Dynamics effects within a regional system: an empirical approach

This paper focuses on the dynamic effects under which the regional economic growth processes are accomplished, breaking them down into two broad types: neighborhood and economy-wide effects. By means of a proposed dynamic space-time empirical model, the competition structure within a multi-regional economic system is developed. Co-integration/error correction modeling techniques are used to support the existence of this competition structure over both the shortand long-term. As an application, we show the dynamic effects on the evolution of the regional performance of Spanish regions over the period 1972-2000. Our results indicate that some macroeconomic forces are operating through time into this Spanish system since positive and negative effects are detected at both economy-wide and neighborhood levels. Further, the findings show that a new taxonomy of the Spanish regions could provide some guidance for the development of appropriate measures for regional economic policy.