The convergence process of the European regions: the role of Regional Policy and the Common Agricultural Policy

The study investigates the convergence of labour productivity in 204 NUTS2 regions of the EU-15 between 1995 and 2006. The main objective of our work was to assess whether and to what extent European Union (EU) policies (Regional Policy and the Common Agricultural Policy) have been effective in promoting economic growth and fostering the process of convergence of EU regions. These policies can have an asymmetric spatial impact, even if some concrete steps have been taken to avoid an excessive concentration of costs or benefits. To verify the effects of EU policies we compare different scenarios: with/without EU policies. Under a methodological profile, we adopt the Solovian model proposed by Mankiw et al. (1992). For the estimates we used an econometric approach based on spatial filters with characteristics similar to Geographically Weighted Regression (GWR) in order to obtain consistent estimates of both the convergence parameters β and the impact of the conditioning variables, policy measures in particular. Our technique allows the estimation of different convergence rates for each region and management of both the presence of spatial spillovers and structural differences in the regional economies. The results indicate that global convergence rates are comparable to those obtained in some other studies, while local coefficients help to interpret the regional growth paths in a more realistic way. Finally, we utilise a quasi-experimental design, the Regression Discontinuity, for comparing the results of policy interventions, in terms of regional β-convergence rates, with a ‘counterfactual’ scenario.