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Is dualism still a source of convergence in Europe?

  • Raffaele Paci

    ()

  • Francesco Pigliaru

    ()

This paper aims at assessing whether dualistic mechanisms represent a significant component of the aggregate labour productivity convergence observed across the European regions in the 1980s. The potential of an explanation of convergence based - in part, at least - on the existence of dualism in some of the initially poorer regions has been largely ignored by the literature. We use a dualistic model based on Dixit (1970) and on Mas-Colell and Razin (1973) to obtain hypotheses to be tested in cross-region growth regressions. In particular, we wish to test whether a high initial allocation of labour in agriculture in fact generates -- in each sector as well as at the aggregate level -- the specific impact on productivity growth (and therefore on convergence) implied by the theory of the dual economy. We use the data-base Regio-Eu set up by CRENoS, with aggregate and sectoral data for 109 territorial units from 1980 to 1990. Our cross-section results are consistent with the major predictions of the dualistic model. While part of the influence exerted by dualistic mechanisms is not easily distinguishable from the one exerted by other mechanisms such as technology diffusion, still the former appears to be a significant component of the whole process of convergence. Ignoring such component could lead to misleading interpretations of the relative roles played by each of the forces behind the process, and to inexact assessments of what actions should be taken - if any - by the European regional policy to help the process become more pervasive. Keywords: Dualism, Growth, Convergence, Regions, Europe JEL: O40, O41, O52, R11

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa98p462.

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Date of creation: Aug 1998
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Handle: RePEc:wiw:wiwrsa:ersa98p462
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  1. Jan Fagerberg, 1995. "Convergence or Divergence - The Impact of Technology," Working Papers Archives 1995524, Centre for Technology, Innovation and Culture, University of Oslo.
  2. Jan Fagerberg & Bart Verspagen, 1996. "Heading for Divergence? Regional Growth in Europe Reconsidered," Journal of Common Market Studies, Wiley Blackwell, vol. 34(3), pages 431-448, 09.
  3. R. Paci, 1996. "More similar and less equal. Economic growth in the European regions," Working Paper CRENoS 199609, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  4. R. Paci & F. Pigliaru, 1997. "European regional growth: do sectors matter?," Working Paper CRENoS 199703, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  5. Dixit, Avinash K, 1970. "Growth Patterns in a Dual Economy," Oxford Economic Papers, Oxford University Press, vol. 22(2), pages 229-34, July.
  6. 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.
  7. Damien Neven & Claudine Gouymte, 1995. "Regional Convergence in the European Community," Journal of Common Market Studies, Wiley Blackwell, vol. 33(1), pages 47-65, 03.
  8. Paci, Raffaele & Pigliaru, Francesco, 1997. "Structural change and convergence: an Italian regional perspective," Structural Change and Economic Dynamics, Elsevier, vol. 8(3), pages 297-318, August.
  9. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
  10. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April.
  11. Sala-i-Martin, Xavier, 1995. "The Classical Approach to Convergence Analysis," CEPR Discussion Papers 1254, C.E.P.R. Discussion Papers.
  12. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity and Convergence across U.S. States and Industries," Empirical Economics, Springer, vol. 21(1), pages 113-35.
  13. Mas-Colell, Andreu & Razin, Assaf, 1973. "A Model of Intersectoral Migration and Growth," Oxford Economic Papers, Oxford University Press, vol. 25(1), pages 72-79, March.
  14. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
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