engleski

Regional convergence in the European Union, new member states and Croatia

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 regional convergence processes in Croatia. Special attention is given to differences in regional growth patterns of the new member states (NMS) and Croatia, as well as factors influencing regional disparities within each country. Regional convergence is analysed for the period 2001-2008 at the NUTS II and NUTS III level. The model most widely used for testing convergence hypotheses is beta-convergence analysis. Beta-convergence is defined as a negative relation between the initial income level and the income growth rate, meaning the less developed regions are expected to record higher growth rates. One should notice a distinction between absolute convergence and conditional convergence. According to the absolute convergence hypothesis, all regions converge towards the same steady state equilibrium. On the other hand, conditional convergence model controls for other differences in cross-sectional units that could produce different steady-state. Other factors usually included in econometric modelling of convergence are demographic variables, labour market conditions, industrial structure, institutional factors and overall government policy. The main hypothesis tested in this work 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). Despite some redistributive effects of regional policy, less developed Croatian regions as well as some NMS regions have not succeeded in reducing gaps in comparison to the most developed regions in Croatia and the EU. According to our model, absolute β-convergence can be found on the national level for EU countries which is in line with previous studies. Convergence also can be found for the 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. No evidence on regional convergence (county level) has been found in Croatia and disparities have been highly persistent throughout the period 2000-2008. Education and share of investment in GDP are significant in explaining development differences for NUTS 2 2 regions of new member states. That means that NMS regions with higher proportion of educated population and higher attractiveness for investors benefited more from EU accession in comparison to regions with less educated population and lower investment levels. These results assert further importance of the European Union and its member states’ regional policies for reducing regional income disparities. Although availability of structural funds are an important factor for speeding-up the regional convergence process, special attention of regional policy should be devoted to other factors influencing potential growth of less developed regions, especially improvements in human capital and change of industrial structure in favour of industries able to benefit from technological progress. The paper consists of five sections. After introduction which presents theoretical background of convergence hypothesis, second section brings a brief literature overview on recent empirical studies on regional convergence in the EU and NMS. Section 3 presents data on regional economic disparities in the EU, NMS and Croatia. This chapter also introduces other regional variables which could influence regional growth rate. Forth section brings a short overview of the econometric model used in this paper and presents main results of the convergence analysis. Section 5 concludes.

regional convergence; regional policy; economic growth; Croatia

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