The European Enlargement Process and Regional Convergence Revisited: Spatial Effects Still Matter.

Abstract

This paper has two main goals. First, it reconsiders regional growth and convergence processes in the context of the enlargement of the European Union to new member states. We show that spatial autocorrelation and heterogeneity still matter in a sample of 237 regions over the period 1993-2002. Spatial convergence clubs are defined using exploratory spatial data analysis and a spatial autoregressive model is estimated. We find strong evidence that the growth rate of per capita GDP for a given region is positively affected by the growth rate of neighbouring regions. The second objective is to test the robustness of the results with respect to non-normality, outliers and heteroskedasticity using two other methods: The quasi maximum Likelihood and the Bayesian estimation methods.