Growth determinants in the regions of the EEC—An empirical study
Reported here are results of an empirical analysis of regional growth in the European Economic Community for the period 1950–75. Data limitations ruled out the specification of a formal regional growth model. Accordingly the analysis is limited to the testing of various hypotheses of growth determinants using multiple regression analysis. The analysis was applied to GDP per capita data for 74 regions. A clear and consistent pattern of convergence was found. Significant growth determinants included economic structure, urbanization and centrality. The sunbelt hypothesis was confounded. Regional policy subsidies were not significant. The most important individual determinant was the growth of the rest of the state in which the region was located although there was a progressive weakening of this effect over time. The results allow for interesting comparisons with similar studies of State growth in the U.S.
The competitiveness of a country, besides the quantity and quality of factors of production, is largely dependent on institutional factors. It is not surprising therefore that the alteration of formal institutions (e.g. laws, measures, policies etc.) is a hot topic nowadays. But it is important to note that the efficiency of formal institutions is based on informal ones. Traditions of a country, culture, the values of the people are all factors that fundamentally affect the functioning of explicitly recorded, and so easily changeable formal rules. Measures taken to enhance the competiveness of a country often fail to have any noticeable effect, because they don’t harmonise with the value system or traditions of the people. The paper provides a short overview on the connection of values and economic performance, then considers the possible efficiency of a few economic policy instruments recently suggested by experts.