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Trends in the relation between regional convergence and economic growth in EU

Lucian Albu

Working Papers of Institute for Economic Forecasting from Institute for Economic Forecasting

Abstract: The purpose of this study is to investigate the relation between regional convergence inside of countries in EU and economic growth, and, based on it, to establish some relevant behavioural regimes. As data sources, we are using data from NUTS 2, EUROSAT, for the period 2000-2014. Thus, initially a number of 276 regions grouped in 28 countries were considered. Then, because six countries (Cyprus, Estonia, Latvia, Lithuania, Luxembourg, and Malta) are not divided in regions in NUTS 2 we made few aggregations, finally resulting 24 countries or groups of countries. As usually in specialised literature, to study the correlation between the real convergence and economic growth we focused on the dynamics of GDP per capita expressed in case of EU in PPS (Purchasing Power Standard). On the one hand, in order to estimate a trend of convergence/divergence among regions within a country or group of countries we used the dynamics of the coefficient of variation. On the other hand, within EU, we used for each country or group of countries the dynamics of the ratio between the individual level of GDP per capita and the average EU GDP per capita in order to evaluate how the position of a country changed. Based on such methodology, we succeeded to elaborate a general typology that permitted us to classify countries of EU in four major groups: 1) countries that improved their position in EU (as GDP per capita), but by sacrificing the regional convergence; 2) countries in which it was registered a regional convergence, but by worsening their position in EU; 3) countries for which both their position in EU was decreasing and a regional divergence registered (the most unfavourable dynamics); 4) countries for which both their position in EU was increasing and a regional convergence was registered (the most favourable dynamics).

Keywords: growth; convergence; nonlinear model; GDP per capita; behavioural regimes (search for similar items in EconPapers)
JEL-codes: C31 E17 O11 O15 O47 O52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2016-11
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