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Regional Convergence in Europe and the Role of Urban Agglomerations

Author

Listed:
  • Jesús Crespo Cuaresma

    (Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy)

  • Martin Feldkircher

    (Oesterreichische Nationalbank, Foreign Research Division)

Abstract

Using data for EU-27 NUTS 2 regions and major cities, we evaluate empirically the role of urban growth spillovers as a determinant of income dynamics at the regional level. We go beyond the empirically well documented static relationship between national income and productivity in urban agglomerations. We use spatial regression models to quantify the effect of city growth spillovers on neighboring regions and assess the interrelationship between urban and regional growth. Our results indicate that urban growth spillovers play an important role in explaining differences in per capita income growth across European regions: Strong income growth in urban agglomerations provides an additional growth bonus for neighboring regions. This effect is very homogeneous across regions in Western and Eastern Europe. Our results indicate that the industrial composition of the agglomeration also matters for regional growth: Regions hosting urban agglomerations with a relatively high specialization in the primary sector as well as in fuels and chemicals tend to experience lower rates of economic growth. Our study is particularly relevant for policymakers since it indicates a trade-off between fostering income convergence at the regional level on the one hand and spurring national growth on the other hand.

Suggested Citation

  • Jesús Crespo Cuaresma & Martin Feldkircher, 2010. "Regional Convergence in Europe and the Role of Urban Agglomerations," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 63-78.
    • Handle: RePEc:onb:oenbfi:y:2010:i:3:b:1
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    File URL: https://www.oenb.at/dam/jcr:b37743b8-f261-403e-aa08-9e81f1f7e6ae/feei_2010_q3_studies_crespo_tcm16-204831.pdf
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    References listed on IDEAS

    as
    1. Jesús Crespo Cuaresma & Martin Feldkircher, 2013. "Spatial Filtering, Model Uncertainty And The Speed Of Income Convergence In Europe," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 720-741, June.
    2. Jesús Crespo Cuaresma & Gernot Doppelhofer & Martin Feldkircher, 2009. "Economic Growth Determinants for European Regions: Is Central and Eastern Europe Different?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 22-37.
    3. repec:onb:oenbwp:y::i:160:b:1 is not listed on IDEAS
    4. Jesus Crespo Cuaresma & Doris Ritzberger-Grunwald & Maria Antoinette Silgoner, 2008. "Growth, convergence and EU membership," Applied Economics, Taylor & Francis Journals, vol. 40(5), pages 643-656.
    5. Jesús Crespo Cuaresma & Gernot Doppelhofer & Martin Feldkircher, 2014. "The Determinants of Economic Growth in European Regions," Regional Studies, Taylor & Francis Journals, vol. 48(1), pages 44-67, January.
    6. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2007. "Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis," Tinbergen Institute Discussion Papers 07-079/3, Tinbergen Institute.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Determinants of economic growth; European regions; urban growth; spatial error;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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