The Effects of Integration on Regional Disparities: Convergence, Divergence or Both?

Posted: 23 May 2001

See all articles by Mariassunta Giannetti

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

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This paper offers an explanation for the coexistence of convergence across countries and the lack thereof at the regional level in the European Union. The model shows that, even if it accelerates growth and brings convergence across countries, the intensification of international knowledge spillovers due to more cross-country interaction may exacerbate within-country regional disparities, if regions with different specialization do not benefit evenly from the exchange of knowledge. The empirical evidence supports the implications of the model. In particular, the data show that regions specialized in advanced sectors at the beginning of the sample period became more similar in terms of per capita income, while regions specialized in traditional sectors lagged.

Keywords: regional growth, integration, knowledge spillovers, learning-by-doing

JEL Classification: 052, 041, 018, F15

Suggested Citation

Giannetti, Mariassunta, The Effects of Integration on Regional Disparities: Convergence, Divergence or Both?. Available at SSRN:

Mariassunta Giannetti (Contact Author)

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Centre for Economic Policy Research (CEPR)

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