Regional economic dynamics and convergence in the European Union

Abstract

This paper uses an alternative approach to convergence analysis, which, in our opinion, is richer than those traditionally proposed. We believe that the evolution of the whole regional distribution is what matters, not that of an average or representative economy, implicit in the or convergence concepts. Moreover, when analyzing inequality among regional economies, geographic space acquires a preeminent role. We therefore apply spatial association tests recently developed in the spatial econometrics literature and relate them to convergence analysis. Specifically, we apply this methodology to the analysis of regional dynamics and convergence in the European Union (EU). In this context, the progress made in the integration process has highlighted the question of economic disparities at regional level. The process of convergence came to an end in the late seventies, coinciding with major changes in economic activity. This paper shows how these factors appear to have provoked a regionally differentiated response which, though significant, did not, in all likelihood, exacerbate the decrease in regional inequalities.