Regional inequalities in Greece during a time of flux: Post 2000 period

In recent years Greece has attracted much publicity and policy analysis due to its ongoing fiscal difficulties and the deep economic crisis it has experienced since 2009. Quite naturally, given the challenges facing Greece in relation to its Eurozone membership, attention in the relevant policy and academic debates has focused predominantly on questions that have to do with national development problems and national fiscal and growth dynamics. As a consequence, attention to regional evolutions and problems has been at best peripheral, failing to address the real issues that are important in the turmoil that the Greek economy has experienced. 

In this paper we provide a detailed analysis of the extent and evolution of regional disparities with specific focus on the impact of spatial dependence and heterogeneity along the Greek regions in the period 2000-2014. Unlike previous studies, we take into account the influence of spatial structure and spatial associations, examining in particular how the latter have conditioned processes of convergence and divergence both prior to and during the crisis. The paper starts with a descriptive analysis of sigma-convergence and of spatial dependence (ESDA), both at the local and global levels; it continues with an examination of the process of convergence, for different sub-periods, controlling both for local-association effects (spatial dependence) and for spatial variations in the speed of convergence (spatial heterogeneity). Results show that, underneath the overall trend of accelerated (but downward) convergence during the crisis, is a set of sub-national dynamics related to the spatial structure of the Greek economy which appear to have become increasingly disparate during the crisis.