New Regional convergence in productivity and productive structure. Application to European Southern countries

Diverse approaches have been used to analyse the hypothesis of convergence between European regions. This paper is particularly focused on productivity trends and the effects of changes in regional productive structures, which seems to be the main source of the observed productivity convergence. The crucial mechanism explaining this last process (labour apparent productivity) is the transfer of labour from the less productive activities to the most ones, a fact that has been particularly important in the poorest regions. The apparent exhaustion of this process runs in parallel to the progressive end of regional convergence in income per capita. So convergence of productive structures seems to be the factor explaining the apparent contradiction between the observed convergence of aggregate productivity levels and the absence (or clear reduction) of productivity convergence within the different sectors. The analysis intends to show that the convergence process is probably exhausted through this way. The core point of the paper is sigma convergence in GDP approach as well as the productive structure convergence. The paper takes as a reference those regions included in five European Mediterranean countries (Spain, France, Italy, Greece and Portugal), but it always compare with the aggregate behaviour in the EURO zone. Data base used come from the European Regional database by Cambridge Econometrics, and the time period ranges from 1980 to 2006.