Viewpoint: Regional inequalities in Europe: reflections on evidence, theory and policy

Abstract

The evolution of regional inequalities in the European Union is often perceived as the spatial footprint of the forces and dynamics driving and shaping its increasingly integrated economy. Seen from this perspective, regional inequalities have received increasing attention at the national and European level and are typically understood as a measure of success of the integration, development and cohesion policies. The last two decades have been marked by important events, including: the Single European Market; the process of transition in Central and Eastern European Member States in the early 1990s; the introduction of the Euro currency; three waves of expansion of the EU; and, important institutional and policy development. Together these events have changed the European economy in an unprecedented way. In the same period, regional inequalities in Europe appear to be consistently high following a mixed core-periphery, east-west and north-south pattern. On average, the core, western and northern regions are more advanced than the peripheral, eastern and southern regions, respectively. Although stories of success have emerged in nearly all parts of Europe, their spatial frequency has maintained this pattern intact over the last 20 years. A large number of econometric studies have examined regional inequalities in Europe with a variety of results that mainly depend on the selection of methodology. However, an increasing number of papers and a simple examination of regional data show that inequalities are increasing. First, at the national level, regional inequalities have increased in most countries. The weighted coefficient of variation of regional GDP per capita has increased between 1995 and 2004 in 14 out of 19 EU countries when inequalities are measured at the NUTS (Nomenclature of Territorial Units for Statistics) II level. In the same period it has also increased in 20 out of 24 countries when measured at the NUTS HI level. In most Member States, the spatial patterns of growth have favoured the metropolis, which has increased its dominance. The share of national GDP produced in the metropolis increased in 19 out of 25 EU countries (in some of them considerably) in the period 1995-2004. Besides the success of the metropolitan regions, the spread in regional performance has also increased because of weak performance at the lower end of the regional distribution. A significant part of regional inequalities is due to the inability of the least advanced regions to close the development gap and converge towards the national average.