Working Paper: CEPR ID: DP12841
Authors: Simona Iammarino; Andrés Rodríguez-Pose; Michael Storper
Abstract: Regional economic divergence has become a threat to economic progress, social cohesion and political stability in Europe. Market processes and policies that are supposed to spread prosperity and opportunity are no longer sufficiently effective. The evidence points to the existence of several different modes of regional economic performance in Europe, responding to different development challenges and opportunities. Both mainstream and heterodox theories have gaps in their ability to explain the existence of these different regional trajectories and the weakness of the convergence processes among them. Therefore, a different approach is required, one that strengthens Europe’s strongest regions but develops new approaches to promote opportunity in industrial declining and less-developed regions. There is ample new theory and evidence to support such an approach, which we have labelled ‘place-sensitive distributed development policy’.
Keywords: regions; inequality; economic divergence; placesensitive development; european union
JEL Codes: R11; R12; R58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regional economic divergence (R11) | social cohesion and political stability (F55) |
| ineffective market processes and policies (P42) | regional economic divergence (R11) |
| structurally distinct regional economies (R11) | divergent economic trajectories (F69) |
| lack of effective diffusion mechanisms (D52) | persistence of regional disparities (R12) |
| higher GDP per capita (E20) | different growth dynamics (O41) |
| traditional economic theories (P19) | weak convergence process (C62) |
| new policy approach (D78) | address unique challenges of different regions (R11) |