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What makes regions in Eastern Europe catching up? The role of foreign investment, human resources and geography

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  • Tondl, Gabriele
  • Vuksic, Goran

Abstract

This paper analyses regional growth in Eastern Europe in the second half of the 1990s, when regional disparities sharply increased. We aim to identify the factors behind growth and investigate in particular the role of (foreign) investment, education and innovation as well as geographical factors in a model of economic growth. The key relationships are estimated with spatial econometric tools on empirical data for the period 1995-2000. We find that foreign direct investment was paramount for growth in that period. EU border regions and capital areas clearly outperformed others. Further, regional growth clusters have appeared. Surprisingly, the high level of secondary education played no role to growth. Higher education, in contrast, was important, also for technology transfer. --

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Bibliographic Info

Paper provided by ZEI - Center for European Integration Studies, University of Bonn in its series ZEI Working Papers with number B 12-2003.

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Date of creation: 2003
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Handle: RePEc:zbw:zeiwps:b122003

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Related research

Keywords: Regional growth; Eastern Europe; foreign direct investment; education; spatial econometrics;

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References

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  1. de la Fuente, Angel, 1996. "On the Sources of Convergence: A Close Look at the Spanish Regions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1543, C.E.P.R. Discussion Papers.
  2. de la Fuente, A., 1995. "Catch-up, Growth and Convergence in the OECD," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 314.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  3. Bruno Van Pottelsberghe & Frank Lichtenberg, 2001. "Does foreign direct investment transfer technology across borders?," ULB Institutional Repository 2013/6221, ULB -- Universite Libre de Bruxelles.
  4. Angel de la Fuente & Rafael Donénech, 2000. "Human Capital in Growth Regressions: How much Difference Does Data Quality Make?," OECD Economics Department Working Papers 262, OECD Publishing.
  5. De Gregorio, Jose, 1992. "Economic growth in Latin America," Journal of Development Economics, Elsevier, Elsevier, vol. 39(1), pages 59-84, July.
  6. R. Paci & F. Pigliaru, 2001. "Technological Diffusion, Spatial Spillovers And Regional Convergence In Europe," Working Paper CRENoS 200101, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
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Cited by:
  1. Virmantas Kvedaras, 2005. "Explanation of Economic Growth Differences in the CEE Countries: Importance of the BOP Constraint," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 48-65, July.
  2. Uppenberg, Kristian & Riess, Armin, 2004. "Determinants and growth effects of foreign direct investment," EIB Papers 3/2004, European Investment Bank, Economics Department.
  3. Paas, Tiiu & Schlitte, Friso, 2007. "Regional income inequality and convergence processes in the EU-25," HWWI Research Papers 1-11, Hamburg Institute of International Economics (HWWI).
  4. Czapiewski, Konrad L. & Florianczyk, Zbigniew & Janc, Krzysztof, 7. "Agricultural knowledge and rural economy - analysis on micro and macro scales," Rural Areas and Development, European Rural Development Network, European Rural Development Network, vol. 7.
  5. Anna Iara, 2005. "Regional growth in Hungary - The impact of European economic integration," ERSA conference papers ersa05p342, European Regional Science Association.
  6. Vassilis Monastiriotis, 2011. "Regional Growth Dynamics in Central and Eastern Europe," LEQS – LSE 'Europe in Question' Discussion Paper Series, European Institute, LSE 33, European Institute, LSE.
  7. Annekatrin Niebuhr & Friso Schlitte, 2004. "Convergence, trade and factor mobility in the European Union — Implications for enlargement and regional policy," Intereconomics: Review of European Economic Policy, Springer, Springer, vol. 39(3), pages 167-176, May.
  8. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2004. "Space and Growth," Tinbergen Institute Discussion Papers 04-129/3, Tinbergen Institute.
  9. Adolfo Cristobal-Campoamor & Osiris Jorge Parcero, 2011. "Behind the Eastern-Western European convergence path: the role of geography and trade liberalization," Working Papers, Department of Applied Economics II, Universidad de Valencia 1112, Department of Applied Economics II, Universidad de Valencia.
  10. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2004. "The 2004 Enlargement: Key Economic Issues," EEAG Report on the European Economy, CESifo Group Munich, CESifo Group Munich, vol. 0, pages 96-118, October.
  11. Rasmus Kattai & John Lewis, 2005. "Hooverism, Hyperstabilisation or Halfway-House? Describing Fiscal Policy in Central and Eastern European EU Members," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 38-47, July.
  12. Maria ABREU & Henri L.F. DE GROOT & Raymond J.G.M. FLORAX, 2005. "Space And Growth: A Survey Of Empirical Evidence And Methods," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 21, pages 13-44.
  13. Piekkola, Hannu, 2005. "Knowledge Capital as the Source of Growth," Discussion Papers, The Research Institute of the Finnish Economy 972, The Research Institute of the Finnish Economy.
  14. Morten Hansen, 2005. "The Irosh Growth Miracle: Can Latvia Replicate?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 3-14, July.
  15. Johanna Vogel, 2012. "Agglomeration and Growth: Evidence from the Regions of Central and Eastern Europe," ERSA conference papers ersa12p1089, European Regional Science Association.
  16. Claus-Friedrich Laaser & Klaus Schrader, 2005. "Baltic Trade with Europe: Back to the Roots?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, Baltic International Centre for Economic Policy Studies, vol. 5(2), pages 15-37, July.
  17. Peter Huber, 2007. "Regional Labour Market Developments in Transition: A Survey of the Empirical Literature," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 4(2), pages 263-298, September.
  18. Marian Dinga, 2011. "The Role of Investment Incentives in Regional FDI Reallocation: A Regression-Discontinuity Approach," CERGE-EI Working Papers wp438, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  19. Don J. Webber & Stephanié Rossouw, 2010. "Sub-national vulnerability measures:A spatial perspective," Working Papers 1004, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  20. Paas, Tiiu & Schlitte, Friso, 2006. "Regional Income Inequality and Convergence Processes in the EU-25," HWWA Discussion Papers 355, Hamburg Institute of International Economics (HWWA).

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