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Institutions and geography: Empirical test of spatial growth models for European regions

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  • Giuseppe Arbia

    ()
    (University "Gabriele D'Annunzio" of Chieti-Pescara)

  • Michele Battisti

    ()
    (University of Palermo)

  • Gianfranco Di Vaio

    ()
    (LUISS Guido Carli University)

Abstract

This article provides an empirical assessment of the growth experiences of European regions, during the period 1991-2004, by taking into account the spatial effects due to both institutions and geography. These effects have been modelled by means of specific controls and by using a non-conventional spatial weight matrix. Results favour a model dealing with substantive spatial externalities. Within this framework, the country-specific institutions are strongly and positively related to the regional productivity's growth rate. In addition, the geo-institutional proximity increases the spatial dependence of the regional output per worker and raises the speed of convergence. By contrast, the pure geographical metrics is underperforming, while underestimating the convergence dynamics.

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Paper provided by Dipartimento di Economia e Finanza, LUISS Guido Carli in its series Working Papers CELEG with number 0907.

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Date of creation: 2009
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Handle: RePEc:lui:celegw:0907

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Keywords: Regional growth; income convergence; institutions; geography; spatial effects.;

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