Does the neoclassical growth model predict interregional convergence? On the impact of free factor movement and the implications for the European Union
This paper sets up a theoretical model of regional growth with free factor movement. The analysis shows that factor endowments are crucial for a regionâ€™s attractiveness regarding factor relocations. In particular, lower endowments of human capital within other regions are advantageous for a regionâ€™s growth prospects, and vice versa. The paper concludes that under the framework of free factor movement, the European Unionâ€™s objective of interregional convergence can only be achieved by subsidising disadvantaged economies.Â
Volume (Year): 2 (2013)
Issue (Month): 4 ()
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