The empirical literature is focused almost exclusively on aggregate productivity growth and convergence across the EU territorial units with, more recently, some studies aimed at understanding catching-up across agricultural regions. No, or very little, attention is deserved to the sectoral sources of growth and convergence loosing important information on the impact of possible variation in sectoral productivity movements on the overall process of convergence.
In this context, the purpose of paper is to provide an investigation of:
- The real economic convergence across a sample of EU-15 regions and in the agricultural, industrial and service sectors;
- The catching up on the productivity growth differential of each sector from that of the economy;
- The sources of productivity growth and convergence distinguishing between within- and between-sector components.
The methodology adopted is both cross-sectional and time series techniques. It refers to panel dataset of variables representing the economic and sectoral productivity of a sample of EU-15 regions at NUTS2 level, from 1980-2006, built up from the EUROSTAT data source.
The panel approach has been selected for several reasons among which there is its capability to mitigate the problems of multicollinearity, to increase the degree of freedom, making the estimates more efficient, and to control better for the effects of missing or unobserved variables.
The analysis developed allows understanding how the varying sectoral composition in regions at different levels of income affects real economic convergence and growth in the EU.