Regional Cohesion: Evidence and Theories of Regional Growth and Convergence

Xavier X. Sala-i-Martin

European Economic Review, June 1996


After arguing that the concepts of -convergence and -convergence are independently interesting, this paper extends the empirical evidence on regional growth and convergence across the United States, Japan, and five European nations. We confirm that the estimated speeds of convergence are surprisingly similar across data sets: regions tend to converge at a speed of approximately two percent per year. We also show that the interregional distribution of income in all countries has shrunk over time. We then argue that, among the proposed potential explanations of this phenomenon, the one-sector neoclassical growth model (with no capital mobility or with partial capital mobility) and the hypothesis of technological diffusion seem to be the ones which survive scrutiny.

Key Words:

Regional Economic Growth, Regional Cohesion, Convergence, Neoclassical Growth, Endogenous Growth, Capital Mobility, Technological Diffusion.

JEL Classification:

O40, O41, O51, O52, O53.