Regional Economic Growth in Europe Analysis of Regional Dependence and Structure

Abstract

The economic structure of European regions is said to be of significant influence on economic growth. To get a more detailed view on the influence of this economic structure the related variety, unrelated variety and specialization of the regions are examined for their influence on economic growth. Several country level analyses researched this issue up to now. For the first time, in this thesis, a EU-wide analysis is done taking into account the spatial dependence of the regions, which is included due to the heterogeneity of economic performance in European regions. This heterogeneity is also captured in regime-tests where different groups of regions are tested and compared according to specific regimes. Although economic performance is distributed heterogeneously between European regions, the regions are converging in their performance. In search for the best policy it is found that a region specific policy mix is best to achieve maximum growth. Investing in human capital is found to be a good choice when the region lags behind in productivity or when the region has high unemployment. Related variety is found to be of positive influence on employment growth while unrelated variety is to a lesser extent positive for employment growth. Specialization is positively related with productivity growth and of negative influence on unemployment.