EMU versus the regions? Regional convergence and divergence in Euroland

Abstract

There is currently considerable interest in and debate over the impact of increasing European economic and monetary integration (EMU) on the regions of the EU. Opinion is sharply divided over whether EMU is leading to regional economic convergence or regional economic divergence. This paper examines the theoretical arguments and empirical evidence for these opposing views, and presents some additional analysis of patterns of regional productivity trends and employment growth over the period 1975–98. The picture that emerges is a complex one: whilst worker productivity shows only very weak convergence across the EU regions (a process which halted altogether after the mid-1980s), regional employment growth has been sharply divergent. Although there is little support for the claim that EMU will lead to regional convergence, these findings suggest that until much more detailed investigation of the specific impacts on particular types of region is undertaken, the regional implications of EMU will remain a contentious issue.

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