Regional Business Cycles and the Emergence of Sheltered Economies in the Southern Periphery of Europe

Abstract

Recent research has highlighted that in the last few years, the evolution of regional disparities in many European states has become pro-cyclical. This represents a change with respect to the predominantly anti-cyclical pattern of the 1960s and 1970s. This paper addresses the question of whether and when this change has taken place in the southern periphery of Europe, before analysing the factors that may have played a role in such a change. The analysis relies on a regional database that includes the evolution of the GDP per capita of NUTS II regions in five European countries (France, Greece, Italy, Portugal, and Spain) between 1980 and 2000. The results of the analysis support the hypothesis of a change towards a pro-cyclical evolution of regional disparities in the cases of Italy, Portugal, and Spain, but not in those of Greece and France. A relationship between these pro-cyclical patterns and the emergence of less dynamic sheltered economies is also detected in peripheral regions. This lack of dynamism is related to the fact that numerous peripheral areas in southern Europe have become increasingly dependent on factors such as transfers or public investment and employment, and therefore are less exposed to changes in market conditions. Copyright 2007 Blackwell Publishing.

Regional mobility in the European Union

“…In any event, the increase in non-market services is negatively correlated with ∆RN K i . This is consistent with the empirical evidence presented by Rodríguez-Pose and Fratesi (2004a), who stress the fact that the European peripheral regions of Europe characterized by high levels of public employment presented more moderate growth rates than the rest between 1980 and 2000.…”

“…In any event, the increase in non-market services is negatively correlated with ∆RN K i . This is consistent with the empirical evidence presented by Rodríguez-Pose and Fratesi (2004a), who stress the fact that the European peripheral regions of Europe characterized by high levels of public employment presented more moderate growth rates than the rest between 1980 and 2000.Next, in order to detect possible variations in behavior patterns over time, we decided to repeat the analysis for various time intervals of a shorter duration. However, the results for the 1977-1988 subperiod are very similar to those just discussed for the period as a whole.…”

Disentangling different patterns of business cycle synchronicity in the EU regions

“…Nevertheless, this tendency is not symmetric in the sense that the more developed regions seem to be more functionally integrated into the broader European space than the less developed regions. In other words, the integration process for the latter is mostly national oriented, which means that the less developed regions and especially the least developed ones (Low-Low) of EU-14, constitute a kind of quasi 'sheltered economies' that are detached from the broader European space remaining less capable to compete in a more integrated European markets (Rodríguez-Pose and Fratesi, 2006).…”

The Impact of Institutional Quality and Efficient Cohesion Investments on Economic Growth Evidence from Italian Regions

“…Understanding the role of regional policymakers on investments financed by Structural funds is a main issue for economic scholars, in order to explain regional imbalances [7][8][9]. Nowadays, there is a widespread belief that the different administrative and political capabilities of regional governments become relevant in the implementation of development policies [10][11][12].…”

“…Our contribution is linked to the literature investigating the institutional factors that explain the presence of regional differences in the impact of EU cohesion policy across Italian regions [7]. We expand the current studies by including a different dimension in the analysis compared to the current economic literature: the qualitative aspect, which is the only one usually taken into account in the economic analysis [10,15], has been accompanied by an innovative managerial one.…”