EU Growth, Convergence and the Knowledge Economy: An Empirical Investigation

This paper examines whether the 'knowledge' economy could contribute to reversing the existing 'centre-periphery' pattern in the EU, through its impact on growth. Using a neoclassical growth framework, we test for β - convergence in 205 EU regions on a cross-sectional basis. The impact of knowledge variables on growth is assessed. The empirical results reveal a limited degree of convergence and a positive impact of most knowledge variables on growth. The convergence pattern does not change when a 'group convergence' approach is attempted. The findings are finally interpreted from a 'new economic geography' perspective in an attempt to draw policy implications.