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Differences in Human Capital and Openness to Trade as Barriers to Growth and Convergence in the EU

In: The Euro and the Crisis

Author

Listed:
  • Marta C. N. Simões

    (University of Coimbra)

  • João A. S. Andrade

    (University of Coimbra)

  • Adelaide P. S. Duarte

    (University of Coimbra)

Abstract

Growth in Southern European EU member states has been weak and is resulting in divergent growth paths relative to the richer EU countries. Convergence in terms of income levels requires more rapid growth in the economically weaker member states but it can succeed or fail depending on possessing necessary human capital and openness to trade levels, fundamental determinants of innovation and diffusion activities that drive productivity growth and thus long-run per capita income growth and convergence. We apply a thresholds regression approach to examine the growth and convergence process of 11 EU member states over the period 1960–2014 using human capital and openness to trade proxies as thresholds identification variables allowing us to determine specific policy implications for different human capital/trade regimes. Our findings confirm the existence of different regimes according to trade levels corresponding to different growth performances due to technological catch-up, external competitiveness, the weight of tradable goods, physical capital accumulation, government size and public debt.

Suggested Citation

  • Marta C. N. Simões & João A. S. Andrade & Adelaide P. S. Duarte, 2017. "Differences in Human Capital and Openness to Trade as Barriers to Growth and Convergence in the EU," Financial and Monetary Policy Studies, in: Nazaré da Costa Cabral & José Renato Gonçalves & Nuno Cunha Rodrigues (ed.), The Euro and the Crisis, pages 73-94, Springer.
    • Handle: RePEc:spr:fimchp:978-3-319-45710-9_6
    DOI: 10.1007/978-3-319-45710-9_6
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    More about this item

    Keywords

    Economic growth; Convergence; Human capital; Trade; EU; Thresholds analysis;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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