Empirica

, Volume 41, Issue 2, pp 129–151 | Cite as

Convergence as a heterogeneous process: what can be learnt about convergence in EMU from regional experiences?

Original Paper

Abstract

We augment the existing literature on regional convergence by uncovering a number of stylized facts on the heterogeneity of regional convergence processes in the absence of currency devaluation as a key policy instrument, and use them to highlight reform strategies that are most likely to be conducive to a successful catching-up of the periphery countries of EMU. We show that regional convergence processes in Europe were extremely heterogeneous, highly discontinuous and strongly concentrated during the last two decades. These stylized facts question the focus of the traditional literature on average (β-)convergence and suggest substantial nonlinearities in regional convergence processes that have yet to be understood in detail. Our results further suggest that growth strategies based on increasing human capital investments and innovation capacities are the most likely to be successful in triggering convergence of lagging regions in currency unions.

Keywords

Regional convergence Within-country development Extreme growth events Currency unions 

JEL Classification

O52 R11 R58 

References

  1. Abreu M, de Groot HLF, Florax RJGM (2005) A meta-analysis of β-convergence: the legendary 2%. J Econ Surv 19(3):389–420CrossRefGoogle Scholar
  2. Barro RJ, Sala-i-Martin X (1991) Convergence across states and regions. Brookings Pap Econ Act 1:107–182CrossRefGoogle Scholar
  3. Barro RJ, Sala-i-Martin X (1992) Convergence. J Polit Econ 100(2):223–251CrossRefGoogle Scholar
  4. Bartlett MS (1937) Properties of sufficiency and statistical tests. Proc R Soc Lond A 160(901):268–282CrossRefGoogle Scholar
  5. Baumol WJ (1986) Productivity growth, convergence and welfare: what the long-run data show. Am Econ Rev 76(5):1072–1085Google Scholar
  6. Crespo Cuaresma J, Feldkircher M (2013) Spatial filtering, model uncertainty and the speed of income convergence in Europe. J Appl Econom 28(4):720–741CrossRefGoogle Scholar
  7. Crespo Cuaresma J, Foster N, Stehrer R (2011) Determinants of regional economic growth by quantile. Reg Stud 45(6):809–826CrossRefGoogle Scholar
  8. Crespo Cuaresma J, Doppelhofer G, Feldkircher M (2012) The determinants of economic growth in European region. Reg Stud. doi:10.1080/00343404.2012.678824 Google Scholar
  9. Dobson S, Ramlogan C, Strobl E (2006) Why do rates of β-convergence differ? A meta-regression analysis. Scott J Polit Econ 53(2):153–173CrossRefGoogle Scholar
  10. Durlauf SN, Johnson PA, Temple JRW (2005) Growth econometrics. In: Durlauf SN, Aghion P (eds) Handbook of economic growth, vol 1. Elsevier, Amsterdam, pp 555–677Google Scholar
  11. Easterly W (2006) Reliving the 1950s: the big push, poverty traps, and takeoffs in economic development. J Econ Growth 11(4):289–318CrossRefGoogle Scholar
  12. Easterly W, Kremer M, Pritchett L, Summers LH (1993) Good policy or good luck? Country growth performance and temporary shocks. J Monet Econ 32(3):459–483CrossRefGoogle Scholar
  13. Ertur C, Koch W (2007) Growth, technological interdependence and spatial externalities: theory and evidence. J Appl Econom 22(6):1033–1062CrossRefGoogle Scholar
  14. Faini R (2003) Migration and Convergence in the regions of Europe: a bit of theory and some evidence. FLOWENLA Discussion Paper 9, HWWA HamburgGoogle Scholar
  15. Hausmann R, Pritchett L, Rodrik D (2005) Growth accelerations. J Econ Growth 10(4):303–329CrossRefGoogle Scholar
  16. Jones BF, Olken BA (2008) The anatomy of start-stop growth. Rev Econ Stat 90(3):587–592CrossRefGoogle Scholar
  17. Juessen F (2009) A distribution dynamics approach to regional GDP convergence in unified Germany. Empir Econ 37(3):627–652CrossRefGoogle Scholar
  18. LeSage JP, Fischer MM (2008) Spatial growth regressions: model specification, estimation and interpretation. Sp Econ Anal 3(3):275–304CrossRefGoogle Scholar
  19. Magrini S (2004) Regional (di)convergence. In: Henderson JV, Thisse JF (eds) Handbook of regional and urban economics, vol 4. Elsevier, Amsterdam, pp 2741–2796Google Scholar
  20. Mankiw GN, Romer D, Weil DN (1992) A contribution to the empirics of economic growth. Q J Econ 107(2):407–437CrossRefGoogle Scholar
  21. Montoya LA, de Haan J (2008) Regional business cycle synchronization in Europe? IEEP 5(1–2):123–137CrossRefGoogle Scholar
  22. Rodrik D (2013) Unconditional convergence. Q J Econ 128(1):165–204CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Austrian Institute of Economic Research (WIFO)WienAustria
  2. 2.Faculty of Business and EconomicsMendel University in BrnoBrnoCzech Republic

Personalised recommendations