The Cohesion vs Growth Tradeoff: Evidence from EU Regions (1980-2000)

Very preliminary draft This paper provides an empirical investigation of the cohesion versus growth tradeoff on European regions at a fine geographical disaggregation level. We use data on gdp per capita at the NUTS3 level for 1980-2000 to estimate the influence of income dispersion within NUTS1 on their economic growth. There is strong evidence that greater spatial disparities foster growth, at least for Northern regions. Finally, an increase in market potential, as expected, has an unambiguous positive impact on local growth