Regional Convergence and Growth Clusters in Central and Eastern Europe: An Examination of Sectoral-Level Data

Scott Hegerty

Eastern European Business and Economics Journal, 2016, vol. 2, issue 2, 95-110

Abstract: Neoclassical growth theory suggests that individual Central and Eastern European (CEE) regions should converge with one another, as those with low initial levels of per-capita GDP grow faster than regions with high initial levels. But previous studies show convergence is more likely to occur at the national level than the regional level. In addition, sectoral analysis (particularly in “new economy” industries such as finance) might uncover results that are not found using aggregate data. This study uses spatial regression and “hot spot” analysis for 233 NUTS-3 regions and four individual sectors from 2000 to 2013, testing for regional convergence and the presence of growth clusters. A regression of growth in per-capita gross value added (GVA) on initial levels finds no evidence for “beta convergence,” except for in the construction sector at the country level in a few cases. Growth “hot spots” are found using the Getis-Ord G* statistic for growth for all sectors except industry in the Baltics and for all sectors in Bulgaria and Romania. Low-growth “cold spots” are located in Poland and Croatia. These findings suggest ideal destinations for investment.

Keywords: Regional Convergence; Central/Eastern Europe; Spatial Statistics; Gross Value Added (search for similar items in EconPapers)
Date: 2016
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