EMU versus the regions? Regional convergence and divergence in Euroland

There is currently considerable interest in and debate overthe impact of increasing European economic and monetary integration(EMU) on the regions of the EU. Opinion is sharply divided overwhether EMU is leading to regional economic convergence or regionaleconomic divergence. This paper examines the theoretical argumentsand empirical evidence for these opposing views, and presentssome additional analysis of patterns of regional productivitytrends and employment growth over the period 1975–98.The picture that emerges is a complex one: whilst worker productivityshows only very weak convergence across the EU regions (a processwhich halted altogether after the mid-1980s), regional employmentgrowth has been sharply divergent. Although there is littlesupport for the claim that EMU will lead to regional convergence,these findings suggest that until much more detailed investigationof the specific impacts on particular types of region is undertaken,the regional implications of EMU will remain a contentious issue.     

European Policy and the Regions: A Review and Analysis of Tensions

This article explores a series of tensions inherent in the series of European policies that are designed to improve the competitiveness of regions in the face of globalization. Its focus is the co-existence of interventionist policies intended to overcome problems of lagging regions such as cohesion policies and those, for example competition policy which are designed to remove barriers to market integration and that are anti-interventionist. Moreover, the changing relationship between the European Union (EU), member states and the regions and problems of how regions are defined complicate policy implementation. To review these issues, the article adopts an agent-centred approach to understanding economic behaviour in the face of globalization in particular geographical and sectoral contexts. This methodology is used to highlight five sources of tension relating to the reality of the experience of globalization. These are illustrated by evidence from a recently completed EU Fifth Framework Programme study of regional adjustment strategies and technological change in five European countries.     

COMPARATIVE REGIONAL POLICY IMPACT ANALYSIS: EX POST EVALUATION OF THE PERFORMANCE OF THE EUROPEAN REGIONAL DEVELOPMENT FUND*

ABSTRACT. This paper addresses the issue of ex post impact analysis of regional policies in the European Community. The analysis is both methodological and applied in nature. After a concise overview of existing impact assessment methods, a two-step approach by means of an exploratory frequency method and an explanatory rational expectations-based model is proposed in order to provide an empirical framework for cross-regional comparative evaluation of the performance of the European Regional Development Fund (ERDF). The seope and applicability of the method is illustrated by means of a case study for Dutch regions.     

Patterns of Regional Inequality in Transition Economies

This paper provides a comparative account of important aspects of regional development in transition economies, on the basis of regional statistics available for Poland, Hungary, Romania and Bulgaria. More specifically it examines the geographical pattern of disparities, the convergence/divergence trends that have taken place at the regional level and the relation of regional disparities to the process of transition. It is found that spatial adjustments under transition favour metropolitan and western regions, especially in countries sharing common borders with the European Union (EU) and being a short distance from the European core. In addition, disparities have increased at various rates and degrees in transition countries to levels that are higher than most of the EU countries. Given that the catch-up process, which favours more often efficiency than equity policies, has a long way to go, the regional problems in these countries may take alarming, by EU standards, dimensions.     

Regional Convergence in Central and Eastern European Countries: A Multidimensional Approach

The paper examines the dynamics of regional income at the NUTS3 level of the new EU Member States from Central and Eastern Europe in the years 1998–2005. The authors apply a wide range of methods and tools including classical beta and sigma convergence analysis supplemented by transition matrices, kernel density estimations and spatial autocorrelation statistics. Results of such a multi-dimensional empirical study reveal some previously unrecognized patterns of regional growth in Central and Eastern European Countries (CEECs). Well-acknowledged metropolization and marginalization processes that cause regional divergence at the national scale are accompanied by the following processes. Firstly, at the macroregional scale, regional convergence has been observed as a result of differences in growth rates between individual countries. Secondly, at the national scale, petrification of existing regional structures has been prevailing in majority of the countries. Furthermore, weak convergence of clubs has been observed separately among the richest metropolitan regions and between the group of the poorest regions. In general, the polycentric spatial structure of the macroregion has reduced the impact of rapid growth of rich capital city-regions on convergence processes. Simultaneously, diffusion of development processes had a rather limited range and polarization in larger metropolitan regions have been a characteristic feature of CEECs.     

The Regional Impact of EU Eastern Enlargement: A View from Germany

Based on a relational concept of regional analysis this contribution emphasizes that European Union (EU) Eastern enlargement will primarily lead to a restructuring or intensification of interregional economic relations. However, it rejects the widespread view that at first the border regions at the present EU Eastern boundary would be affected by Eastern enlargement. This view relies on the problematic assumption that the regions' transnational relations are subject to a logic of geographical nearness. The most important nodes of transnational economic relations in an enlarged EU are not the border regions, but certain regional development centres in the interior of the European economic space. Thus the regional impact of EU Eastern enlargement should be differentiated with regard to different types of regions: Particular advantages come towards the structurally strong regions in the interior of the present EU as well as the accession countries, whereas the structurally weak regions at the present EU Eastern boundary can gain advantages from Eastern enlargement only to the extent that they manage to overcome their endogenous blockades concerning cross-border economic cooperation and a positive attitude of the regions' population towards European integration.     

Do EU Regional Policies Favour Regional Entrepreneurship? Empirical Evidence from Spain and Germany

The European Commission in the scope of its cohesion policy tries to increase competitiveness of the European Union (EU) regions by supporting, beside many other instruments, entrepreneurial activities in the EU sub-national regions. This paper sheds an empirical light on the relationship between entrepreneurial activities and entrepreneurial perceptions on the one hand and the economic performance of regions eligible for EU regional policies in Spain and Germany on the other. Based on empirical data on the NUTS2 level, there will be analysis of whether previous EU support has later had an impact on entrepreneurial activities and/or entrepreneurial perception in the regions. The results show empirical evidence for a relationship between entrepreneurial activities and EU regional policies. However, other determinants such as gender and the role model function have an even stronger impact. Some of the results may help to increase the effectiveness of EC regional policies and of regional policies of the national governments, especially if the interdependence of entrepreneurship support policies and proper regional policies is considered.     

Australia’s relationship with the European Union: from conflict to cooperation

ABSTRACT

After decades of tension, Australia and the European Union (EU) now have a substantive relationship, interacting and cooperating with each other within a wide range of areas. The relationship is currently at a critical turning point. The Framework Agreement has, for the first time, elevated the relationship to a treaty level. It strengthens Australia–EU actions and interests on bilateral, regional and multilateral issues. There is considerable potential for closer cooperation and more extensive pooling of the resources and capacities of both interlocutors on a range of policies and within the multilateral context. This article provides an assessment of the relationship, the current state of play and key challenges facing the relationship as the EU and Australia forge stronger ties through the conclusion of a Framework Agreement and the commencement of discussions on a Free Trade Agreement at the same time as the UK’s exit negotiations from the EU. It demonstrates that, although there are challenges facing the relationship, there are also significant opportunities to further develop and strengthen ties.     

Analysing How Environmental Concerns are Integrated in the Design of the EU Structural Funds Programmes

This paper analyses the environmental measures co-financed by the European Union (EU) Structural Funds in the less-developed regions. Specifically, it studies if these environmental measures are tailored to the specific needs of the different regions and whether they are driven by an ecological modernization approach. The inclusion of environmental goals into the regional policy is also tested by analysing its connection with the main European environmental directives. We find a suitability of the regional programmes to the regional specific environmental factors, a scarce presence of the ecological modernization paradigm behind the programmes implementation and a clear orientation of the regional programmes to meet the EU legislation.     

Regional Innovation Policies in the Czech Republic and the Case of Prague: An Emerging Role of a Regional Level?

The aim of the paper is to provide an overview of the development of Czech innovation policy which started to get its shape in the first years of the 21st century. The article traces its origins to a number of interlinked factors—the introduction of European regional policy in the Czech Republic, the increased inflow of foreign direct investment into R&D-intensive sectors and also the devolution of power to Czech regions that were established in 2001 and gave a new, regional dimension to research and innovation policy. It pays particular attention to the process through which the regionally-based innovation policy advocated by the European Union (EU) has been translated and adapted in the context of a new EU member state. As an illustration of the efforts at the regional level to make a better use of the potential of R&D and innovation in the regional development, a case study of a regional innovation strategy of the City of Prague is analysed. The City of Prague was selected for a critical analysis of an innovation system and innovation policy due to the fact that it is a region with significant but until now not fully exploited innovation potential and, in addition, its first innovation strategy has been recently adopted. The innovation strategy is closely scrutinized and the process of its elaboration is critically examined within the European and especially national context. The authors demonstrate that there is a lot of conceptual ambiguity and confusion associated with the process of transferring the experiences of Western European regions to the Czech Republic. The authors believe that at least some of their observations and analysis of weaknesses of the process through which the regional innovation strategy (RIS) has been carried out will have relevance for other Czech regions and even for other regions in the new EU member states.     

The Dynamics of Regional Disparities in Central and Eastern Europe during Transition

This paper examines the evolution of territorial imbalances in per capita income in the Central and Eastern Europe regions between 1990 and 2001. In order to overcome the limitations of conventional convergence analysis, we have combined a non-parametric approach that allows us to study the dynamics of the entire cross-section distribution, with a series of theoretical results and measures taken from the literature on personal income distribution. The results obtained show an overall reduction in regional inequality over the study period. This process has been compatible with the simultaneous presence of between-country convergence and within-country divergence. Likewise, we have observed a reduction in the development gap between the sample regions and Western Europe. In any event, the polarization of the distribution under consideration has decreased, while the registered level of intra-distribution mobility is relatively low. Furthermore, the analysis highlights the important role played in explaining the distribution dynamics by factors such as the national component, spatial location, productive structure, agglomeration economies and the percentage of gross domestic product devoted to investment.     

The Structural Funds in Andalusia for the Programming Period 2014–2020: Time for Tightening Belts

During the period 2014–2020 it will be the first time since Spain joined the European Economic Community that the Southern region of Andalusia will not be considered as one of the Objective 1 priority areas for the European Regional Policy. This paper analyses the economic impact of the foreseeable withdrawal of an important amount of European Structural Funds in the region. Our point is to develop a dynamic general equilibrium model to assess, under different simulation scenarios, the effects of the removal of this funding on the main regional economic indicators, specially focusing on GDP growth, a key variable for the future of the region.     

Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982–1997

In this paper we apply earnings equations for U.K. regions over 1982–1997. We find evidence of rapid convergence across regions regarding the determinants of individual wages (i.e., regional fixed-effects, gender gaps, and returns to education and experience). In contrast, data on average regional earnings point to a worsening of U.K. regional inequalities and a rise in the North-South gap. Education accounts for most of the discrepancy between aggregate divergence and disaggregated convergence. First, London gained because its workforce became relatively more educated over the period. Second, returns to education increased nationwide, which favored the most educated regions (i.e., London). Third, returns to education were initially lower in London but they (partially) caught up with the rest of the country. Had returns to education and their distribution across U.K. regions remained stable over the period, the U.K. North-South divide would have decreased.     

Regional Efficiency in the European Union

This paper examines existing disparities in technical efficiency levels across the European regions over the period 1986–2002. The results reveal that technical efficiency is not randomly distributed across space in the European setting. On the contrary, the different tests performed highlight the presence of positive spatial autocorrelation and spatial heterogeneity in the distribution under consideration. In fact, we have detected several regional clusters characterized by similar efficiency levels distinguishing them from the rest of the sample. Nevertheless, the estimates carried out show the existence of a process of regional convergence in terms of technical efficiency during the study period. Our findings also reveal that factors such as the regional stock of capital per worker or the patterns of productive specialization are relevant in explaining the changes in technical efficiency experienced by the European regions between 1986 and 2002.     

EU Regional Policy After 2006: Will Scotland Notice the Difference?

In order to accommodate the recent enlargements of the European Union (EU) there has been considerable changes to the operation of EU regional policy which means that Scotland along with other regions in the EU-15 will receive considerably less money from the Structural Funds in the future. This article discusses the extent to which the reduction in EU funding for economic development will impact on the Scottish economy. The issue is explored by considering the contribution, which Structural Funds have made in the past to economic development in Western Scotland, which has received the lion's share of the money allocated to Scotland. It is suggested that whilst the amount of economic development in Scotland will not be significantly reduced as a result of the decline in EU funds the types of projects and organizations receiving funding will alter because of changes made to the way in which the funds are administered in Scotland.     

Policy governance from an autopoietic perspective: revisiting Hungary’s regionalization experience

This perspective on Hungary’s post-socialist regional policy governance is informed by an approach that relates region-building and regional governance to social autopoiesis and the self-referential and self-(re)producing nature of social systems such as states. Following debates in regional studies that reflect tensions between the local constitution and external determination of regional governance, we will demonstrate how Hungary has incorporated European Union (EU) policy frameworks through specific appropriations of territorial politics and regional ideas. These appropriations reflect Hungary’s post-socialist transformation not only in terms of responses to global forces, but also as specific spatial practices and regionalization experiences. As we argue, this has in effect resulted in a regionalism without regions – a strategy of Europeanizing territorial politics without creating institutional structures that directly challenge existing power relations. Autopoiesis thus helps explain the resilience of social systems, not only their resistance to institutional change but also their capability to ‘domesticate’ external influences. While criticisms of Hungary’s technocratic and post-political regionalization projects cannot be ignored, our analysis indicates why externally driven intervention in self-organizing governance processes, for example through EU conditionality, has had less impact than expected.     

Delocalization Patterns in University–Industry Interaction: Evidence from the Sixth R&D Framework Programme

Increasing university–industry interaction (UII) and university contribution to the local economy are compatible—conventional wisdom would say. However, similar to other university activities, interaction with industry may be limited due to a lack of absorptive capacity in local firms. The data of those participating in the European Union's (EU's) Sixth R&D Framework Programme (FP6) were used to obtain values for the number and, notably, the budgets of UII projects at the regional level for the EU27. Two types of interactions were considered: inside and outside the region. Our analysis indicates that universities from regions whose firms have low absorptive capacity participate more often in FP6 projects with firms outside the region. Our results highlight the value of policies that facilitate firm R&D to enhance collaboration with regional universities.     

A NEOCLASSICAL MODEL OF REGIONAL GROWTH IN INDONESIA

In this paper a neoclassical model of regional growth is specified, estimated, and applied to the provinces of Indonesia. While parametric estimates indicate that factors of production respond as expected to neoclassical incentives, the attractiveness of growing regions for capital and labor inputs leads to instability and divergence among regions when the model is solved dynamically. A simulation of government intervention via a policy of encouraging capital growth in lagging regions demonstrates the potential of reversing such effects and encouraging regional convergence.     

European Corridors as Carriers of Dynamic Agglomeration Externalities?

Transport corridors are viewed as a promising way forward in European Union (EU) transport policy, assumed to contribute positively to regional economic development. However, the validity of this assumption is not evident. The aim of this paper is to empirically test whether agglomeration economies in European transport corridor regions are positively related to indicators of regional economic development compared to regions outside the scope of corridors. The results build on the notion that the type of agglomeration economy in combination with the structure of the economy matters for prospects of structural economic growth in different regions. In this way, the analysis not only contributes to enhancing the empirical scrutiny of the corridor concept in EU transport policy, but also provides new insights into how corridors contribute to regional economic growth. We find only limited evidence for a corridor effect across European regions on productivity and employment growth externalities. Instead, we find a large degree of spatial heterogeneity interacting with corridors—a heterogeneity that has been little recognized in EU policies. We suggest that recent attention to place-based development strategies may accord well with the kinds of agglomeration effects related to corridor development observed in this study.