Slow Convergence? The New Endogenous Growth Theory and Regional Development

Abstract

In economics, interest has revived in economic growth, especially in long-term convergence in per capita incomes and output between countries. This mainly empirical debate has promoted the development of endogenous growth theory, which seeks to move beyond conventional neoclassical theory by treating as endogenous those factors-particularly technological change and human capitdrelegated as exogenous by neoclassical growth models. The economists at the forefront of the formulation of endogenous growth theory and the new growth empirics have begun to use long-term regional growth patterns to test and develop their ideas. Their analyses suggest that regional convergence is a slow and discontinuous process. In this paper we consider whether endogenous growth theory can help to explain this finding. We argue that endogenous growth theory has important regional implications, but also major limitations when applied to a regional context.

Entrepreneurial culture, regional innovativeness and economic growth

“…Economic growth is negatively related to the initial level of GRP per capita, which supports the convergence hypothesis. This corresponds with other findings on regional convergence in Europe (Martin and Sunley 1998). However, if I take shorter periods of time (e.g.…”

“…The leeway for regional politics and culture has recently increased because of ongoing modernization processes, such as economic integration and globalization (Ohmae,1995) Globalization and European integration have made some territorially based production factors (especially with regard to Fordist large scale, standardized modes of production for national markets) become less important, enhancing the freedom of firms to choose locations at will. At the same time, however, 'new' regional production factors such as those mentioned earlier have become of critical importance, especially for post-Fordist small scale, flexible modes of production for global markets (Martin and Sunley, 1998). Therefore a time of globalization and European integration became also a time of resurgence of regional economies.…”

The Role of Structural Change in European Regional Productivity Growth

“…Rich regions may also benefit as labour is re-allocated from industry to services or, indeed, within these sectors. This could occur if, in the context of increasing international competition, particular sectors in regions benefit more than others from localized increasing returns from technology spillovers (Martin and Sunley, 1998) or agglomeration effects (Krugman, 1991). In a world characterized by endogenous growth or new economic geography models, it is plausible to expect that the 'petty trades' referred to by Abramovitz (1986) could be present in rich regions in relatively low productivity manufacturing or service industries.…”

Problems with Regional Production Functions and Estimates of Agglomeration Economies: A Caveat Emptor for Regional Scientists

“…See, for example, Barro and Sala-i- Martin (1991Martin ( , 2004, Armstrong (1995), Evans and Karras (1996), Rey and Montouri (1997), Garofalo and Yamarik (2002), Badinger et al (2004), Egger et al (2006), Benos and Karagiannis (2008), Esposti and Bussoletti (2008), and Tselios (2009). See also the survey of Martin and Sunley (1998).…”