Does economic convergence hold? A spatial quantile analysis on European regions

Abstract

This paper investigates differences in economic growth determinants for 187 regions across 12 European countries. The study focuses on a period of increasing inequalities including the peak of global recession (1981–2009). The conditional convergence model is estimated, removing the assumption of linearity, by using a spatial quantile regression. Spatial quantile results are used for the identification of groups of regions that share a common path in terms of economic growth determinants. This approach allows us to analyse if different growth performances may cause disparities across regions. The empirical evidence shows how European regions are characterized by different convergence rates as well as heterogeneity in the effect of investments, population growth, human capital, and spillovers. Besides, convergence tends to be higher for the European regions that grow slower, producing a stronger reduction of disparities between these regions. This last outcome highlights how EU regions are different in their economic performance, pointing out the need for ad hoc policies.