Forecasting regional growth: the MASST model

Nowadays, forecasting regional growth is not possible without taking into account the recent economic dynamics at national and supranational level. In fact, the particular focus of the European Union on sovereign debts and deficits imposed by the economic slowdown, the macroeconomic trends that emerged as a result of the crisis and, last but not least, new politically sensible decisions concerning the future of the European Union play a role in explaining the remarkable industrial and geographic heterogeneity in the response to the crisis and the persistence of some of the contraction-induced effects in some countries and regions. All this introduces complexity in the way regional economic growth can be modelled for forecasting purposes. The MASST model is a regional econometric growth model built to simulate regional growth scenarios in the medium and long run (typically, over a 15–20‑year time horizon), taking into consideration also macroeconomic aspects; in its estimation step, in fact, it explains regional growth as the result of national macroeconomic trends and regional growth assets at the same time. This paper aims to present the model and its interpretative power by merging national macroeconomic trends and the long-term regional structure. Particular emphasis will be given to the outcomes of two recent simulations for Polish regions

Territorial scenarios in Europe: Growth and disparities beyond the economic crisis

Up to the start of the present economic crisis (2008), Europe was characterized by a clear trend of convergence in the GDP level of European countries, which was able to counterbalance the opposite trend in intra-national disparities that took place in many countries – namely those with a more recent accession to the Union. The economic downturn of the last years, however, has brought this process of convergence to a halt, mainly as a consequence of the tight austerity policies imposed to many southern European countries. This evidence, recognized by the European Union in the last Cohesion Report (“the crisis has reversed the process of convergence of regional GDP per head and unemployment within the EU”) brought to the fore the relevance of macroeconomic policies in regional development. Therefore in this paper, with the help of a newly built macroeconomic and regional forecasting model (MASST), the future of regional convergence / divergence in the EU is explored through four scenarios: a baseline one, recognizing the clear break of the crisis and three exploratory scenarios, depicting in a consistent way three different “territorial” strategies: supporting large metropolises vs. cities of second and third rank, vs. peripheral and lagging regions. Interestingly enough, the “cities” scenario proves to be at the same time the most cohesive and the most expansionary, shedding some doubts on the traditional equity/efficiency trade-off through an intermediate strategy based on the exploitation of a diffused territorial capital. Overall, diverging regional processes are forecasted from now to 2030