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Does the neoclassical growth model predict interregional convergence? On the impact of free factor movement and the implications for the European Union

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  • Sascha Sardadvar

Abstract

This paper sets up a theoretical model of regional growth with free factor movement. The analysis shows that factor endowments are crucial for a region’s attractiveness regarding factor relocations. In particular, lower endowments of human capital within other regions are advantageous for a region’s growth prospects, and vice versa. The paper concludes that under the framework of free factor movement, the European Union’s objective of interregional convergence can only be achieved by subsidising disadvantaged economies.Â

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  • Sascha Sardadvar, 2013. "Does the neoclassical growth model predict interregional convergence? On the impact of free factor movement and the implications for the European Union," Economics and Business Letters, Oviedo University Press, vol. 2(4), pages 161-168.
  • Handle: RePEc:ove:journl:aid:10026
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    File URL: http://www.unioviedo.es/reunido/index.php/EBL/article/view/10026
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    References listed on IDEAS

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    1. Alicja Olejnik, 2008. "Using the spatial autoregressively distributed lag model in assessing the regional convergence of per-capita income in the EU25," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 371-384, August.
    2. Sascha Sardadvar, 2012. "Growth and disparities in Europe: Insights from a spatial growth model," Papers in Regional Science, Wiley Blackwell, vol. 91(2), pages 257-274, June.
    3. Barro, Robert J & Mankiw, N Gregory & Sala-i-Martin, Xavier, 1995. "Capital Mobility in Neoclassical Models of Growth," American Economic Review, American Economic Association, vol. 85(1), pages 103-115, March.
    4. Guilherme Mendes Resende & Alexandre Xavier Ywata de Carvalho & Patrícia Alessandra Morita Sakowski, 2013. "Evaluating Multiple Spatial Dimensions of Economic Growth in Brazil Using Spatial Panel Data Models (1970 - 2000)," Discussion Papers 1830a, Instituto de Pesquisa Econômica Aplicada - IPEA.
    5. Raul Ramos & Jordi Suriñach & Manuel Artís, 2010. "Human capital spillovers, productivity and regional convergence in Spain," Papers in Regional Science, Wiley Blackwell, vol. 89(2), pages 435-447, June.
    6. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    7. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    8. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    9. Nazrul Islam, 2003. "What have We Learnt from the Convergence Debate?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 309-362, July.
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    Cited by:

    1. Sascha SARDADVAR, 2016. "Regional Economic Growth And Steady States With Free Factor Movement: A Theoretical Model With Evidence From Europe," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 21-57.

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