The diverging economic trajectories of European Union countries, laid bare and amplified by the

Eurozone Crisis are the subject of debates within Comparative Political Economy and Post-

Keynesian Economics, often centring on the role of price and non-price competitiveness. This paper

aims to contribute to these debates by examining the dynamics of fourteen Eastern and Western

European countries between 1990 and 2019, analysing the convergence of the former towards the

latter and divergence within the two groups. In so doing, it draws on Thirlwall’s (1979) model of

Balance of Payments-Constrained Growth, Post-Keynesian theories of export-led growth and the

literature on competitiveness within the EU. It argues that patterns of trade and income growth lend

support to the thesis that European Economies were Balance of Payment-constrained and that their

export performance therefore conditioned their growth trajectories. It also finds Eastern Europe’s

convergence to have been driven by price competitiveness, while divergence within the East and the

West was at least in part due to non-price competitiveness. On the theoretical and methodological

side, it claims existing measures of competitiveness, both price and non-price, are severely flawed

because the Real Effective Exchange Rates that are used as price variables fail to appropriately

account for price competitiveness.