Real convergence in Malta and in the EU countries after the financial crisis (2020)

Brian Micallef


Strong economic growth after the 2008-2009 financial crisis led to a rapid rate of real convergence in Malta. This article compares Malta’s real convergence process with that of other EU27 economies post-financial crisis. A growth accounting framework is used to decompose the sources of growth and convergence from a supply-side perspective. The EU evidence of convergence is mixed. Malta’s convergence since 2010 was driven by a higher utilization of labour. The cross-country comparison identifies three important lessons for a country’s convergence process: one, the perils associated with rapid growth driven by the accumulation of imbalances; two, the need for a flexible adjustment process following an economic shock; and three, EU and euro area memberships are no panacea for real convergence, without institutions that are conducive to technological adoption and productivity growth. 

Journal of Economic Integration, June 2020, 35(2), pp. 215-239. DOI: