INCOME DISPROPORTION BETWEEN CENTRAL AND EASTERN EUROPE REGIONS

In 2004 the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia joined EU. Those seven Central and Eastern Europe economies were far behind old EU countries in terms of economic development. Considerable differences were also inside countries, where the regions with capitals were significantly distinguished in terms of income and development over the remaining regions. In the same time idea of regional cohesion gain in importance in EU. Nowadays, one of the main EU's priorities is to reduce disparities between regions and improve economic well-being of delayed areas through actions under cohesion policy. The purpose of the research is to verify whether accession to EU helped to reduce income disproportions between CEE regions and also the effectiveness of EU fund usage by CEE regions. In the first part of the article, Author will present literature review about income inequity issue at the regional level. In the second part, EU regional policy will be discussed and actions that aim to reduce disproportions between EU regions. Then paper highlights the key statistics about income from Eurostat by NUTS2. The research period covers years from 2004 to 2015 due to availability of data for EU funds real expenditure. The main method is comparative analysis, which will be supplemented with descriptive statistics methods (in particular, time series analysis, including structure and dynamics analysis, distribution measures, including average measures). Moreover, to assess efficiency of funds usage the method of development pattern was used, which defines a linear hierarchy of objects based on their distance from the so-called development pattern. In the last part of the article, Author will analyse income gap between CEE regions. Research confirmed that income inequity was changing with different speed and directions over CEE counties. Huge disproportions can be also noticed inside individual countries, where capital regions were always the most developed regions with the highest income. Gross Domestic Product by PPS compared to EU average increased in all regions in analysed period. Only four regions with capital cities achieved GDP exciding EU average: Praha, Kozep-Magyarorszag, Mazowieckie and Bratislaysky kraj. Moreover, hypothesis about spatial autocorrelation was not confirmed. Regions near strong capital regions did not achieve high level of GDP. The highest growth in disposable income was noticed in Slovakia, Latvia, Lithuania and Estonia, where income doubled in analysed period. However, all three Baltic countries are still behind EU average. The most efficient in transforming EU funds into GDP growth are capital regions: Praha, Kozep-Magyarorszag, Bratislaysky kraj and Mazowieckie. Regions, despite diminishing EU aid, are able to maintain a high level of GDP per capita. However, high EU expenditures are not causing proportional increase in GPD per capita level. Result of this research confirmed that cohesion policy actions are no fully effective in CEE regions. There are still huge income inequalities and this trend seems to continue. Policy makers should ensure proper policy is implemented to reduce income disproportions.