IDEAS home Printed from https://ideas.repec.org/p/use/tkiwps/1712.html
   My bibliography  Save this paper

Determinants of regional growth and convergence in Germany

Author

Listed:
  • K. Haaf
  • C.J.M. Kool

Abstract

In this paper, we analyse the sources of real per capita income growth and convergence in the 16 German states over the period 1995-2014 using a panel approach. The empirical analysis applies the popular growth – initial income equation. We augment the basic model specification with a trend term and a crisis dummy. We then augment the model with additional explanatory variables and account for non-linear interaction effects. Overall, we find evidence of slow but significant convergence once the crisis and a trend are appropriately accounted for. Internal migration has a positive impact on growth in the East and thus contributes to the convergence between Eastern and Western states. Horizontal tax equalisation is ineffective in promoting growth and convergence, but we do find some evidence that federal supplementary grants have contributed to convergence between grant receiving and non-receiving states. Structural funding is found to have opposing growth effects on Eastern and Western states and has significantly promoted convergence.

Suggested Citation

  • K. Haaf & C.J.M. Kool, 2017. "Determinants of regional growth and convergence in Germany," Working Papers 17-12, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:1712
    as

    Download full text from publisher

    File URL: https://dspace.library.uu.nl/bitstream/handle/1874/355264/REBO_USE_DP_2017_1712.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    2. Boltho, Andrea & Carlin, Wendy & Scaramozzino, Pasquale, 2018. "Why East Germany did not become a new Mezzogiorno," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 308-325.
    3. Barro, R.J. & Sala-i-Martin, X., 1991. "Regional Growth and Migration: a Japan - U.S. Comparaison," Papers 650, Yale - Economic Growth Center.
    4. Berthold, Norbert & Drews, Stefan & Thode, Eric, 2001. "Die föderale Ordnung in Deutschland - Motor oder Bremse des wirtschaftlichen Wachstums?," Discussion Paper Series 42, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    5. Kubis, Alexander & Schneider, Lutz, 2009. "Zum Zusammenhang von Abwanderung und regionaler Konvergenz," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 15(10), pages 408-414.
    6. Thushyanthan Baskaran & Lars P. Feld & Sarah Necker, 2017. "Depressing dependence? Transfers and economic growth in the German states, 1975–2005," Regional Studies, Taylor & Francis Journals, vol. 51(12), pages 1815-1825, December.
    7. Titze, Mirko, 2007. "Wer fördert wie? Eine Diskussion der GA-Förderung in Ostdeutschland," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 13(10), pages 366-375.
    8. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
      • Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence," Papers 645, Yale - Economic Growth Center.
      • Barro, Robert J. & Sala-i-Martin, Xavier, 1992. "Convergence," Scholarly Articles 3451299, Harvard University Department of Economics.
    9. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    10. Berthold, Norbert & Fricke, Holger, 2007. "Volkswirtschaftliche Auswirkungen der finanziellen Ausgleichsysteme in Deutschland," Discussion Paper Series 93, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    11. Etzo, Ivan, 2008. "Internal migration and growth in Italy," MPRA Paper 8642, University Library of Munich, Germany.
    12. Etzo, Ivan, 2008. "Internal migration: a review of the literature," MPRA Paper 8783, University Library of Munich, Germany.
    13. Barro, Robert T. & Sala-I-Martin, Xavier, 1992. "Regional growth and migration: A Japan-United States comparison," Journal of the Japanese and International Economies, Elsevier, vol. 6(4), pages 312-346, December.
    14. Robbert Maseland, 2014. "Does Germany have an East-West Problem? Regional Growth Patterns in Germany since Reunification," Regional Studies, Taylor & Francis Journals, vol. 48(7), pages 1161-1175, July.
    15. Sousa, Cândido T. & Pereira, Elisabeth T., 2012. "A Contribution to the Empirics of Convergence: the Case of the European State Members," MPRA Paper 62017, University Library of Munich, Germany.
    16. Alecke, Björn & Mitze, Timo & Untiedt, Gerhard, 2010. "Regionale Wachstumseffekte der GRW-Förderung?: Eine räumlich-ökonometrische Analyse auf Basis deutscher Arbeitsmarktregionen [Regional Growth Effects of Private Sector Investment Grants in Germany?," MPRA Paper 22643, University Library of Munich, Germany.
    17. Wolfgang Eggert & Maximilian Von Ehrlich & Robert Fenge & Günther König, 2007. "Konvergenz‐ und Wachstumseffekte der europäischen Regionalpolitik in Deutschland," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 130-146, March.
    18. Scheufele, Rolf & Ludwig, Udo, 2009. "Der lange Weg der Konvergenz," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 15(10), pages 400-407.
    19. Nazrul Islam, 2003. "What have We Learnt from the Convergence Debate?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 309-362, July.
    20. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    21. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-1085, December.
    22. Kubis, Alexander & Schneider, Lutz, 2008. "Im Fokus: Wanderungsverhalten der Ostdeutschen," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 14(4), pages 128-131.
    23. Jonathan Eberle & Thomas Brenner, 2016. "More bucks, more growth, more justice? The effects of regional structural funds on regional economic growth and convergence in Germany," Working Papers on Innovation and Space 2016-01, Philipps University Marburg, Department of Geography.
    24. Berthold, Norbert & Kullas, Matthias, 2009. "20 Jahre Mauerfall: Konvergenz in Deutschland?," Discussion Paper Series 105, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    25. Bade, Franz-Josef & Alm, Bastian, 2010. "Endbericht zum Gutachten Evaluierung der Gemeinschaftsaufgabe "Verbesserung der regionalen Wirtschaftsstruktur" (GRW) durch einzelbetriebliche Erfolgskontrolle für den Förderzeitraum 1999-20," EconStor Research Reports 93487, ZBW - Leibniz Information Centre for Economics.
    26. Shioji, Etsuro, 2001. "Composition Effect of Migration and Regional Growth in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 15(1), pages 29-49, March.
    27. Michael Koetter & Michael Wedow, 2013. "Transfer Payments without Growth: Evidence for German Regions, 1992–2005," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 37(4), pages 1438-1455, July.
    28. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thomas Wieland, 2020. "REAT: A Regional Economic Analysis Toolbox for R," REGION, European Regional Science Association, vol. 7, pages 1-57.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. de la Fuente, Angel, 2002. "On the sources of convergence: A close look at the Spanish regions," European Economic Review, Elsevier, vol. 46(3), pages 569-599, March.
    2. ?gel de la Fuente, "undated". "Convergence Across Countries And Regions: Theory And Empirics," UFAE and IAE Working Papers 447.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    3. Julie Le Gallo & Sandy Dall'erba, 2008. "Spatial and sectoral productivity convergence between European regions, 1975–2000," Papers in Regional Science, Wiley Blackwell, vol. 87(4), pages 505-525, November.
    4. Elena Vakulenko, 2016. "Does migration lead to regional convergence in Russia?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(1), pages 1-25.
    5. Thushyanthan Baskaran & Lars P. Feld & Sarah Necker, 2017. "Depressing dependence? Transfers and economic growth in the German states, 1975–2005," Regional Studies, Taylor & Francis Journals, vol. 51(12), pages 1815-1825, December.
    6. Mendez-Guerra, Carlos, 2017. "Heterogeneous Growth and Regional (Di)Convergence in Bolivia: A Distribution Dynamics Approach," MPRA Paper 81060, University Library of Munich, Germany.
    7. Romano Piras, 2013. "Can the Augmented Solow Model with Migration Explain the Italian Internal Brain Drain?," LABOUR, CEIS, vol. 27(2), pages 140-163, June.
    8. Hao, Yu & Peng, Hui, 2017. "On the convergence in China's provincial per capita energy consumption: New evidence from a spatial econometric analysis," Energy Economics, Elsevier, vol. 68(C), pages 31-43.
    9. Fischer, Lorenz Benedikt & Pfaffermayr, Michael, 2018. "The more the merrier? Migration and convergence among European regions," Regional Science and Urban Economics, Elsevier, vol. 72(C), pages 103-114.
    10. Tobias Hagen & Philipp Mohl, 2011. "Econometric Evaluation of EU Cohesion Policy: A Survey," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 16, Edward Elgar Publishing.
    11. Massimiliano Affinito, 2011. "Convergence clubs, the euro-area rank and the relationship between banking and real convergence," Temi di discussione (Economic working papers) 809, Bank of Italy, Economic Research and International Relations Area.
    12. Dimitar Eftimoski, 2020. "Some new insights on economic convergence and growth in Central, Eastern, and Southeastern Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 863-884, November.
    13. Azomahou, Théophile T. & El ouardighi, Jalal & Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2011. "Testing convergence of European regions: A semiparametric approach," Economic Modelling, Elsevier, vol. 28(3), pages 1202-1210, May.
    14. FUKAO Kyoji & MAKINO Tatsuji & TOKUI Joji, 2015. "Regional Factor Inputs and Convergence in Japan: A macro-level analysis, 1955-2008," Discussion papers 15123, Research Institute of Economy, Trade and Industry (RIETI).
    15. Cem Ertur & Julie Le Gallo & Catherine Baumont, 2006. "The European Regional Convergence Process, 1980-1995: Do Spatial Regimes and Spatial Dependence Matter?," International Regional Science Review, , vol. 29(1), pages 3-34, January.
    16. Adriana Di Liberto & Francesco Pigliaru & Roberto Mura, 2008. "How to measure the unobservable: a panel technique for the analysis of TFP convergence," Oxford Economic Papers, Oxford University Press, vol. 60(2), pages 343-368, April.
    17. repec:ath:journl:tome:34:v:2:y:2014:i:34:p:13-21 is not listed on IDEAS
    18. Stephen Dobson & Carlyn Ramlogan & Eric Strobl, 2006. "Why Do Rates Of Β‐Convergence Differ? A Meta‐Regression Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 153-173, May.
    19. John Nixon, "undated". "Convergence Analysis of Health Care Expenditure in the EU Countries Using Two Approaches," Discussion Papers 99/3, Department of Economics, University of York.
    20. Mendez-Guerra, Carlos, 2019. "Environmental Efficiency and Regional Convergence Clusters in Japan: A Nonparametric Density Approach," MPRA Paper 92245, University Library of Munich, Germany.
    21. Grafström, Jonas, 2017. "An Econometric Analysis of Divergence of Renewable Energy Invention Efforts in Europe," Ratio Working Papers 295, The Ratio Institute.

    More about this item

    Keywords

    Internal migration; Fiscal equalisation; Structural funding; Panel approach; Interaction effects;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:use:tkiwps:1712. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marina Muilwijk (email available below). General contact details of provider: https://edirc.repec.org/data/eiruunl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.