Regional inequalities and convergence clubs in the European Union new member-states

Abstract

The paper assesses on empirical grounds the level and the evolution of regional inequalities in each European Union new member-state (EU NMS) and examines the possibility for the emergence of regional convergence clubs. The experience of the EU NMS is a unique situation, where relatively closed economic systems opened, almost at once, to the world economy and, at the same time, market mechanisms replaced central planning. Thus, understanding the spatial pattern of regional growth in the EU NMS may provide valuable insight for theory and policy. The application of non linear econometric models, which transcend the "all or nothing" logic behind conventional convergence analysis, has shown the existence of regional convergence clubs in many EU NMS. The identification of regional convergence clubs, irrespective of the pattern that emerges in each EU NMS, highlights the heterogeneous spatial impact of the EU economic integration process.new European Union member-states, regional inequalities, convergence clubs, Weighted Least Squares (WLS), integration