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Globalization and endogenous regional growth

Roberta Capello () and Ugo Fratesi

ERSA conference papers from European Regional Science Association

Abstract: The aim of this paper is to analyze the endogenous factors allowing regions to compete successfully in a globalized economy. These factors are expected to vary across different groups of regions, due to their different specialization and different endowment of structural connections with the world; for this reason, our analysis is conducted for all regions of Europe but also by groups, by considering separately regions with specialization in the most performing sectors and an high endowment of connections ('global players') and regions with the right specialization in the most performing sectors but little endowed with connections ('regional players'). We expect the role of other regions to be marginal, since they don't have the features to compete in the global economy and their growth will hence be pulled by exogenous factors. As a first step in the analysis, we will use descriptive statistical analysis to evidence the characteristics of regions which have successfully confronted with globalization. For global players and regional players separately, we will evidence which structural characteristics are significantly different for those regions which have on average outperformed the others in the two economic indicators of employment growth and productivity growth (which makes them also have an higher than average GDP growth). Moreover, a cluster analysis on structural features and past performance will allow us to identify common structure and behaviors among groups of global players and regional players. The second step of the analysis will involve the use of explicative econometric techniques to identify which structural characteristics have determined the higher performance of some regions with respect to others, despite belonging to the same category. We will hence regress regional performances on a number of globalization-related variables, such as regional FDI investment, functional upgrading, sectoral structural restructuring, innovation capability, infrastructure endowment. The paper will conclude with the policy implications coming from this work, which we expect to be differentiated for different groups of regions, able to play a different role in the global economy.

Date: 2011-09
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