Structural Reforms and Regional Convergence

Che, Natasha Xingyuan; Spilimbergo, Antonio

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Structural Reforms and Regional Convergence

CEPR Discussion Paper No. DP8951

39 Pages Posted: 25 May 2012

See all articles by Natasha Xingyuan Che

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

There are 2 versions of this paper

Date Written: April 2012

Abstract

Which structural reforms affect the speed the regional convergence within a country? We found that domestic financial development, trade/current account openness, better institutional infrastructure, and selected labor market reforms facilitate regional convergence. However, these reforms have mixed effects on the growth of regions closer to the countrys development frontier. We also document that regional income disparity and average income are inversely correlated across countries so that speeding up regional convergence increases national income. We also present a theoretical model to discuss these results.

Keywords: economic growth, income inequality, regional convergence, structural reforms

JEL Classification: J68, O11, O18, O25, O33

Suggested Citation: Suggested Citation

Che, Natasha Xingyuan and Spilimbergo, Antonio, Structural Reforms and Regional Convergence (April 2012). CEPR Discussion Paper No. DP8951, Available at SSRN: https://ssrn.com/abstract=2066324