Working Paper: CEPR ID: DP13712
Authors: Andrés Rodríguez-Pose; Tobias Ketterer
Abstract: In this paper we assess whether both the levels and the degree of change in government quality influence regional economic performance in the European Union (EU) and, in particular, in its lagging regions. The results of the econometric analysis, covering 249 NUTS2 regions for the period between 1999 and 2013, suggest that: a) government quality matters for regional growth; b) relative improvements in quality of government are a powerful driver of development; c) one-size-fits-all policies for lagging regions are not the solution; d) government quality improvements are essential for low growth regions; and e) in low income regions basic endowment shortages are still the main barrier to development. In particular, low growth regions in Southern Europe stand to benefit the most from improvements in government quality, while in low income regions of Central and Eastern Europe, investments in the traditional drivers of growth remain the main factors behind successful economic trajectories.
Keywords: economic growth; government quality; institutional change; regions; EU
JEL Codes: R11; R50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government quality (H11) | regional economic performance (R11) |
| improvements in government quality (H11) | economic growth (O49) |
| government quality (H11) | better economic outcomes (P17) |
| relative improvements in government quality (H11) | economic performance (P17) |
| government quality improvements (L15) | development in low growth regions (O54) |
| government quality improvements (L15) | economic outcomes in Southern Europe (O52) |
| basic endowment shortages (I24) | barriers to development in low income regions (O15) |