Growing Differently: European Integration and Regional Cohesion

We document two novel stylized facts on European integration and cohesion. First, we show that the interregional income distribution, measured as GDP per capita at the NUTS-3 (Nomenclature des unités territoriales statistiques) level, is bimodal for all considered years. Second, we demonstrate that this mixture of two log-normal distributions provides an excellent fit for this interregional distribution in all considered years. We put forward two meso-level interpretations of these stylized facts, based on heterodox growth theory: The log-normality of the individual clusters hints at a cumulative growth process, where growth is strongly path-dependent. However, the bimodality in the income distributions also implies two separate growth mechanisms. We show that the high-variance log-normal distribution governs the dynamics at both tails of the income distribution, which might be interpreted as the core and periphery, and the low-variance variant the bulk of the distribution, thus interpretable as a semi-periphery. Based on these theoretical mechanisms, we propose a taxonomy of European regions that is not based on arbitrary GDP thresholds.