Business Intelligence

Convergence Of European Regions: A Reappraisal

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Executive Summary

The authors provide a reappraisal of income convergence across European regions over the period 1990-2005 by using a semiparametric partially linear model to approximate the relationship between the average growth rate of GDP per capita and the initial GDP per capita. Estimation results point out both country heterogeneity and non-linearity in the convergence process. Only low income regions converge while there is little evidence of convergence for higher income regions. The convergence hypothesis according to which poorer economies catch up wealthier ones is considered as a way to differentiate exogenous growth models from endogenous ones.

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