Analysis of the main factors of regional growth an indepth study of the best and worst performing Eu

1
Analysis of the main factors of regional growth -
an in-depth study of the best and worst
performing European regions
Ben Gardiner Cambridge Econometrics
08 July 2009
2
What is the Project About?

• Objective(s)
• to deepen the understanding of economic
  development in the regions of the EU27
• to identify those (NUTS2-level) regions that have
  performed well and those that have performed
  poorly (relative to EU and/or national average)
• to identify and analyse the underlying factors of
  this diverse (regional) performance
• to draw out broad policy conclusions
• Timeline
• Year 1 literature review, problems challenges,
  statistical analysis, regional performance
  indicators
• Year 2-4 case study analysis updating Year 1
  results
• Project team
• Cambridge Econometrics (UK), Applica (BE), wiiw
  (AT)
• scientific committee
• Further information
• see http//www.euregionalgrowth.eu/

3
Growth theory offers limited help in working out
the answers
4
Data analysis helps a bit more, provided you know
what you are doing
5
What can be said about innovation and performance?

• For the majority (but not all) of Member States,
  productivity is the main driver behind GDP per
  capita growth
• But what drives / is associated with higher
  regional productivity growth
• sector specialisation
• innovation
• trade and globalisation
• education levels

6
Empirical analysis is more suggestive, even if
precision is a problem

• Robust factors of growth
• initial conditions
• initial GDP per capita
• human and physical capital endowment
• high-skilled/low-skilled workforce
• share of gross fixed capital formation
• infrastructure variables
• presence of airports, strength of road/rail
  networks
• control variables
• capital city dummy, CEE dummy
• in some cases,
• density variables (agglomeration effects)
• population variables

7
Case study analysis should strengthen / validate
findings

• Purpose
• broaden and refine the picture of the main
  mechanisms of growth suggested by the
  quantitative approach
• what role for public policy?
• Selection process
• hard limits on numbers of regions
• selection in practice
• quadrant analysis
• typological aspects
• Moving forward
• 3 pilot studies (Bayern, Galicia, and Silesia)
• 12 more to go this year
• _at_45 in total

8
Conclusions

• Ambitious goals
• Main findings
• Case study work
• Summary statements