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Is foreign trade important for regional growth? Empirical evidence from Portugal

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  • Soukiazis, Elias
  • Antunes, Micaela

Abstract

The aim of this study is to investigate whether openness, export shares or trade balances affect regional growth in Portugal. Human capital is also considered as a conditional factor to growth, expressed by the rate of success in high school education. Thus, we analyse whether the combination of international trade and human capital is relevant to explain regional growth in Portugal and how it affects the convergence process between regions. In the empirical analysis, interaction terms are introduced to explore the existence of different performances between regions of the Littoral and the Interior. As an alternative to the traditional approach that considers the population growth rate, we include the share of sectoral employment aiming to capture labour specialisation in the main sectors of economic activity and measure its impact on regional growth. The empirical analysis estimates the conditional convergence model of the Barro's type, applied to the Portuguese NUTS3 regions for the period 1996-2005. The GMM estimation approach applied to regional panel data reveals that factors associated with external trade, human capital and sectoral labour share (especially of the industrial sector) are relevant to explain regional growth and convergence in Portugal.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 3 (May)
Pages: 1363-1373

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:1363-1373

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Web page: http://www.elsevier.com/locate/inca/30411

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Keywords: Conditional convergence Human capital External trade Employment share GMM regressions Panel data;

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Cited by:
  1. Paula Gracinda Santos & Ana Paula Ribeiro & Vitor Manuel Carvalho, 2013. "Export-led growth in Europe: Where and what to export?," FEP Working Papers 479, Universidade do Porto, Faculdade de Economia do Porto.
  2. Ana Poças & Elias Soukiazis, 2011. "Are health factors important for regional growth and convergence? An empirical analysis for the Portuguese districts," GEMF Working Papers 2011-14, GEMF - Faculdade de Economia, Universidade de Coimbra.

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