SPATIAL HETEROGENEITY AND INTERREGIONAL SPILLOVERS IN EU: SOME EVIDENCE ABOUT THE EFFECTS OF COHESION POLICIES ON CONVERGENCe

In this work, using a spatial econometric perspective, the speed of convergence for a sample of 163 regions of the European Union over the period 1981-1996 is estimated. For this purpose, we use a specification strategy which allows an explicit modeling of both spatial heterogeneity and spatial autocorrelation found in the analyzed sample. The estimated final model combines groupwise-heterocedasticity, the identification of two regimes (Cohesion and non-Cohesion countries) and spatial dependence. Our results show how an appropriate treatment, simultaneously, of the problems derived from spatial structural instability and substantive spatial dependence can shed new insights into the European convergence process. One of the main findings of the paper is that the analysis opens a path to discern the ex-post general effects of European Union regional policies as a whole on the regional convergence process in terms of the Cohesion/Non Cohesion country dichotomy. Our estimations indicate that over the analyzed period there was a faster convergence in relative income levels of the regions belonging to Cohesion countries (5.3 per cent) than in the rest of the regions of the European Union (3.3 per cent). Therefore, our results contrast with other evidence that points to the fact that the convergence process in Europe stopped at the beginning of the 1980s. JEL classification: C21, C51, O52, R11, R15