“Magic Diamond” in a Macroeconomic Performance: an Empirical Assessment of Selected EU Countries

Abstract

A stable macroeconomic environment plays a crucial role in the overall stability of an economy. Although macroeconomic stability cannot certainly drive the country’s productivity and competitiveness, its absence would have far-reaching consequences for its economy. The paper aims to analyze the macroeconomic performance of selected European (EU) countries, reflected in the “magic diamond “indicators: gross domestic product per capita, unemployment rate, inflation rate, and trade balance, striving to figure out what contributes the most to the economic development of a country. The study includes the EU countries that are in a transition from efficiency-driven to innovation-driven stage of development: Greece, Portugal, Spain, Cyprus, Malta and Slovenia, covering the 22 years’ period from 1995 to 2016. The findings have provided better understanding of the overall macroeconomic performance, relation between individual indicators among each other, and their contribution to the economic growth in the context of selected EU countries.