Regional GDP Convergence in the European Regions in the light of the Economic Recession

This article investigates the implications of the slowdown of the European economies since 2007 on the process of GDP convergence at the regional NUTS 2 level. We use a nominal data set on GPD per capita divided into the periods 1995-2006 and 2007-2010. Using the notion of β-convergence we find that convergence is still present at the aggregated level, but the rate of convergence has significantly decreased from a rate of 2.63 percent before the recession to a rate of convergence equal to 1.60 percent after the recession. Moving to the national level we confirm the findings in many countries that a pattern of regional divergence is present. We do not observe a pattern of regional convergence in any of the nations considered for the period from 2007. Out of the 19 countries analyzed divergence is present in 6 countries whereas the pattern is not determinable in any of the remaining countries. No countries have gone directly from regional convergence to regional divergence. With a few exceptions a more gradual process is observed form convergence to no determined pattern to divergence. This overall pattern is a challenge to the regional development policy of the European Union.