A quite robust model of differential growth rates of per capita income in the major functional urban regions of the European Union is presented and tested for the 1980s. The results underline the important role of purely spatial economic processes in differential regional growth and suggest that the pattern of European urbanisation tends itself to generate systematic divergence of mean per capita incomes between neighbouring city-regions, even though the mechanism generating this divergence of mean incomes is not inconsistent with converging incomes for comparable individuals. In addition, the evidence is supportive of a spatial adaptation of Romer's endogenous technical progress model. The model is formulated in a way which tests policy concerns. In general, the results are supportive of European regional policy although the systematic spatial effects of European integration seem to be fading and extending outwards to near-peripheral urban regions.

This article discusses the interaction between demographic aging, population decline, and various aspects of the local development challenges facing public authorities. In particular, this article examines some of the financial issues arising from population aging and decline and the ways in which new approaches to public finance are being used in support of European Union regional and urban policy. In this context, it is argued that a comprehensive portfolio investment approach has the potential to significantly improve policy effectiveness.

No abstract