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The Cohesion vs Growth Tradeoff - Evidence from EU Regions (1980-2000)


  • Matthieu Crozet


  • Pamina Koenig



This paper provides an empirical investigation of the cohesion versus growth tradeoff on European regions at a fine geographical disaggregation level. We use data on gdp per capita at the NUTS3 level for 1980-2000 to estimate the influence of income dispersion within NUTS1 on their economic growth. We analyze the existence of the tradeoff using Redding and VenablesÂ’(2004) approach. From a simple new economic geography model in which we add a technological externality in order to allow for local growth, we derive an estimable equation linking the level of factor prices in a region to the level of inequalities inside that region, as well as the regionÂ’s access to markets. Our results show a positive relation between the gdp per capita growth rate of a region and the change in the level of inequalities inside the region. Finally, an increase in market potential, as expected, has an unambiguous positive impact on local growth.

Suggested Citation

  • Matthieu Crozet & Pamina Koenig, 2005. "The Cohesion vs Growth Tradeoff - Evidence from EU Regions (1980-2000)," ERSA conference papers ersa05p716, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa05p716

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    1. Feldman, Maryann P. & Audretsch, David B., 1999. "Innovation in cities:: Science-based diversity, specialization and localized competition," European Economic Review, Elsevier, vol. 43(2), pages 409-429, February.
    2. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
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    Cited by:

    1. Philippe Martin, 2005. "The geography of inequalities in Europe," Post-Print hal-01020614, HAL.
    2. Steven Poelhekke & Frederick van der Ploeg, 2008. "Growth, Foreign Direct Investment and Urban Concentration: Unbundling Spatial Lags," DNB Working Papers 195, Netherlands Central Bank, Research Department.
    3. Michael Bräuninger & Annekatrin Niebuhr, 2008. "Agglomeration, Spatial Interaction and Convergence in the EU," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(3), pages 329-349.
    4. Brülhart, Marius & Sbergami, Federica, 2009. "Agglomeration and growth: Cross-country evidence," Journal of Urban Economics, Elsevier, vol. 65(1), pages 48-63, January.
    5. Philippe Martin, 2005. "The geography of inequalities in Europe," Sciences Po publications info:hdl:2441/9283, Sciences Po.
    6. Nuno Carlos LEITÃO, 2013. "A Panel Data Modelling Of Agglomeration And Growth: Cross-Country Evidence," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 8(1), pages 67-77, February.
    7. repec:spo:wpecon:info:hdl:2441/9283 is not listed on IDEAS
    8. Tripathi, Sabyasachi, 2012. "Large Agglomerations and Economic Growth in Urban India: An Application of Panel Data Model," MPRA Paper 41574, University Library of Munich, Germany.

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