Analysis of Regional Development Convergence at Sub-National Level. The Case of Hungary

The enlargement of the European Union (EU) led to an increase in regional development differences, challenging the EU structural policy. Whilst there are a wealth of papers discussing international and across EU development convergence, the issue seems under-researched at national level, especially when smaller territorial units are considered. This paper aims to partially fill this gap, by using low aggregation (Local Administrative Unit 1, LAU1) territorial data between 2002 and 2013 - a period that comprises Hungary s EU accession and also the years of the recent global financial crisis. We employ a novel approach to circumvent the lack of income, productivity or competitiveness data at LAU1 level by deriving two Regional Development Indices (RDI) resting on the estimation of an internal migration functions. Once the RDIs are estimated, we proceed to a test sigma, beta and unit root convergence. Further, we assess the probabilities of LAU1 region specific RDIs of changing their positions within distributional quartiles. Results regional divergence and low mobility of regions with rather bleak consequences for Hungarian and indeed European cohesion aims. Acknowledgement : Zoltan Bakucs greatfully acknowledges support from National Research, Development and Innovation Office (OTKA Project no. K 120080, "Impact of Rural Development Policy in Hungary. A Complex View")