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Growth, Integration and Regional Inequality in Europe

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  • George Petrakos

    ()

  • Andres Rodríguez-Pose

    ()

  • Antonis Rovolis

    ()

Abstract

This paper challenges the ability of the conventional literature initiated by Barro and Sala-i-Martin (1991, 1992) to detect actual convergence or divergence trends across countries or regions and suggests an alternative dynamic framework of analysis, which allows for a better understanding of the forces in operation. With the use of a SURE model and time-series data for eight European Union (EU) member-states, we test directly for the validity of two competing hypotheses: the neoclassical (NC) convergence hypothesis originating in the work of Solow (1956) and the cumulative causation hypothesis stemming from Myrdal?s theories (1957). We also account for changes in the external environment, such as the role of European integration on the level of inequalities. Our findings indicate that both short-term divergence and long-term convergence processes coexist. Regional inequalities are reported to follow a pro-cyclical pattern, as dynamic and developed regions grow faster in periods of expansion and slower in periods of recession. At the same time, significant spread effects are also in operation, partly offsetting the cumulative impact of growth on space. Similar results are obtained from the estimation of an intra-EU model of inequalities at the national level, indicating that the forces in operation are independent of the level of aggregation. Our findings challenge the conventional wisdom in the European Commission about the evolution of regional inequalities and have important policy implications.

Suggested Citation

  • George Petrakos & Andres Rodríguez-Pose & Antonis Rovolis, 2003. "Growth, Integration and Regional Inequality in Europe," ERSA conference papers ersa03p46, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa03p46
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/46.pdf
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
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    8. Henderson, Vernon, 2000. "How urban concentration affects economic growth," Policy Research Working Paper Series 2326, The World Bank.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Growth, Recession and Geographical Inequality
      by Brian Ashcroft in Scottish Economy Watch on 2012-07-13 02:40:27

    Citations

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    Cited by:

    1. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
    2. Mihaela Simionescu, 2017. "The GDP per Capita Convergence in the European Union," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(1), pages 81-87, March.
    3. Iulia Andreea BUCUR & Oana Ancuta STANGACIU, 2015. "The European Union Convergence In Terms Of Economic And Human Development," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7(2), pages 256-275, August.
    4. Dariusz Wozniak & Piotr Czarnecki & Robert Szarota, 2011. "The analysis of convergence process of voivodships' efficiency in Poland using the DEA metod," ERSA conference papers ersa11p925, European Regional Science Association.
    5. George Petrakos & Dimitrios Kallioras & Ageliki Anagnostou, 2006. "Determinants of Industrial Performance in the EU-15 Countries, 1980-2003," ERSA conference papers ersa06p134, European Regional Science Association.
    6. Barrios, Salvador & Strobl, Eric, 2009. "The dynamics of regional inequalities," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 575-591, September.
    7. Roberto Ezcurra & Andrés Rodríguez-Pose, 2011. "Can the economic impact of political decentralisation be measured?," Working Papers 2011-02, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    8. Stoyan Totev, 2010. "Economic Integration and Conversion in the EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 3-23.
    9. Stoyan Totev, 2011. "EU Periphery, Economic Problems and Opportunities – The Case of Balkan Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 59-68.
    10. repec:bla:ausecp:v:56:y:2017:i:1:p:59-71 is not listed on IDEAS
    11. Mark V. JANIKAS & Sergio J. REY, 2005. "Spatial Clustering, Inequality And Income Convergence," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 21, pages 45-64.
    12. repec:kap:itaxpf:v:24:y:2017:i:2:d:10.1007_s10797-016-9416-1 is not listed on IDEAS
    13. Mark V. Janikas & Sergio J. Rey, 2005. "Spatial Clustering, Inequality and Income Convergence," Urban/Regional 0501002, University Library of Munich, Germany.
    14. Ivo Bicanic & Oriana Vukoja, 2009. "Long Term Changes in Croatia’s Wage Inequality: 1970-2006," wiiw Balkan Observatory Working Papers 83, The Vienna Institute for International Economic Studies, wiiw.
    15. Stoyan Totev, 2010. "Economic Integration and Convergence of EU Member States," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 68-86.
    16. George PETRAKOS, 2014. "Economic Crisis In Greece. European And Domestic Market And Policy Failures," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 39, pages 9-33.
    17. Angelos Liontakis & Christos T. Papadas & Irene Tzouramani, 2011. "Regional Economic Convergence in Greece: A Stochastic Dominance Approach," ERSA conference papers ersa10p1188, European Regional Science Association.
    18. Dimitris Kallioras & George Petrakos & Georgios Fotopoulos, 2005. "Economic integration, regional structural change and cohesion in the EU new member-states," ERSA conference papers ersa05p383, European Regional Science Association.
    19. Yongzheng Liu & Jorge Martinez-Vazquez & Alfred M. Wu, 2017. "Fiscal decentralization, equalization, and intra-provincial inequality in China," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 248-281, April.
    20. Stoyan Totev, 2006. "Comparative Analysis of the Processes of Regional Specialization and Concentration in EU," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 67-89.

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