Convergence clubs in the regions of Greece

Abstract

Although there have been numerous studies on economic convergence, at both national and regional levels, the concept of club convergence has received far less attention. A convergence club implies the existence of a set of economies that in the long run are driven to a common steady-state position. This study contributes to the empirical literature on Greek regions by testing for the existence of a convergence club over the period 1970–2000. Time series techniques and two empirical approaches to the common convergence point are employed. Results suggest that, while there is no uniform pattern across all regions, four central regions follow a common convergence path. One important conclusion also to emerge from the study is that, in the case of Greece, a measure of average economic performance as a proxy for the steady-state convergence point would appear to be more appropriate when seeking to identify the members of a convergence club.

Notes

² Some notable exceptions are Chatterji (1992), Chatterji and Dewhurst (1996), Kangasharju (1999), Oxley and Greasley (1999) and Je Su (2003).

¹ Early studies include Baumol (1986), Mankiw et al. (1992), Barro and Sala-i-Martin (1992).

³ For a more detailed review see De la Fuente (2000) and Bernard (2001).

⁴ See for example McGuinness and Sheehan (1998).

⁵ It is noteworthy that the bivariate ADF tests (Table 1) also highlight, among others, linkages between these four regions.

⁶ See Siriopoulos and Asteriou (1998), Tsionas (2002).