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TFP Convergence Across European Regions: A Comparative Spatial Dynamics Analysis

Download Now Date Added: Dec 2010
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This paper proposes a fixed-effect panel methodology that enables one to simultaneously take into account both TFP and traditional neoclassical convergence. The authors analyze a sample of 199 regions in EU15 (plus Norway and Switzerland) between 1985 and 2006 and find the absence of an overall process of TFP convergence as they observe that TFP dispersion is virtually constant across the two sub-periods. This result is proved robust to the use of different estimation procedures such as simple LSDV, spatially corrected LSDV, Kiviet-corrected LSDV, and GMM ? la Arellano and Bond. However, they also show that this absence of a strong process of global TFP convergence hides interesting dynamic patterns across regions.