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Growth, Integration and Regional Inequality in Europe

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  • George Petrakos

    ()

  • Andres Rodríguez-Pose

    ()

  • Antonis Rovolis

    ()

Abstract

This paper challenges the ability of the conventional literature initiated by Barro and Sala-i-Martin (1991, 1992) to detect actual convergence or divergence trends across countries or regions and suggests an alternative dynamic framework of analysis, which allows for a better understanding of the forces in operation. With the use of a SURE model and time-series data for eight European Union (EU) member-states, we test directly for the validity of two competing hypotheses: the neoclassical (NC) convergence hypothesis originating in the work of Solow (1956) and the cumulative causation hypothesis stemming from Myrdal?s theories (1957). We also account for changes in the external environment, such as the role of European integration on the level of inequalities. Our findings indicate that both short-term divergence and long-term convergence processes coexist. Regional inequalities are reported to follow a pro-cyclical pattern, as dynamic and developed regions grow faster in periods of expansion and slower in periods of recession. At the same time, significant spread effects are also in operation, partly offsetting the cumulative impact of growth on space. Similar results are obtained from the estimation of an intra-EU model of inequalities at the national level, indicating that the forces in operation are independent of the level of aggregation. Our findings challenge the conventional wisdom in the European Commission about the evolution of regional inequalities and have important policy implications.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p46.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p46

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  1. Petrakos, George & Brada, Josef C, 1989. "Metropolitan Concentration in Developing Countries," Kyklos, Wiley Blackwell, vol. 42(4), pages 557-78.
  2. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April.
  3. 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.
  4. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, vol. 37(2-3), pages 293-298, April.
  5. Henderson, Vernon, 2000. "How urban concentration affects economic growth," Policy Research Working Paper Series 2326, The World Bank.
  6. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  7. repec:fth:eeccco:142 is not listed on IDEAS
  8. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  9. Andrew Dickerson & Heather Gibson & Euclid Tsakalotos, 1998. "Business Cycle Correspondence in the European Union," Empirica, Springer, vol. 25(1), pages 49-75, January.
  10. Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January.
  11. 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.
  12. K.H. Midelfart & H.G. Overman & S.J. Redding & A.J. Venables, 2000. "The location of European industry," European Economy - Economic Papers 142, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Growth, Recession and Geographical Inequality
    by Brian Ashcroft in Scottish Economy Watch on 2012-07-12 21:40:27
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Salvador Barrios & Eric Strobl, 2005. "The dynamics of regional inequalities," European Economy - Economic Papers 229, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  2. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
  3. Stoyan Totev, 2011. "EU Periphery, Economic Problems and Opportunities – The Case of Balkan Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 59-68.
  4. George Petrakos & Dimitrios Kallioras & Ageliki Anagnostou, 2006. "Determinants of Industrial Performance in the EU-15 Countries, 1980-2003," ERSA conference papers ersa06p134, European Regional Science Association.
  5. Mark V. Janikas & Sergio J. Rey, 2005. "Spatial Clustering, Inequality and Income Convergence," Urban/Regional 0501002, EconWPA.
  6. Dariusz Wozniak & Piotr Czarnecki & Robert Szarota, 2011. "The analysis of convergence process of voivodships’ efficiency in Poland using the DEA metod," ERSA conference papers ersa11p925, European Regional Science Association.
  7. Ivo Bicanic & Oriana Vukoja, 2009. "Long Term Changes in Croatia’s Wage Inequality: 1970-2006," wiiw Balkan Observatory Working Papers 83, The Vienna Institute for International Economic Studies, wiiw.
  8. Stoyan Totev, 2010. "Economic Integration and Conversion in the EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 3-23.
  9. Angelos Liontakis & Christos T. Papadas & Irene Tzouramani, 2011. "Regional Economic Convergence in Greece: A Stochastic Dominance Approach," ERSA conference papers ersa10p1188, European Regional Science Association.
  10. Stoyan Totev, 2010. "Economic Integration and Convergence of EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 68-86.
  11. Dimitris Kallioras & George Petrakos & Georgios Fotopoulos, 2005. "Economic integration, regional structural change and cohesion in the EU new member-states," ERSA conference papers ersa05p383, European Regional Science Association.
  12. Stoyan Totev, 2006. "Comparative Analysis of the Processes of Regional Specialization and Concentration in EU," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 67-89.

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