DP914 | Regional Convergence in the European Community

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This paper assesses convergence in output per head across regions in the European Community (EC), for the period 1975<196>90. We use three alternative methodologies to measure convergence, which yield consistent results. We observe that there are strong differences in the pattern of convergence across sub-periods and across subsets of regions. If Southern Europe seemed to catch up in the early 1980s, it stagnated, at best, in the second part of the 1980s. The regions in Northern Europe, on the other hand, tended to stagnate or diverge in the first part of the 1980s but converge strongly thereafter. This pattern is consistent with the view that North European countries have adjusted better to the main change in policy regimes which occurred in the mid-1980s, namely the implementation of the Single Market programme and the entry of Spain and Portugal into the EC in 1985. This evidence also lends support to the view that trade liberalization can exacerbate disparities. Finally, our evidence indicates that the distinction between the North and the South of the EC is likely to be more relevant in the analysis of growth patterns than the distinction between the centre and the periphery. Preliminary evidence on migration indicates that the population in the Southern regions responds much more slowly to wage and unemployment differences. This may partly explain why Southern regions have not converged after 1985.