set of types of rural areas displaying their strengths and weaknesses related to their economic, social and ecological characteristics. The analysis was performed with different combinations of countries. The data set based on countries within the EU15 led to a first typology of four types showing a specific distribution of strong(er) and weak(er) types of regions already functioning for a longer time in the context of EU integration. Including more Central and Eastern European (CEE) countries led to a set of five types combined with the change of type distribution within and between the countries. The approach is an easy to understand classification and visualisation tool to show the relative development status of European regions as well as the relationship of the status with their location (core or border region).

The chapter provides a radiography of the 2014–2020 Cohesion Policy, focusing on both main continuity and innovation elements (in terms of objectives, implementation rules and financial allocations) and on some of the likely effects of the current rules on the new European Union (EU) non-euro member countries. The closer link between EU funds and EU economic governance, which has been introduced in the current financial period, has the potential to influence negatively the evolution of the EU regional development disparities, especially in the EU eastern periphery. These new conditionalities (ex-ante and macroeconomic), whose main effects, in the case of non-compliance, would be the suspension of EU funds, might deteriorate even more the economic situation, particularly in those regions with the greatest needs in terms of infrastructure or administrative capacity. The Romanian case is particularly relevant for this debate.

The main aim of this chapter is to analyse whether recent economic developments in Central and Eastern European countries have been subjected to a typical process of Dutch Disease (DD). We investigate the impact of foreign aid and other external inflows on the economies of these countries through their effect on the real exchange rate (RER).

After a review of the literature on the DD, we apply robust new generation augmented Dickey-Fuller (ADF) tests, and autoregressive distributed lag models following the methodology of Arellano and Bond (1991) and Blundell and Bond (1998) to establish the impact of capital inflows on output growth for the period 2003–2013.

We find no significant role for financial costs in the determination of the RER in the integration process of these countries. The evidence supports a positive influence of external capital inflows, and in particular European structural funds, on the determination of RER. This positive influence also extends to non-tradable goods and public investments.

In order to promote medium-long run sustainability, Central and Eastern European countries should carefully apply European funds in a way that does not bring about higher internal prices, or, if possible, control the nominal exchange rate in accordance. They must invest more in the higher qualification of human resources, research and development, innovation, entrepreneurship and industrial clusters, in view of the development of the tradable sector.

It is the first chapter that analyses the presence of DD originated by European structural funds and external inflows of funds for this group of countries.

The recent European crisis has raised a number of concerns among economists about the persistence of significant productive and competitiveness differences across national economies within the European Union (EU). Such differences can be seen as both a major root cause underlying the crisis and as an important factor explaining the current political difficulties within the EU.

The big divide between core and periphery is taken into account in this chapter, which focuses on the processes of structural transformation in the European periphery. We intend to contribute to a better understanding of structural changes in Europe and of their potential impact on future growth prospects and overall convergence/divergence dynamics.

A comparison of the experiences of two groups of peripheral countries is undertaken, based on a sample of old member states of Southwestern Europe and of new member states of Eastern Europe. A descriptive analysis is made of the trends occurred in the structure of production, employment and trade, examining this evidence in the light of technology and skill-based industrial classifications. Comparisons are made for both the pre and post-crisis periods.

Changes in the economic structure towards more skill- and technology-intensive sectors were relatively modest in Southwest Europe, whereas they increased rapidly in Eastern Europe. Notwithstanding, both groups of countries have experienced a strong deterioration of the growth dynamics after 2008, which seems to reflect the strong emphasis of economic policy on financial market stabilisation and a relative neglect of policies targeted to the recovery of investment and to the reinforcement of exporting capacities.

The solution to overcome economic retardation requires inevitably export-led growth and the building up of a more competitive economy. This, in turn, requires the design of an adequate industrial policy.

European Union (EU) central and eastern economies have gone through a process of structural change since 1989, when the post-communist transition started. This process was afterwards reinforced by the three EU enlargement waves that took place in 2004, 2007 and 2013. Though exhibiting low levels of aggregate productivity, this group of countries joined the EU with higher levels of human capital than the southern member states, an advantage that should have accelerated real convergence towards the EU15. However, evidence to date suggests that the convergence process came to a halt in 2007–2008 when massive capital inflows stopped, highlighting the fragilities of the growth strategies implemented so far. In these peripheral countries, structural change has been characterised by an expanding services sector alongside growing income inequality. The two strands of literature on these issues highlight that: (a) an expanding services sector may not be detrimental for growth, quite the opposite, depending on services composition and on the capacity of services sub-sectors to incorporate information and communication technologies (ICTs); and (b) inequality is negatively related to growth through the fiscal policy, socio-political instability, borrowing constraints to investment in education and endogenous fertility channels and positively through the savings channel and incentives. We analyse the nexus between structural change, inequality and growth in this group of countries highlighting income inequality as a potential mechanism that connects the other two variables. We provide a descriptive quantitative analysis of the profiles of structural change and income inequality in our sample and apply dynamic panel methods to investigate the existence of causality among services sector expansion, inequality and aggregate productivity considering a maximum period between 1980 and 2010.