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European regional growth, technology gap and R&D efforts

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  • Lydia Greunz

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Abstract

Since the early days of European integration, one of the central goals for the European Union has been greater equality in income and productivity among member states and regions. This goal was realised for a long time since form the early 1950s onwards, differences in GDP per capita within European regions declined steadily. However, more recently, THE PROCESS OF EUROPEAN ECONOMIC CONVERGENCE HAS CONSIDERABLY SLOWED DOWN and, according to a widening group of economists, has CEASED AT THE REGIONAL LEVEL after 1980. The paper we wish to present aims to explain the different PATTERNS OF CONVERGENCE AND DIVERGENCE in terms of GDP per capita of the European regions. Is it reasonable to think that catching up will occur for all European regions? What role does the technology gap play for the catching up process? What are the mechanisms and policies to be implemented to upgrade social capability which is a major determinant of catching up? In order to answer these crucial questions we have built a MODEL OF CUMULATIVE GROWTH - a SIMULTANEOUS SYSTEM OF EQUATIONS. In this model, and according to the technology gap literature, one of the major determinants of catching up is the existence of a TECHNOLOGY GAP. The latter offers a potential for faster growth if SOCIAL CAPABILITY is sufficiently developed. In our model, social capability is measured in terms of highly and moderately qualified working population, R&D activity and physical infrastructure endowment. Industrial and service activities as well as innovative output are endogenised in the simultaneous equations framework. Our model is tested onto a sample of European regions that is considerably larger than those used by authors publishing in related fields. Whereas the latter generally use NUTS I samples (about 60 observations), our sample is essentielly based upon NUTS II regions and the NUMBER OF OBSERVATIONS TOTALS 153 REGIONS. If this extended sample constitutes clearly one of the INNOVATIONS of this paper with respect to the existing literature, another originality is the chosen approach to explain the different trajectories of convergence and divergence. Indeed, our approach permits to CLUSTER the European regions with respect to their steady state levels of GDP per capita and, more important, enables to identify for each cluster the appropriate policy measures.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa01p92.

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Date of creation: Aug 2001
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Handle: RePEc:wiw:wiwrsa:ersa01p92

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  1. Jan Fagerberg & Bart Verspagen & Marjolein Cani�ls, 1997. "Technology, Growth and Unemployment across European Regions," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 457-466.
  2. Aadne Cappelen & Jan Fagerberg & Bart Verspagen, 1999. "Lack of regional convergence," Working Papers Archives 1999001, Centre for Technology, Innovation and Culture, University of Oslo.
  3. Baldwin, Richard & Forslid, Rikard, 1997. "The Core-Periphery Model and Endogenous Growth," CEPR Discussion Papers 1749, C.E.P.R. Discussion Papers.
  4. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  5. Bart Verspagen, 1997. "Estimating international technology spillovers using technology flow matrices," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(2), pages 226-248, 06.
  6. 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 1072-85, December.
  7. Grossman, G.M. & Helpman, E., 1993. "Endogenous, Innovation in the Theory of Growth," Papers 165, Princeton, Woodrow Wilson School - Public and International Affairs.
  8. Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  9. Jan Fagerberg, 1999. "The Economic Challenge for Europe: Adapting to Innovation-Based Growth," Working Papers 2, Centre for Technology, Innovation and Culture, University of Oslo.
  10. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September.
  11. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  12. Jan Fagerberg & Bart Verspagen, 1996. "Heading for Divergence? Regional Growth in Europe Reconsidered," Journal of Common Market Studies, Wiley Blackwell, vol. 34(3), pages 431-448, 09.
  13. Bernard Fingleton, 2000. "Convergence: International comparisons based on a simultaneous equation model with regional effects," International Review of Applied Economics, Taylor & Francis Journals, vol. 14(3), pages 285-305.
  14. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
  15. Fagerberg, Jan, 1987. "A technology gap approach to why growth rates differ," Research Policy, Elsevier, vol. 16(2-4), pages 87-99, August.
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Cited by:
  1. Elias Soukiazis & Micaela Antunes, 2013. "Growth Performance in Portugal since the 1960s: A Simultaneous Equation Approach with Cumulative Causation Characteristics," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 47(1), pages 169-192, March.

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