Regional Convergence in the European Union, new Member States and Croatia

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Abstract

Over the past two decades, the issue of regional convergence in the European Union has been the subject of a wide range of empirical research. This paper aims to provide more information on the differences in regional growth patterns of new member states (NMS), as well as Croatia, in addition to the factors influencing regional disparities within each country. This research provides an analysis of regional convergence in the period 2001-2008 at the NUTS II and NUTS III level.

The most widely used model for testing convergence hypotheses is beta-convergence analysis. Other factors commonly included in the econometric modelling of convergence are demographic variables, labour market conditions, industrial structure, institutional factors and overall government policy. The main hypothesis is that the process of regional convergence in NMS and Croatia is not strong enough to dominate over other factors, influencing regional potential growth (mainly industry structure and quality of human capital). Absolute β-convergence can be found at the national level for EU countries. Convergence also can be found for NMS regions, but the pace of convergence on the regional level is lower in comparison to the national level and the estimated β-convergence parameter is less significant.

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