Technology adoption and club convergence

Alexiadis, Stilianos and Tomkins, Judith (2010): Technology adoption and club convergence.

Abstract

Although the importance of technology adoption has been acknowledged, nevertheless, at a more general level, a critical question arises: how do the overall infrastructure conditions affect the absorptive ability of a regional economy? This question can be stated alternatively as: what are the implications of a ‘poor’ or a ‘superior’ infrastructure for regional convergence? It is possible to provide some answers to these questions by constructing a model of regional convergence that encapsulates the impact of infrastructure in the absorptive ability of a regional economy. In this model the possibility that high technological gaps might act as obstacles to convergence is taken explicitly into consideration. The model developed in this paper indicates that convergence towards leading regions is feasible only for regions with sufficient absorptive capacity, which is assumed to be a function of infrastructure conditions in a regional economy. The model is tested using data for the NUTS-2 regions of the EU-27 during the time period 1995-2006. The results suggest that adoption of technology has a significant effect on regional growth patterns in Europe.

• Item Type: MPRA Paper
• Language: English
• Keywords: Convergence-club, Technological Gap, European Regions
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

References

Abramovitz, M. (1986) Catching Up, Forging Ahead and Falling Behind. Journal of Economic History, 46: 385-406.

Alderman, N. (2004) Innovation in Complex Capital Projects: Clustering and Dispersion in two cases from Argentina and the UK. Journal of Economic Geography, 4: 65-82.

Anselin, L. (1988) Spatial Econometrics: Methods and Models. Dordrecht: Kluwer.

Bernard, A. Jones, C. (1996) Technology and Convergence. Economic Journal, 106: 1037-1044.

Barro, R. Sala-i-Martin, X. (1992) Convergence. Journal of Political Economy, 100: 223-251.

Baumol, W. and Wolff E. (1988), ‘Productivity Growth, Convergence and Welfare: A reply’, American Economic Review, 78: 1155-1159.

Bode, E. (2004) The Spatial Pattern of Localised R&D Spillovers: an Empirical Investigation for Germany. Journal of Economic Geography, 4: 43-64.

Boldrin, M. Canova, F. (2001) Inequality and Convergence in Europe’s Regions: Reconsidering European Regional Policies. Economic Policy, 16: 207-253.

Button, K. Pentecost, E. (1995) Testing for Convergence of the EU Regional Economies. Economic Inquiry, 33: 664-671.

Corrado, L., Martin, R., Weeks, M. (2005) Identifying and Interpreting Regional Convergence Clusters across Europe. Economic Journal, 115: C133-C160.

de la Fuente, A. (2000) Convergence across Countries and Regions: Theory and Empirics. European Investment Bank Papers, 5: 25-45.

Durlauf, S. Quah, D. (1999) The New Empirics of Economic Growth. In J. Taylor and M. Woodford (eds) Handbook of Macroeconomics. Amsterdam: Elsevier, 235-308.

Durlauf S., Johnson P., Temple J. (2005), Growth Econometrics. In: Aghion P., Durlauf S. (eds.), Handbook of Economic Growth. vol. 1A. Amsterdam: North-Holland: 555-677.

Fingelton, B. (2001) Theoretical Economic Geography and Spatial Econometrics: Dynamic Perspectives. Journal of Economic Geography, 1: 201-225.

Fischer, M. Stirböck, C. (2006) Pan-European Regional Income Growth and Club-Convergence. Annals of Regional Science, 40: 693-721.

Galor, O. (1996) Convergence? Inferences form Theoretical Models. Economic Journal, 106: 1056-1069.

Galor, O. Tsiddon, N. (1997) The Distribution of Human Capital and Economic Growth. Journal of Economic Growth, 2: 93-124.

Gerschenkron, A. (1962) Economic Backwardness in Historical Perspective, Cambridge, MA: Bellknap Press.

Howitt, P. Mayer-Foulkes, D. (2005) R&D, Implementation and Stagnation: A Schumpeterian Theory of Convergence-Clubs. Journal of Money, Credit and Banking, 37: 147-177.

Islam, N. (1995) Growth Empirics: A Panel data Approach. Quarterly Journal of Economics, 110: 1127-1170.

Martin, R. (1999) The New Geographical Turn in Economics: Some Critical Reflections. Cambridge Journal of Economics, 23: 65-91.

Martin, R. (2001) EMU versus the Regions? Regional Convergence and Divergence in Euroland. Journal of Economic Geography, 1: 51-80.

Martin, R. Sunley, P. (1996) Paul Krugman’s Geographical Economics and its implications for Regional Development theory: A Critical Assessment. Economic Geography, 72: 259-292.

Martin, R. Sunley, P. (1998) Slow Convergence? New Endogenous Growth Theory and Regional Development. Economic Geography, 74: 201-227.

Martin, R. Sunley, P. (1998) Path Dependence and Regional Economic Evolution. Journal of Economic Geography, 6: 359-437.

Neven D. Gouyette, C. (1995) Regional Convergence in the European Community. Journal of Common Market Studies, 33: 47-65.

Peri, G. Urban, D. (2006) Catching-up to Foreign Technology? Evidence on the Veblen-Gerschenkron Effect of Foreign Investment. Regional Science and Urban Economics, 36: 72-98.

Pigliaru, F. (2003) Detecting Technological Catch-up in Economic Convergence. Metroeconomica, 54: 161-178.

Puga, D. (2002) European Regional Policies in the Light of Recent Location Theories. Journal of Economic Geography, 2: 373-406.

Rey, S. Janikas, M. (2005) Regional Convergence, Inequality and Space. Journal of Economic Geography, 5: 155-176.

Rey, S. Montouri, B. (1999) US Regional Income Convergence: A Spatial Econometric Perspective. Regional Studies, 33: 143-156.

Rogers, M. (2004) Absorptive Capability and Economic Growth: How do Countries Catch-up?. Cambridge Journal of Economics, 28: 577-596.

Taylor, J. Woodford, M. (eds) Handbook of Macroeconomics. Amsterdam: Elsevier.

Veblen, T. (1915) Imperial Germany and the Industrial Revolution, New York: Macmillan.