Traces of the Iron Curtain: A multivariate analysis of regional cohesion in Europe

Abstract

The present study aims to test relative welfare differences among regions in Europe, so as to examine whether the post-communist era has led to more socio-economic cohesion in Europe. The performance of European regions is analysed, compared, and assessed by using the Regional Competitiveness Index (RCI) and stylised fixed nominal categories. The current status of regional cohesion is tested on the basis of detailed data on 268 NUTS 2 European regions by using a robust methodology oriented towards univariate comparison of location parameters, multivariate classification by the decision tree and CHAID algorithm, and comparison of nominal variables with four values based on density plots.Multivariate classification appears to offer statistically excellent results with an overall correct prediction rate for post-socialist and capitalist regions in Europe of 99.6%. The research results from the Higher education and Innovation pillars, reveal a convergence of capitalist and post-socialist regions with capital cities and a divergence of regions with administrative capitals and other regions. Relatively, the two groups which perform best are both groups with capitals, while the group of capitalist regions with a capital city is significantly better in almost all pillars.The key message is that the transition of post-socialist regions is not yet over. Capitalist regions in Europe perform better than post-socialist regions in eight of the nine pillars of regional competitiveness. Our research results also reveal that the group of post-socialist regions without capital cities are significantly lagging behind the rest of the regions in Europe, and thus form the most vulnerable group of European regions. As there is data continuity in the official RCI classification and measurement, policy makers will be able to compare the performance of their own regions over time and to design appropriate concerted strategies accordingly. From this perspective, our study draws several interesting lessons and results for policy makers at various levels. Place-based regional planning and policy based on our analysis framework may be helpful in developing effective measures to cope with the socio-economic legacy of the “Iron Curtain” and get closer to regional cohesion in Europe.