Heterogeneity of regional growth in the EU: A recursive partitioning approach
Date
2016
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Abstract
We use model-based recursive partitioning as a technique to assess heterogeneity
of growth and convergence processes based on an economic growth regression for
255 European Union NUTS2 regions from 1995 to 2005. The starting point of the
analysis is a human-capital-augmented Solow-type growth equation similar in spirit
to Mankiw, Romer, and Weil (1992). Initial GDP and the share of highly educated
in the working age population are found to be important for explaining economic
growth, whereas the investment share in physical capital is only significant for coastal
regions in the PIIGS countries. Recursive partitioning leads to a regression tree with
four terminal nodes with partitioning according to (i) capital regions, (ii) non-capital
regions in or outside the so-called PIIGS countries and (iii) inside the respective
PIIGS regions furthermore between coastal and non-coastal regions.
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Keywords
convergence, regional data, recursive partitioning, growth regressions