The paper aims at testing real agricultural convergence process across the EU-15 regions at NUTS2 level from 1995-2005 and the role of the Common Agricultural Policy (CAP) and of the Cohesion and Structural Funds also considering separately Structural Funds related to Agriculture, Rural Development and Fishery. The analysis verifies the prescription of the theory of endogenous growth and of new economic geography in comparison with the neoclassical approach to convergence.
The importance of the topic is:
- Political - The EU has reconfirmed the objective of real convergence as a priority within the Cohesion Policy. As support reaches regions that are for the majority agricultural, the sector is understood as factor of acceleration of growth and income. The CAP has changed also with the evolving objectives of the Cohesion Policy and the recent reinforcement of decoupling and Rural Development Policy (RDP) should be partly interpreted in this respect.
- Financial – The EU funds for Cohesion objective have been increased for the current programming period rising a strong debate on the effectiveness of the related instruments in a context in which disparities still persist. Concerning the agricultural sector, the emphasis on the contribution of the RDP to convergence calls for a territorial analysis, aspect already underlined by the theoretical and empirical literature.
- Theoretical – The territorial analysis of the convergence process implies the understanding of the role of spatial dependence and spillovers as suggested by the theory of endogenous growth and of the new economic geography.
- Methodological – The theoretical debate can be tested empirically by the techniques from the spatial analysis that, however, has not been widely applied to the issue of agricultural convergence.
The empirical study compares the OLS estimates and those from the geographically weighted regression (GWR) techniques. The analysis points out that in OLS estimates residual distribution is not random, making neoclassical approach not fully appropriated for the explanation of agricultural convergence.
The GWR approach makes significantly better predictions, revealing local patterns in the spatial distribution particularly of the agricultural labour productivity at 1995 and of the Structural Funds related to Agriculture.
The results achieved by GWR also underline a significant spatial heterogeneity of the local coefficients of agricultural convergence, emphasising the operational of a “centre-periphery” model of growth with well defined clubs of convergent regions. This rises doubts about the effectiveness of the prevailing policy prescriptions based on parametric analysis. In this context, the overall European Regional Policy does not affect significantly agricultural convergence while the CAP and the sector’s Structural Funds are characterised by spatial non stationary parameters and the geographic representation allows to understand the regions where they have had a stronger impact. This analysis is of specific importance in the light of the need for a more effective territorial reference of the Cohesion Policy also supported by the recent prescriptions of the RDP and suggests an in-depth analysis of the local factors of agricultural growth.