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2018, vol. 46, iss. 1, pp. 155-171
Fundamental drivers of prosperity in the European Union and Western Balkans countries
University of Belgrade, Faculty of Economy

emailbgavrilo@ekof.bg.ac.rs
Project:
Role of State in New Growth Model of Serbian Economy (MESTD - 179065)
The risks of financial institutions and markets in Serbia-microeconomic and macroeconomic approach (MESTD - 179005)
Development and utilization of novel and traditional technologies in production of competitive food products with added valued for national and global market - CREATING WEALTH FROM THE WEALTH OF SERBIA (MESTD - 46001)

Keywords: Legatum Prosperity Index; Principal Component Analysis; Cluster Analysis; Drivers of Prosperity
Abstract
In this paper the aim is to identify key drivers that have contributed the most to the prosperity of European Union and Western Balkan countries in the 2007-2016 period. Empirical analysis is based on data for cumulative growth rate of values of nine original Legatum Prosperity Index (LPI) pillars and on implementation of Multivariate Data Analysis. Using Principal Component Analysis, four principal components are obtained and we named them: Economic Environment, Social Infrastructure, Institutional Framework and Life Conditions. Based on standardised score values of four new variables, we distinguish the countries that had the highest positive and negative score in each component. With cluster analysis based on LPI pillars growth rates, four clusters of countries have been formed: the first cluster consists of three Western Balkan countries, the second and third of, respectively, ten and four mostly new EU member state countries, and fourth of fourteen predominantly 'old' EU member countries. The analysis points out the fundamental drivers of prosperity in countries belonging to different clusters according to changes in values of nine LPI pillars in the previous decade. In all observed countries it is possible to identify certain similarities in the change of components of prosperity, as they are EU members or candidates for membership.
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About

article language: English
document type: Original Scientific Paper
DOI: 10.5937/industrija46-16696
published in SCIndeks: 12/04/2018
peer review method: double-blind
Creative Commons License 4.0

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