Regional Convergence in Romania: From Theory to Empirics

This paper adds to the current literature regarding the economic development of Romanian regions by providing a test of unconditional convergence of growth rates between 1995 and 2011. The results show a divergent trend during the period taken into analysis as regions with higher initial GDP values will exhibit higher growth rates during the analyzed period. The obtained beta coefficient as well as the correlation coefficient between the dependent and independent variable displays diminishing values over time showing that initial values of real GDP are poor predictors of economic growth rates. Moreover, given the fact that the neoclassical approach is not validated by empirical data, the alternative framework, respectively the endogenous growth model seems to be better suited for the Romanian reality.