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Regional Infrastructure and Convergence: Growth Implications in a Spatial Framework

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Transition Studies Review

Abstract

In this paper we contribute to the debate on convergence, by presenting an overview of the catch up process of the European regions between 1995 and 2006, focusing on both absolute and conditional β convergence. Our focus is on the role of infrastructure stocks in shaping the growth and convergence process between EU regions and to what extent the spatial dimension of the data affects results. We also explicitly examine the link between infrastructure evolution and regional economic growth with a spatial panel data approach. Our results confirm an ongoing convergence process at the EU regional level, and assess the important role of transport and telecommunication infrastructure, with traditional and spatial estimation techniques. We also confirm, in a panel setting, the strong positive correlation between transport and TLC indicators and GDP growth at the regional level.

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Notes

  1. Slight differences with respect to figures provided by national statistical offices might be due to different definitions of the level of government to which motorways refer to.

  2. Subscript i for the regional dimension is omitted for clarity of exposition.

  3. A list of the NUTS2 used in the empirical analysis is presented in the Appendix.

  4. Considering a standard Cobb–Douglas production function, the implied rate of annual convergence is derived by: \( \gamma = - {\frac{{1 - e^{\beta T} }}{T}}, \) while the half life is derived from τ = −ln (2)/ ln (1 + β).

  5. A recent criticism to the definition of Objective 1 regions in the UK is put forth by Gripaios and Bishop (2006), who conclude that the qualifying regions may not have been optimally selected, possibly providing an explanation to the small difference we find between the two groups in Table 3.

  6. In order to rule out the possibility that the initial level of mobile phones may be capturing convergence effects, we added an interaction between the initial level of GDP and mobile phones. The coefficient associated to the initial level of mobile phones is largely still significant, therefore ruling out the convergence critique.

  7. In our initial period of 1995, mobile phones were still not very widespread and were a significant new technology.

  8. We report results for the geographical distance-based matrix W. In order to verify robustness to alternative specifications, we used a geographical distance based spatial weight matrix and a rook second order contiguity matrix, and results were stable to both specifications.

  9. We have omitted estimated coefficients for the spatially lagged variables due to space limitations. Few are statistically significant. Detailed results available upon request.

  10. We used a rook second order contiguity matrix, and verified robustness to alternative specifications.

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Acknowledgments

The authors wish to thank A. Caragliu, and participants at the VIII Milan European Economic Workshop, June 2009, for helpful suggestions and discussions on an earlier version, and J.P. LeSage and J.P. Elhorst for making their Matlab routines publicly available. The usual disclaimer applies.

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Authors and Affiliations

  1. Department of Economics, Business and Statistics, Università degli Studi di Milano, Milan, Italy

    Chiara Del Bo, Massimo Florio & Giancarlo Manzi

Authors
  1. Chiara Del Bo
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  2. Massimo Florio
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  3. Giancarlo Manzi
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Corresponding author

Correspondence to Chiara Del Bo.

Appendix: List of regions in the sample

Appendix: List of regions in the sample

See Table 7.

Table 7 List of EU regions
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Del Bo, C., Florio, M. & Manzi, G. Regional Infrastructure and Convergence: Growth Implications in a Spatial Framework. Transit Stud Rev 17, 475–493 (2010). https://doi.org/10.1007/s11300-010-0160-4

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