Regional Convergence in the European Union: Results from a Panel Data Model

This paper evaluates the convergence process for different samples of European Union regions during the period 1982-1999 by using fixed effects panel data regressions. This estimation method allows us to control for unobserved time-invariant heterogeneity in cross-sectional models. The results of growth rates are significantly negatively related to income levels and show that the convergence relationship holds. However when regions are bound to very different steady state positions, convergence to a common income level appears to be impossible.

How tight should one's hands be tied? Fear of floating and credibility of exchange rate regimes

This paper analyzes the linkages between the credibility of a target zone regime, the volatility of the exchange rate, and the width of the band where the exchange rate is allowed to fluctuate. These three concepts should be related since the band width induces a trade-off between credibility and volatility. Narrower bands should give less scope for the exchange rate to fluctuate but may make agents perceive a larger probability of realignment which by itself should increase the volatility of the exchange rate. We build a model where this trade-off is made explicit. The model is used to understand the reduction in volatility experienced by most EMS countries after their target zones were widened on August 1993. As a natural extension, the model also rationalizes the existence of non-official, implicit target zones (or fear of floating), suggested by some authors.fear of floating, target zones, exchange rate arrangements, rational expectations, credibility

The Regional Policy of the European Union and the Enlargement Process to Central and Eastern European Countries

The successive enlargement processes of the European Union have implied reforms in Regional Policy. Since the Single European Act (1987), Europe has got a structural policy mainly focused on regions whose development is lagging behind. The accession of CEECs will mean an extraordinary increase in regional development disparities. However, the current EU Regional Policy is addressed to deal with such a kind of development lags. Competition in a large market combined with regional development policy of the EU is a successful policy mix to boost growth of CEECs in the framework of an open market economy. The own success of regional policy in current objective 1 regions will led to an important reduction of assisted population. The financial perspectives approved in the Berlin Summit (March 1999) provides enough financial space to assist 90% of population in CEECs and 75% of current population under objective 1. The main challenge involved in the successful extension of EU Regional Policy to CEECs lies in the field of management capabilities and administration reforms that must be carried out in these countries.Regional Policy, European Union, Central and Eastern European Countries

Regional Policy and Convergence in Europe: The Case of Backward Regions

This paper analyzes the performance of regions whose development is lagging behind since the institutionalization of the EU regional policy, (1989). Results from a panel data model with fixed effects prove that backward regions have been catching up with the EU average income since the launching of the first programming period, the so called Delors'I package, 1989-1993

Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU

Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innovation activities on the productivity levels of firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D effects is significant for a number of different issues. First, the results show a sizeable impact on TFP growth, as the impact of R&D is twice that of non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complementary, at least for the case of countries with high R&D intensities or high non-R&D intensities

Regional Impacts of non-R&D Innovation Expenditures across the EU Regions: Simulation Results Using the Rhomolo CGE Model

In the EU, a sizable part of innovation is attributed to the activities other than R&D such as purchases of advanced machinery, licenses, patents and minor modifications in products or processes. These non-R&D innovation activities receive substantial funding from the European cohesion policy (ECP). In this paper we applied the dynamic spatial computable general equilibrium model RHOMOLO to evaluate the ex-ante short and long run economic impacts of 2014-2023 non-R&D innovation subsidies allocated to the EU27 NUTS2 regions. The results of computer simulations show that the most notable welfare improvements (GDP, production and household consumption) were observed in the Eastern EU regions that receive the largest share of funding. Such outcome is in line with the goals of the European Cohesion Policy of stimulating economic convergence of the least developed regions. As was expected, the magnitude of macroeconomic impacts positively correlates with the amount of non-R&D subsidies allotted to the regions.JRC.J.2-Knowledge for Growt

Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU

Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innova- tion activities on the productivity levels of ?firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D e¤ects is significant for a number of diffffrent issues. First, the results show a sizable impact on TFP growth, as the impact of R&D is twice that of non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complementary, at least for the case of countries with high R&D intensities or high non-R&D intensities

New Economic Geography And Educational Attainment Levels In The European Union

In this paper a New Economic Geography model is used to analyse the distribution of educational attainment levels in the European Union. The results show that educational attainment levels decrease with distance to large consumer markets, proving that the theoretical predictions of the model are verified empirically

Geographical economics and per capita GDP growth in Romania

This paper analyses the growth dynamics in the Romanian economic over the period 1995-2008 and the link between them and the economic geography of the country in light of the transition process started in the early nineties. The analysis of the growth dynamics is carried out at different geographical scales and using different time spans. The analysis of the growth dynamics is followed by an econometric exercise which first tries to check for the (non)existence of convergence and then we have studied to which extend the economic geography of the country is a key ingredient in the observed growth dynamics. The results of our analysis point out that regardless of the period of study under consideration a catching-up process across Romanian counties is not taken place. Rather a divergence process is pretty much at work. Our second important conclusion is that the economic geography of the country is shaping the growth dynamics observed over the course of the years in Romania.peer-reviewe

European constitutional political economy : enlargement and the crisis of institutional system

The classical “integration process” has reached a critical point and constitutional limits, which make a qualitative change of importance in the system of community government indispensable. Our paper is based on an analysis of the constitutional choices of citizens and governments using a political-economic model, whose main conclusion centres on the need for breaking the central governments’ monopoly in the representation of national interests of the Union’s member states, both at a constitutional level (reform of treaties) and in the institutional balance (decision making).peer-reviewe