The Changing Pattern of Regional Convergence in Europe

Abstract

The article provides an assessment of the regional convergence process between the Western European regions since the 1950s. Two sets of issues are addressed: (a) Is there sufficient evidence of regional convergence? If so, has the speed of convergence changed over time and is this speed satisfactory. (b) Is convergence a phenomenon limited to the core EC regions as often claimed or did it encompass Europe's Southern and Northern regions as well? The investigation follows the methodology suggested by Barro and Sala-i-Martin to study the process of convergence in a neo-classical model of growth and to assess its speed. In contrast to the results obtained we then put an estimation of convergence based on panel data techniques, which shows the size of individual regional effects determining steady state income. The results suggest that convergence had set in at a rather high rate during the fifties and sixties. European regions seemed to have joined on a common convergence path until 1973. After 1975, convergence slowed down distinctly and several poorer regions on the Southern periphery started to show a weakness in convergence. Slow convergence in the 1980s was paired with an increasing deviation in steady state income between rich and poor regions, which a number of the latter could not recover when convergence set in again in the late 1980s.

JEL Classification: O11, O18, O47, R11, C23