Proximity and growth spillovers in European regions: The role of geographical, economic and technological linkages

This study examines the role of proximity in regional growth using a multi-dimensional framework, for seven EU countries during 1990-2005. We incorporate geographical as well as economic and technological effects in two seminal growth models in order to test for the existence and magnitude of interregional externalities. Our findings show that spillovers are important for European regional growth, regardless of the measure of proximity; thus regions surrounded by dynamic entities are likely to growth faster than otherwise. Moreover, our results underline the need for coordinated EU policies aiming at higher physical and human capital accumulation, taking into account regional synergies.