Regional convergence and growth in Europe: understanding patterns and determinants

Abstract

The paper examines the pattern of regional convergence and the determinants of regional growth in Europe, providing a discussion of the issues that are of relevance to the theoretical conceptions and the subsequent design of regional development policy, supported by an illustrative empirical analysis. The analysis covers 249 NUTS II regions of the European Union in the period 1990–2003. Using as its basis the standard framework of (absolute) β-convergence, the paper detects a mirror-image J-shaped relationship between regional growth and regional development levels. This type of relationship indicates that regional divergence factors are getting stronger, and, eventually, dominate, at more advanced levels of development. On the basis of a regional growth model, factors such as agglomeration economies, geography, economic integration and economic structure seem to create an overall unfavourable economic environment for lagging (and, possibly, less favoured) regions. Such an environment generates dilemmas and questions concerning the mix of policies that may promote growth and at the same time reduce regional inequalities in the European Union.

Regional Growth and National Development: Transition in Central and Eastern Europe and the Regional Kuznets Curve in the East and the West

“…Employing a different methodological approach that looks at the issue of polarisation rather than disparity/convergence per se, find that the distribution of regional incomes becomes less polarised (along a non-linear path) as levels of national GDP per capita increase. A similar effect (an inverted-J path) has been found in the study of Petrakos et al (2011), albeit for the case of regional levels of development and in the context of a neoclassical convergence model.…”

Competitiveness and Economic Growth in Romanian Regions

“…The issues regarding the regional competitiveness were analysed in the context of social and economic cohesion (Chilian, 2011). This objective might be achieved by having the monetary union (Petrakos et al 2011). The definition given by Martin (2003) for regional competitiveness reflects the capacity to provide goods and services to satisfy the market's needs by maintaining sustainable incomes of high levels.…”

Assessing geographical effects in spatial diffusion processes: The case of euro coins

“…Indeed the question remains of how strongly integrated is the eurozone system across regions and whether it contributes to cancelling out regional disparities within countries as well (Martin, 2001;Petrakos et al, 2011;Puga, 2002). Both Martin (2001) and Puga (2002) stress the need for further consideration of spatial proximity effects or the internal geographical structures of the eurozone in order to better understand polarisation and convergence effects, and eventually fine tune regional policy.…”

“…Finally, controlling for differences between regions at the beginning of a convergence process (initial state) is important when analysing economic convergence (Barro & Sala-i Martin, 1992;Petrakos et al, 2011). This is especially easy to deal with in the context of coin diffusion since the initial endowment is perfectly known.…”

“…Diffusion processes in particular are impacted by the geographic complexity of a broad variety of attractors and repellers of human movements (Gould, 1969). In economics it is also well known that cumulative processes can be spatially selective and show dependencies on initial regional conditions (Arthur, 1994;Barro & Sala-i Martin, 1992;Krugman, 1996;Petrakos, Kallioras, & Anagnostou, 2011).…”