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

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  • Giuseppe Arbia
  • Michele Battisti
  • Gianfranco Di Vaio

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 modeled 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 Università di Perugia, Dipartimento Economia, Finanza e Statistica in its series Quaderni del Dipartimento di Economia, Finanza e Statistica with number 72/2009.

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Length: 28 pages
Date of creation: 15 Nov 2009
Date of revision:
Handle: RePEc:pia:wpaper:72/2009

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

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