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Changing regional disparities in the European Union in the

2000s convergence from different aspects


Mt Farkas, Pl szab

Abstract Resumen
Over the last decade the interest in researches of regional En la ltima dcada el inters en investigaciones de dispari-
disparities in the European Union has been growing both in dades regionales en la Unin Europea ha sido creciendo en la
political and in economic cycles. After the eastern enlargement poltica y adems en la economa. Despus de la ampliacin
in 2004 the Union had to face with large inequalities between en 2004 la Unin tuvo que cara a grandes desigualdades entre
its regions. Several attempts were made to investigate these sus regiones. Ha habido muchos intentos para investigar estos
processes both with simple statistical, and with complex, procesos con metdos simples o complejos y multidimensio-
multidimensional methods. In our paper we want to contribu- nales. Nuestro trabajo quisiera contribuir a este discurso por
te to this discourse by reflecting the short history of measu- reflejando en la historia de los metdos diferentes para medir
rement methods of development and later by discussing the desarrollo, luego por discutiendo las desigualdades cambi-
changing inequalities between the NUTS 2 regions of Europe antes entre las regiones NUTS 2 de Europa. Para los anlisis
after 2004. We use thematic maps, inequality indices and usamos mapas temticas, indices de desigualdad y modelos de
regression models for the analysis and try to reflect the role of regresin y probamos reflejar el papel de los Estados Nuevos
New Member States in shaping these processes. en conformando estos procesos.

regional disparities, development, European Union, convergence disparidades regionales, desarrollo, Unin Europea, convergencia

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Introduction regional development and measuring planning regions are always created for
the level of development are necessary specified objectives.
In order to promote its overall harmonious requirements, because there is need to Within the regional policy the term
development, the Union shall develop and determine the undeveloped regions as region is usually understood as a given
pursue its actions leading to the strengthe- the potential beneficiaries of EU supports. scale between the nation state and local.
ning of its economic, social and territorial Its not a simple way to give a definition This definition could easily be pertained
cohesion. In particular, the Union shall aim of the region, and as Bristow (2010, 5) to very different sub-national territories
at reducing disparities between the levels of argues: [] regional geographers have and geographical areas, such as the states
development of the various regions and the long struggled to define the boundaries of US, provinces of Canada or small-scale
backwardness of the least favored regions. of their fundamental object of study, such industrial districts as well as areas like
(Treaty of Lisbon 2010, Article 174) that what actually constitutes a region NUTS II regions, which were focusing
remains an object of mystery (Harrison on. For the regional policy theres a need
These statements above can be found in 2006), and a vibrant source of ongoing for comparing the different regions with
the Treaty of Lisbon, the most important debate. Based on different notions, each other, and its crucial to support the
international agreement and the cons- ideas of the region in the discipline of policy with defining the least developed
titutional basis of the European Union. geography could be grouped in different territories. The status of different regions
Catching up of regionsas an important ways. According to Paasi (2002) there depends on the administrative status of
objective of the regional policycould be exists the idea of the pre-scientific re- the given country and the role of regi-
intervened in different ways. If we decom- gion, which sees the object as a practical ons in the administrative and territorial
pose the regional policys acknowledged choice, a spatial unit suiting to the pur- system: in many countries the region
development indicator (GDP per capita), it pose of collecting and representing datas has administrative role, while in many
might be affected favourably either by the with no particular conceptual role. The other ones they have only statistical and
growth of the rate of the active population, discipline-centred approach sees the planning function.
the employment rate or the effectiveness regions as a result of research process, In the European Union the Nomenc-
of production. In this paper our focus is when theyre often formal or functional lature of Territorial Units for Statistics
on answering mainly two questions. First, classifications of empirical outcomes, and (NUTS) constitutes the system of regions.
which one of the referred dimensions lies a particular geographical perspective is It was set up by Eurostat at the beginning
behind the weakening (?) EastWest legitimated by them. In the notion of the of 1970s with the aim of providing a single
divide between the regions of EU, and critical approach regions are neither uniform breakdown of territorial units for
secondly, in this respect are the converg- neutral, nor self-evident entities, instead the production of regional statistics for
ing eastern regions similar to those in the are fundamentally social constructions the European Community. For practical
western part of the continent? (cited in Bristow 2010). reasons NUTS is based primarily on the
Our paper is organized as follows. The Another distinct separation is what institutional divisions currently being in
first section introduces the regional sys- Vanhove and Klaassen (1980) suggest in force in the Member States (normative
tem of the EU and states the short history their work on regional policy, namely that criteria): normative regions are the exp-
on different measurement methods of there exists uniform (homogenous), nodal ression of political will; their limits are
development and the EUs same prac- (polarized) and planning/programming fixed according to the tasks allocated to
tice. In the second part we amplify the regions. This latter view is connected the regional communities, to the size of
relevance of decomposing the GDP per to the above-mentioned pre-scientific population necessary to carry out these
capita, than review the general charac- notion, which is the most coherent with tasks efficiently and economically, and
teristics of regional inequalities after the regional competitiveness and regional po- according to historical, cultural and other
eastern enlargement (2004). In the fourth licy literature. Whilst in uniform (homoge factors (EC 2011).
section we analyze the changing regional nous) regions the homogeneity (the sepa- The system is a three-level hierarchical
inequalities of the components of GDP rate spatial units can be linked together classification with much heterogeneity,
per capita, and the changing characteris- of certain commonphysical, economic, because every country has sovereignty
tics of spatial structure. The last section socialcharacteristics), in polarized ones over the area of the administrative ter-
concludes. the heterogeneity (a sets of units main- ritorial system. However the NUTS reg-
taining more connections with one given ulation defines minimum and maximum
pole than with any other one) constitutes population thresholds for the size of the
System of regions and measuring
the base of the region, therefore concrete NUTS regions (see Table 1).
development in the EU factors differ from each other. Uniform The aim of the NUTS classification is to
In the case of regional policy dividing a and nodal regions generally evolve by ensure that regions of comparable size ap-
given country into regions, defining the different socio-economic processes, but pear at the same NUTS level, but each level

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European Union re value of economic growth began to
Population threshold values be questioned by social scientists and
environmentalists (see e.g. the Social
Level Minimum Maximum Indicator Movement [Berger-Schmitt
NUTS 1 3 million 7 million and Noll 2000], or reports of the Club
NUTS 2 800 000 3 million of Rome), and as a consequence, from the
1970s onwards new conceptualizations
NUTS 3 150 000 800 000
and indices of development have started
Source: Eurostat
to appear. These composite indices and
Table 1: Threshold values of the NUTS regions in Europe alternative measures of development fol-
lowed different approaches (Offer 2000).
still inevitably contains regions that differ leading position both in economic and in The first extended the national accounts
greatly in terms of population, area, eco- political sense as a superpower, and the to incorporate non-market goods and to
nomic weight or administrative powers. confrontation between the USA and the eliminate the detrimental components
This heterogeneity across the EU often former Soviet Union shaped the geopoli- (e.g. the Measure of Economic Welfare
simply reflects the situation at Member tical processes of the globe. [Nordhaus and Tobin 1972], or the In-
State level. Just to mention an example, at After the war it was widely accepted, dex of Sustainable Economic Welfare by
NUTS 2 level (which is the basic region of that the main object of development plan- Daly and Cobb 1989). Another approach
the regional policy of the EU) there exist ning politics had to be to increase the vo- focused on social norms by means of so-
huge differences between the regions: the lume of economic production (mainly via cial indicators, while the third considered
relative standard deviation is 83% in the industrialization), so development had the mental states as most important di-
case of population, and 136% in the case been identified with economic growth mensions of human well-being by means
of area; these facts have to be considered (Sachs 2000). As Offer (2000, 4) puts it: of survey data on reported subjective fe-
when making regional comparisons. [] the output measure of GDP per head, elings and experiences.
The current NUTS nomenclature app- or its annual rate of change, also became After some decades the number of
licable from 1st January 2012 subdivides a normative benchmark for economic and composite indices has started to grow at
the economic territory of the European even social performance, the higher the first particularly in scientific analyses of
Union into 97 regions at NUTS 1 level, 270 better. Theories about this phenomena some research institutes. The pioneer was
regions at NUTS 2 level and 1294 regions also predicted that the benefits of eco- the United Nations Research Institute for
at NUTS 3 level. With the accession of Cro- nomic growth (i.e. the increase of GDP Social Development (UNRISD) which deli-
atia in 2013 these numbers have grown to per capita) later would spread across the vered the first multidimensional develop-
982721315 respectively. What follows whole society (its the so called trick- ment indicators (Drewnowski and Scott
is the brief introduction of the history of le-down effect), and inequalities betwe- 1966; McGranahan et al. 1970). These
measuring development, later detailing en poor and rich people would reduce. indices included different economic and
to the practice of the EU. Unfortunately there was evidence, that social variables which reflected to physical
In the last few years there emerged an inequalities between and within countries (nutrition, shelter, health), cultural (edu-
intensive political (and academic) dis- had increased substantially (see e.g. the cation, leisure, security), and higher needs
course and debate about the meaning, calculations of Maddison 2010), and the (income), thereby tried to capture the
the sense and measuring of development, expected benefits didnt come true. meaning of well-being and development
well-being and the deficiencies of the GDP The concept of development (as eco- in a more complex way (Stanton 2007).
based approaches. In this section with nomic growth) started to be contested in Later from the early 1970s onwards other
some regards of this discourse we look at the 1970s, when it was redefined as so- international organizations (ILO, OECD)
the short history of different measuring mething, which transcends the economic joined into the research of composite in-
methods, and try to reflect the actual EUs growth, and includes the requirements of dicators, publishing several alternative
practice. redistribution, participation or human approaches for development (like the
The notion of development in the sci- development as well. The developmen- basic needs approach, which was pro-
entific and philosophical discourses has talist paradigm, which concentrated only vided first by the International Labour
a long history traced back to the era of to greater economic production have inc- Organization, later tested by Streeten
Enlightenment (Power 2003) or in some reasingly become unsustainable. After 1981 and Stewart 1985).
cases earlier (Abrahamsen 2001), but it the golden age, from the early 1950s The most influential, and perhaps the
got more attention in its political context to the end of 1960s attention began to best known and widely accepted al-
soon after the World War II. In the new shift towards the ecological, social and ternative development indicator is the
geopolitical world order the USA had the physical costs of affluence. The welfa- Human Development Index, constructed

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by the UNDP in 1990. The theoretical In recent years there has been a shift performance of a given area, and demo-
background of the HDI is based on the from this narrow interpretation, which graphic factors; more detailed it yields
capabilities approach of Nobel-prize was demonstrated by a number of ini- information about the efficiency level of
winner Amartya Sen, who argued that tiatives reflecting renewed societal and the employed resources (depending on
the quality of life should be conceived political priorities. In 2007 the European the capital/labour ratio), the technology,
and measured directly in terms of func- Commission (together with the European public and social infrastructure, human
tionings and capabilities instead of ma- Parliament, Club of Rome, the WWF and capital, knowledge etc. (Marattin and
terial resources or utility. As he noted: the OECD) organized the Beyond GDP Salotti 2009).
The central feature of well-being is the conference for developing indicators that Our empirical analysis is based on a
ability to achieve valuable functionings. complement GDP, and revealed strong model, where the representative firm use
The need for identification and valuation support from policy-makers, economic, labour and capital as factor inputs. Pro-
of the important functionings cannot be social and environmental experts and civil duction is given by constant returns to
avoided by looking at something else, such society. This initiation continued in 2009 scale production function reads as:
as happiness, desire fulfillment, opulence with other publications reflecting to the
Y = AK L1 (1)
or command over primary goods (Sen same problem. The Commission publish-
1985, 200). Published at first time, HDI ed a communication (GDP and beyond where Y denotes total output measured by
were constituted by three indicators: the Measuring progress in a changing world) GDP, A is total factor productivity, K and
gross domestic product (GNP), the lite- with the aim of improving, adjusting and L are capital and labour, and 1 are
racy rate among the people older than complementing GDP with indicators that output elasticities of capital and labour
25 years and the life expectancy at birth. could be able to monitor social and en- respectively. Dividing both sides by P (po-
These were regarded as proxy indicators vironmental progress. The culmination pulation) we get the following equation:
of most important dimensions of human of the mentioned events was the Stiglitz
Y P = A( K L) L P

(2)
development; if these are ensured for SenFitoussi report (Stiglitz et al. 2009)
where A ( K L ) reflects labour produc-

the society, its individuals could achieve including recommendations on how to
valuable life circumstances (Alkire 2005, better measure economic performance, tivity, since it is equal to YL, which is
Robeyns 2005). Although in the last two societal well-being and sustainability. positively related to capital intensity and
decades HDI has got into cross-fire of The report was discussed later by the total factor productivity. Moreover, LP
huge criticism, its usually accepted as European Parliament and as a consequen- in (2) could be further decomposed into
a better way to measure development ceand also in order to translate the re- labour market participation (the ratio of
than GDP does. commendations of the mentioned report employed persons per working age popu-
In the case of the EU measuring devel- and the initiatives into concrete action lation: LWAP), and into a demographic
opment is a crucial point for the regional the European Statistical System Commit- factor (the ratio of working age population
policy. As we mentioned above, reducing tee (ESSC) launched a Sponsorship Group per total population: WAPP).
the inequalities between countries and re- on Measuring Progress, Well-being and Many of the respecting literature
gions (territorial cohesion, convergence) Sustainable Development. They prepared include the working hours to the labour
and catching up the backward has been a report with about 50 concrete actions to productivity factor (see e.g. van Ark and
a common objective since decades. To be carried out by 2020, predictably with McGuckin 2005; Maynard 2007; Marat-
carry out these objectives the criteria of forward-looking results. tin and Salotti 2009; Mourre 2009),
backwardness need to be assigned which In the next section we deconstruct the but presumably it is strongly correlated
is based on the value of GDP per capita EUs development indicator into three with. Therefore in our paper we use the
of the regions, and the GNI per capita of dimensions; later based on this metho- following decomposition method:
the countries. In the latest and recent re- dology the changing regional inequalities
Y P = Y L L WAP WAP P (3)
gional policy period these were the main will be analyzed.
indicators, which the supported NUTS2 with the denominations above.
regions and countries were ascertained This methodology can also be found
by. Nevertheless, measuring of a countrys The decomposition method in the European Commissions Sixth
socio-economic performance is a recur- When one considers GDP per capita as a Report on economic, social and territo-
rent problem in the EU. As many criticisms proxy measure for development process, rial cohesion (EC 2014), but there exist
emphasize, the state of development in its usually forgotten, or not taken into many exemplars in the country level as
a certain country or region is a complex account, that changes in the indicator well. Mezei et al. (2009) for example de-
and multidimensional phenomena, which could be affected by many factors. The composed the indicator into a sectorial
should not be restricted only to its eco- index implicitly includes dimensions of production and a sectorial employment
nomic factor. labour productivity, the employment dimension in the case of Romania, while

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Lengyel (2003), Nemes Nagy (2004) and territorial, social and economic cohesion combination of lower hourly producti-
Banerjee and Jesenko (2014) used the between and within the member states; vity and lower labour utilization, while in
same methodology like us, when analyzed the reduction of regional income dispa- the case of EU10 this was owing to weak
regional economic differences in Hungary rities has been a key objective. From the productivity. In this respect in the next
and in Slovenia. Whats next in our paper 1990s onwards the emergence of new section we focus on the period between
is the review of the economic situation of growth theories, and increasing data 2005 and 2011 with the aim of analyzing
the EU Member States regions focusing availability have launched many empiri- the main changes of the inequalities in
on the changing disparities and spatial cal work on regional development in the the mentioned factors and their spatial
inequalities between them. European Union and research focusing structure after the accession of CEE count-
on disparities has received considerable ries. For analyzing the catching-up of the
attention both from an academic and a regions, two kinds of convergence will
Regional disparities in the policy point of view. Much of the regar- be tested: the -convergence mainly by
European Union a brief over ding literature share the common result, kernel-density estimations and inequality
view that income convergence across nations indices, the -convergence by regression
Over the last decadesespecially after was observable before the millennium, models. Data availability determined the
the millenniumthe interest in the issue however disparities between regions choice of the end of the analyzed period,
of regional disparities has been growing within the member states appeared to thus we consider 2011 as final year. For
in the EU. After the eastern enlargement persist or even to grow (cf. Terrasi 2000; the analysis we use the EUs database
in 2004 the economic gap (expressed in Puga 2001; Giannetti 2002; EC 2003; (Eurostat), namely the statistics of gross
GDP per capita) between the 10% of the EC 2007; Marelli and Signorelli 2010; domestic product, the total and working
population living in the most prosperous Smtkowski and Wcjik 2012). Other wi- age population and the employment datas
regions and the same percentage living in dely accepted facts are, that spatial effects between the abovementioned period. Our
the least prosperous ones has more than have an impact on the process of regio- territorial frame of research consists of
doubled, comparing it to the EU15. The nal growth, i.e. neighboring regions tend 272 NUTS2 units, including all regions
enlarged EU faced with great social and to grow at similar speeds (Quah 1996; of the 28 member states.
economic differences between the old Fingleton 2003), and that the traditio-
and the new member states, moreover, nal coreperiphery pattern of the whole
the transition from centrally planned eco- European spatial structure is weakening Changing inequalities of GDP per
nomies to market economies in the 1990s (Szab 2009). capita after the eastern enlarge
and the EU integration in 2004 led to a According to the analysis of Mourre ment
rise of regional inequalities within the (2009), in the end of the 2000s the main While reviewing the spatial structure
Central and Eastern European countries cause of low GDP per capita in the some of different productivity factors, some
(Lackenbauer 2004; Riede 2006). of the EU15 countries regions was the descriptive statistics also need to be
Although in the mid-1990s the growth
rate of the Central-European countries
relative standard deviation (%)
were higher than the EU15, the gap betwe-
110
en these country groups remained high.
Only Slovenia and Czech Republic had a
105
GDP per head above 60% of the EU-15
average, while the others lagged behind.
100
In Romania and Bulgaria this value was
about 2627 percent of the EU average
(EC 2004). With the accession of these 95

countries, the population of the EU had


risen almost by 80 million people, but 90
their contribution to the gross domestic
productaccording to the population we- 85
ighthad been scarce, and as a consequ-
ence, average GDP per capita significantly 80
reduced. 2005 2006 2007 2008 2009 2010 2011
In connection to these facts, an impor- Data source: EUROSTAT
Graphics: M. Farkas
tant aim of the EUs regional policysin-
ce its establishmenthas been to ensure Figure 1: Changing inequalities of per capita GDP between 2005 and 2011

5
mentioned. In 2005 the value of GDP per the EUs average gross domestic product with optimal bandwidths proposed by
capita in the most developed region was occurred especially in some Romanian Silverman (1986) supplementing it by
15 times higher, than in the less devel- and Polish regions: e.g. Bucuresti-Ilfov transition matrices. The estimated density
oped one, which difference decreased to had a GDP per capita value 81% of the functions characterizing the distribution
11 times in 2011. Both years the region EU average and it has reached to 122% of GDP per capita across the regions are
of Inner London (UK) was the leader, and in 2011, Mazowieckie (PL) had the same shown in Figure 2, which has undergone
Nord-Est (RO) the lattermost, but its value in 2005, and it has reached to 107%. some worth mentioning changes during
worth mentioning that these values are The relative standard deviation (RSD) of the analyzed period. First, it has to be no-
generally higher in smaller regions which the logarithm of GDP per capita shows the ted that the formerly poorer regions
contain the capitals of a given country. trend of weakening disparities across regi- has started to converge, the distribution
The spatial structure of the total output ons too, however since 2009 its value has has lost mess at the low end. Second, in
in 2005 was rather mosaic than in 2011. been stagnating (see Figure 1). (The value regions near to the mode of distribution
In the former year the most economically of RSD was 4.22% in 2005, and 3.76% opposite processes have taken place, ther-
developed regions (with GDP per capita in 2011). However, the calculation of the efore the function has become slightly
over the 125% of EU average) had been relative standard deviationwhile shows bimodal, and stretched out further in the
found sparsely in the central zone of the the fact of -convergencetell us nothing upper part. According to our transition
continent, however in 2011except for about whether reduce of inequalities has matriceswhich show the probabilities
the mentioned capital-regionsthey star- been the result of catching up of poorer of regions moving from a pre-defined in-
ted to concentrate to the southern parts of regions, or falling back of prosperous ones. come category in ti to another one in ti+1
Germany, and the Austro-German border To answer these questions we use kern- these results are confirmed. We made
side. The greatest changes compared to el density estimates for 2005 and 2011 9 categories in 2005 and 2011 with equal

Data source: EUROSTAT


Density Density Edited by: L. Czaller; M. Farkas
Graphics: M. Farkas
1.5

2
1.5
1

1
0.5

.5
0

8 9 10 11 12 9.5 10 10.5 11 11.5 12


logarithm of GDP per capita logarithm of GDP per employee

Density Density
15
4
3

10
2

5
1
0

3.6 3.8 4 4.2 4.4 4.6 4.05 4.1 4.15 4.2 4.25 4.3

logarithm of employee per active age population 2005 2011 logarithm of active age population per total population

Figure 2: Kernel-density functions of the GDP per capita dimensions

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number of observations relative to the the above-mentioned phenomena with a amended on their relative position. The
EUs average GDP per capita in 2005, ther- value of 0.1396 (see Table 2). To explore fact that capital-regions usually have
eby the value weve related to remained the effects of the New Member States in higher values is true in the case of labour
constant. The values show, that moving this convergence process, we repeated productivity as well, shown by the high
from the lowest category to the second, the regression controlling to them with a values of correlation coefficients between
or from the second to the third has a dummy variable (NMS=1, otherwise=0). the labour productivity and total output
probability of approximately 60%, and After the inclusion of the NMS dummies, measured by GDP per capita. Reflecting to
its also more probable in higher inco- the parameter of the initial income le- the changes of the former indicator, 36 of
me-categories. However, the most stable vel decreased, and became insignificant. 50 regions with highest growth rates are
categories were the highest ones: from Nonetheless, the control variable had a found in the New Member Statesagainst
the 27 richest regions 26 retained their positive and highly significant parameter. mainly in Romania (e.g. South Muntenia,
position. The probability of mobility in the So the process of convergence in a whole Central Region or Bucharest-Ilfov), and
transition matrix was 73.5% (see Major European level has been occurred mainly the Baltic States. In opposite, almost in the
2008 for the calculation method). due to higher growth rates of regions in whole of Great Britain and in some Greek
Another approach for testing the fact the New Member States. regions the level of labour productivity
of catching up is a regression estimation has decreased significantly.
based on the neoclassical growth theo- If we look at the changes of regional
ry and the pioneer works of Baumol Regional inequalities of the fac inequalities, one can see that between
(1986), Barro (1991) and Barro and tors of GDP per capita 2005 and 2011 the RSD of labour pro-
Sala-i-Martin (1992), where the growth After reviewing the main processes of ductivity has followed the same path as
rate of different regions is explained by the the GDP per capita, we try to investigate in the case of GDP per capita until 2009,
initial level of GDP per capita. This met- which dimension (the labour producti- and this tendency havent ceased from
hod suggests that during a given period vity, the labour market participation or that year (Figure 3). The distribution
less developed regions are growing faster the activity rate) is the most similar to it of the indicator in question shows that
than more developed ones, so disparities during the analyzed period, and which the functions lower tail has shifted and
start to reduce in the long term. Based on one has the greatest role in shaping the slightly narrowed, while number of re-
Sala-i-Martin (1992) we estimated the inequalities of total output. gions around the average has dropped
following equation: In Europe the regional differences of effecting a faint peak beneath the average
labour productivity is very similar to that and the upper part has moved to higher
ln yt = ln yt 0 t (4)
of GDP per capita, with regions having ge- values (Figure 1). According to our reg-
where is the growth rate of GDP per capita nerally higher values placed in the central ression analysis convergence was also
between 2005 and 2011 in region i, and zone of the continent. Although, moving observed, however the parameters value
are the unknown parameters, is the ini- away from the core the spatial structure has slightly droppedbut remained sta-
tial value of GDP per capita in region i, the becomes mosaic in the western part, while tistically significantwhen controlling to
t is the error term. The outcomes confirm rather homogenous in the east. This pecu- the New Member States. To sum it up, in
our assumptions, the parameter of the liarity was noticeable especially in 2005, the convergence process NMS had greater
regression has negative sign referring to while by 2011 some eastern regions have role, but there were also catching up in the

Results of the regression models


For the NUTS 2 regions of Europe
Dependent
GDP/POP GDP/EMP EMP/ACTP ACTP/POP
variables

Model A Model B Model A Model B Model A Model B Model A Model B


0.1397*** -0.026 -0.1549*** -0.056*** -0.0857*** -0.075** -0.0288 -0.1465***
Initial levels
(0.0165) (0.0207) (0.0172) (0.0213) (0.0266) (0.03) (0.0265) (0.0213)
0.1672*** 0.1246*** 0.009 0.1722***
NMS Dummy
(0.0245) (0.0205) (0.009) (0.003)
N 271 271 262 262 258 258 260 260

R2 0.219 0.370 0.305 0.420 0.031 0.034 0.005 0.148

Source: own calculations based on EUROSTAT data

Table 2: Results of the regressions among NUTS 2 regions

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and 86% related to the Unions average,
relative standard deviation (%)
these extremities have been modified to
110
110 and 91% by 2011, whileas weve
seen in Figurethe size of inequalities
105
activity rate were 2.3% higher, than in 2005. From
the 59 regions of New Member States 54
100
were up to the EU average in 2005 (almost
half of the regions reaching this value),
95
labour market participation their number has grown to 58 by the end
of the period, only Severozapaden (BG)
90
have stayed under it. Besides the NMS
labou
r prod regions mainly Spanish and some German
uctivit
85 y
units were found between the leaders
in both years.
80
2005 2006 2007 2008 2009 2010 2011 Returning to the changes of inequa-
lities, the -convergence was tested to
Data source: EUROSTAT
Graphics: M. Farkas these indicators as well, reflecting to
an important rule connected to the two
Figure 3: Inequalities of the different factors of GDP per capita (20052011)
mentioned types of convergence hypot-
hesis. If we look at the initial and final
case of the western regions which had lo- regions and two Baltic States (Estonia RSD values of employment and active age
west levels of labour productivity in 2005. and Latvia) could reach the EU average ratio, it was higher in 2011 than 2005
The employment rate of a given region in 2005, their number has increased with (which shows -divergence, excluding
refers to the employed persons as a per- two Polish Voivodeships and a Bulgarian the intermediate processes). In contrary
centage of the active age population (i.e. Planning Region. The active age popu- the results of linear regressions signifi-
between 1564 years). As we mentioned lation ratio on the contrary is generally cantly showparticularly with regard to
above, labour market participation could higher in the Eastern part of the EU; in the labour market participationdescending
have an important role in shaping the eco- Old states only the capital-regions could inequalities between regions. While the
nomic productivity, the two indicators achieve higher values than their hinter- employment/active age population ratio
generally are in positive correlation (in lands. We add, that the range of the da- indicates convergence process in a whole
our analysis the coefficient between them tas (related to EU average) was between European level, the parameter in the
was +0.604 in 2005, and +0.608 in 2011, cca 120 and 70% in both years, but their case of active age population rate (Model
respectively). distribution was rather asymmetric in the A) were insignificant (but negative), in
Beside labour market participation, the case of the labour market participation. turn it has become statistically signifi-
ratio of active age population was cha- While the skewness of distribution had cant (as well as NMS dummy) in Model
racterized by lower inequalities (based negative values both in 2005 and in 2011 B. Therefore latter changes presumably
on RSD) than GDP per capita during the (0.661 and 0.585) signing that the mass rather occurred within the Old and New
five-year period. Although the trend of of distribution was slightly concentrated country groups, then in whole Europe.
inequalities differs from that of produc- over the mean, the form of function has According to these contradictory results it
tivity factors; the employment rate has become bimodal near to it by the end of could be emphasized, that -convergence
followed a tendency towards equalization, the period (see Figure 1). need not accompany -convergence: the
but from 2009 an opposite process have However, the distribution of the active diminishing trend of the standard devi-
been observed, while the differentiation age ratio in 2005 has been close to sym- ation is not followed automatically from
have started in 2006 in the case of the ra- metrical with a skewness of 0.245, and the significance level and the negative
tio of active age population (see Figure 3). with more regions below the average. By sign of the regressions parameter (for
The spatial disparities of labour market 2011 the former value increased to 0.517, detailed mathematical derivation see e.g.
participation were featured by a shape thereby the distribution was more skewed Barro and Sala-i-Martin 2004; Young
divide between the New Member States to the right with the mess of regions et al. 2008).
(+Greece) and other parts of Europe, of around the 9095% level of the EU ave- By 2011, based on different socio-eco-
course one can find regions with lower rage. As we mentioned before, in the case nomic characteristics (here: economic
level of employment in Southern Italy and of this indicator there hasnt been huge output and its factors analyzed above) and
in Spain as well. From the eastern side differences between the regions of EU27: as a consequence of diverse processes,
of the Union only Czech and Slovenian in 2005 the values dispersed between 110 distinct types of regions can be detached.

8
recent years these indicated clear spatial
Europe 0 200 400 600 800 1000 km

Region types based on cluster-analysis Scale 1 : 35 000 000


disparities with bigger coherent zones.
30 20 10 0 10 20 40 50 60 With kernel density estimations weve
Types of the regions
According to their GDP factors shed light on changes in the distribution
least developed of the different factors, sometimes reflec-
less developed with higher
active-age population ratio
ting realignment within a given part of
N
A developed with higher
0 it. In almost all cases the catching-up of
E labour market participation 6
C most developed
initially less developed regions has been
60 O

average with the lowest noticeable, most clearly in production
active-age population ratio
C

factors. Using socio-economic data, we


I

Source: EUROSTAT
show evidence of -convergence almost in
T

Cartography: M. Farkas
N

all cases, but when controlling to the New


A
L

Member States, their role in shaping these


T

processes were also often influential (e.g.


A

50 in the case of per capita GDP it was un-


50 doubtedly shown). The sigma convergen-
ce on the other hand has been remarkable
only when examining the total and the
labour productivity, while considering the
other two dimensions after some years of
A
SE equalization trend the inequalities have
A CK
BL tended to grow, and stabilized in a higher
40
40 level than 2005. The paper also finds that
from the New Member States in most ca-
ses only the capital regions were likely
E R R A to catch up with Western ones, and have
D I T N
M E E started to assimilate to them, while other
A N
0 10 S E A 30
parts have dropped behind.
Figure 4: Region-types of Europe based on their productivity factors

In the southern parts of the Union (Greece, ket participation. There are 3 regions References
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