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Further Economic Theories in the Convergence-Divergence Debate

In: Convergence After Divergence? Regional Growth in Europe

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  • Gabriele Tondl

    (Wirtschaftsuniversität)

Abstract

The empirical test of the convergence process of European regions in Chapter 3 has shown that the convergence hypothesis had to be rejected for a large part of the 1980s. Even when convergence of regional incomes was observed again by the end of the decade, there appear to be forces at work which the neo-classical two-region growth framework cannot explain. The evidence of diverging forces, as reflected in a larger spread of steady state income positions in the panel data model, suggests the applicability of other theoretical concepts. Economic theory offers two prominent, rather new theoretical concepts which can explain forces of divergence and ultimately the phenomenon of regional divergence: The first is new growth theory or endogenous growth theory, the second is new economic geography.

Suggested Citation

  • Gabriele Tondl, 2001. "Further Economic Theories in the Convergence-Divergence Debate," Springer Books, in: Convergence After Divergence? Regional Growth in Europe, chapter 4, pages 118-183, Springer.
    • Handle: RePEc:spr:sprchp:978-3-7091-6219-4_4
    DOI: 10.1007/978-3-7091-6219-4_4
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