The economic performance of Portuguese and Spanish regions: A network dynamic approach

This paper contributes to further understanding the economic performance of Portuguese and Spanish regions, using a stochastic network approach. The empirical analysis is made at the territorial level of NUT 3 regions and covers the period 1995-2008. The performance of regions is based on GDP per capita at Purchasing Power Standards. The network analysis is based on a metric space built from the correlation coefficients between the log-difference of annual growth rates. The metric space and the corresponding topological coefficients are compared with the independent performance of randomly generated data. The metric space is graphically represented along the 3 dominant eigenvalues and the strongest connections are selected and represented in a network of Iberian regions. The main purpose of this research is to find the most relevant geographical and demographic determinants of regional development, namely a “border effect”, an “interiority (without border) effect”, a “coastal effect”, a “metropolitan effect” and an “ultra periphery effect”.