No abstract

This paper evaluates the impact of structural funds on the convergence process between 145 European regions over 1989-1999. The presence of spillover effects is investigated with spatial econometric methods, which assess the impact of the funds on the targeted region and its neighbours. We also control the potential endogeneity problem in the estimation of their impact. Our estimation results indicate that significant convergence takes place, but that the funds have no impact on it. Simulation experiments show how investments targeted to the peripheral regions never spill over to their neighbours, which calls for a reconsideration of current regional policy tools. JEL classification: C14, O52, R11, R15

The purpose of this article is to study the evolution of GDP disparities among 138 European regions over the period from 1980 to 1995. Regional per capita GDP cross-sectional distribution is characterized by means of nonparametric estimations of density functions, and the growth process is modeled as a first-order stationary Markov chain. Spatial effects are then introduced within the Markov chain framework using regional conditioning and spatial Markov chains. The results of the analysis indicate the persistence of regional disparities, a progressive bias toward a poverty trap, and the importance of geography in the convergence process.

The authors show that spatial dependence and spatial heterogeneity matter in the estimation of the β-convergence process among 138 European regions over the 1980 to 1995 period. Using spatial econometrics tools, the authors detect both spatial dependence and spatial heterogeneity in the form of structural instability across spatial convergence clubs. The estimation of the appropriate spatial regimes spatial error model shows that the convergence process is different across regimes. The authors also estimate a strongly significant spatial spillover effect: the average growth rate of per capita GDP of a given region is positively affected by the average growth rate of neighboring regions.