Regional convergence and economic development in the EU: the relation between national growth and regional disparities within the old and the new member states

Hans Kramar
International Journal of Finance, Insurance and Risk Management, Volume 6, Issue 1, 1052, 2016
DOI: 10.35808/ijfirm/139


While European integration has substantially contributed to economic convergence on a national scale, the diverging development of highly developed metropolitan regions and lagging rural areas has become a growing challenge especially for the new member states in Central and Eastern Europe. Although it is widely assumed that economically growing countries are usually confronted with rising inequalities, the question, whether there is a direct relation between total economic growth and regional divergence, has not been sufficiently answered so far. In this context the paper inquires to which degree the process of economic restructuring and catching-up in European countries is accompanied by increasing spatial disparities. The empirical investigation of recent GDP data confirms the trend towards economic convergence on a national scale. On a regional scale, however, the process of convergence was much slower and almost came to an end after the beginning of the global economic crisis in 2008. The reason for these diverging results can be found in the change of disparities within the countries: While regional inequalities largely remained unchanged in the majority of the old member states, the gap between rich and poor regions widened in most countries which accessed the EU since 2004. This trend slowed down or even reversed after 2008, which seems to confirm the assumption that economic growth intensifies spatial divergence. A detailed analysis of the correlation between national growth rates and the change of regional disparities, however, indicates that growing divergence in the new member states can hardly be explained by the speed of total economic growth, but rather by other specific conditions there. A reflection on the mechanisms of agglomeration economies suggests three arguments for the strong diverging effect of the catching-up processes in the new member states, which await to be tested empirically in future research.

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