Modern trends in the economic differences between countries and within them: comparison of the world and the European Union

Abstract

This article aims to test empirically two popular hypotheses about territorial economic differences in the modern world. According to the first hypothesis, economic differences between countries in the modern world are not as large as regions’ differences within countries. According to the second hypothesis, the decline in the degree of economic differences between countries is due to the relatively faster economic development of capital regions. Investigation of the economic differences on various territorial levels realized applying the method of comparing the coefficient of variation of the income of the population. The source of the empirical data for this research is the Sub-national Human Development Index (SHDI) database created by the Netherlands Institute for Management Research of the Radboud University, which contains such indicator as Income index of SHDI in the inner regions of 161 countries in the world for the period from 2000 to 2017. A comparison of economic differences at different territorial levels revealed that in the 21st century, neither in the world as a whole nor in the EU regions’ differences within countries are higher than differences between countries. However, starting with 2015 the economic differences between inner regions of the EU countries began to outweigh the economic differences between countries themselves, and this is the specifics of the European Union. In the 21st century, both inter-country and intra-country regional economic differences in the EU countries are significantly lower than in the world as a whole. The economic importance of non-capital regions is gradually increasing in the EU, although for the time being the EU (and probably the world as a whole) still characterized by the economic growth, which is based mainly at the expense of capital regions.