{"id":31796,"title":"Upward Convergence? The History of EU Cohesion","link":"https:\/\/bst-europe.eu\/de\/investment-budget\/upward-convergence-the-history-of-eu-cohesion\/","date":"13. Dezember 2022","date_unix":1670933645,"date_modified_unix":1754481082,"date_iso":"2022-12-13T12:14:05+00:00","content":"

In our recent study, The Future of EU Cohesion<\/strong><\/a>,<\/strong> which we presented during the 2022 European Week of Regions and Cities, we provided an outlook on how the green and digital transition may alter the landscape of economic prosperity across European regions. We found evidence that the ongoing twin transition will likely undermine cohesion by widening the gap between poorer and richer regions.<\/p>\n

How does this finding relate to trends in the development of regional economic cohesion<\/a> we observed in the past? The evidence so far is mixed. On the one hand, the European Union was dubbed a convergence machine<\/em> for equalizing economic conditions across regions in a manner unmatched in the world<\/a>.<\/p>\n

This position highlights the overall success of a more integrated Europe than ever. On the other hand, discussions of regions left behind<\/a> have intensified recently. Worries are that especially left-behind regions will drive inequality and, thus, lead to less overall cohesion in Europe.<\/p>\n

To shed light on this debate, we’ve analysed data on the development of economic prosperity in 1182 NUTS-3 regions<\/a>. In our analysis, we look back to 1993, the first year the economic and monetary union was established<\/a>. We summarize our results in three key insights on economic convergence since then.\u00a0<\/strong><\/p>\n

\"eu<\/p>\n

Insight #1: Economic prosperity increased since 1993 \u2013 in every single European region<\/strong><\/h2>\n

In 1993, the average level of GDP per capita (in purchasing power standards) in European NUTS-3 regions was 14,439 EUR. This value more than doubled to 29,546 EUR in 2021 (up 105 per cent). But economic prosperity did not rise evenly over this time. Until the financial crisis in 2008\/2009, average GDP per capita growth reached as high as 6 per cent per year. Subsequently, the speed of growth slowed and stayed below 4 per cent (except for 2017 and 2021).<\/p>\n

Despite a slowdown in economic prosperity growth, the GDP level increased in every European region between 1993 and 2021. However, economic development differed substantially across regions. The best performing regions were Cork (Ireland, plus 723 per cent), Cluj (Romania, plus 569 per cent), Timis (Romania, plus 569 per cent), Salaj (Romania, plus 563 per cent) or Wroc\u0142awski (Poland, plus 518 per cent). In general, Eastern European regions performed particularly well: 81 of the 100 best-performing regions are located there.<\/p>\n

In contrast, the worst performing regions are Drama (Greece, plus 2 per cent), East Attica (Greece, plus 4 per cent), Viterbo (Italy, plus 6 per cent), Thasos-Kavala (Greece, plus 7 per cent) and Xanthi (Greece, plus 18 per cent). In general, Southern European regions performed particularly poorly: 51 of the 100 worst-performing regions are located there.<\/p>\n

Overall, economic prosperity increased for all regions between 1993 and 2021 but not at the same pace.
\n<\/strong><\/p>\n

Insight #2: Regional inequality across regions is decreasing \u2013 but slowly<\/strong><\/h2>\n

While some regions gained more than others, it is not straightforward whether this led to upward convergence or divergence. For upward convergence, regions with lower levels of economic prosperity in 1993 should have grown more than regions with higher levels of economic prosperity. To put it in macroeconomic terms, poorer regions need to exhibit a higher rate of economic growth to catch up and thus narrow the prosperity gap.<\/p>\n

For measuring spatial inequality across regions<\/a>, the Lorenz curve and the Gini<\/a> coefficient are commonly applied. The Lorenz curve visually shows the discrepancy between the current distribution of economic prosperity and a situation where every European region exhibits exactly the same level of economic prosperity.<\/p>\n

The Gini coefficient quantifies this discrepancy by calculating the area between the Lorenz curve (yellow) and the equality line (blue). The smaller the Gini coefficient, the higher equality, with a value of zero indicating no variance between regions.<\/p>\n

\"eu
eu cohesion history<\/figcaption><\/figure>\n

 <\/p>\n

So, how did inequality in economic prosperity across European regions develop between 1993 and 2021? The Gini index in 1993 was 0.262 but decreased to 0.226 by 2021. This means that economic prosperity is now more equally distributed across European regions than in the past. Hence, economic cohesion has increased over time.<\/p>\n

In fact, the Gini index has declined steadily and almost continuously since 1993 in the EU. Only in the aftermath of the financial crisis in 2008\/2009 and in 2020, when the Covid-19 pandemic peaked, was a minor increase in inequality observable. Currently, there is no observable change in the trend of declining inequality.<\/p>\n

Insight #3: All except Western European regions contributed to more cohesion<\/strong><\/h2>\n

When taking a more detailed look at the development of regional inequality across Europe, a more diverse picture emerges. Regions in Northern Europe have become substantially more aligned since 1993. The Gini index for regions in Eastern Europe declined over time, but regional inequality is still the highest in these regions.<\/p>\n

Surprisingly, the Gini index for regions in Southern Europe has always been the smallest despite a shift to a higher level of inequality after the financial crisis in 2008\/2009. Finally, the Gini index for Western European regions has been relatively unchanged since 1993 but did drop just a little overall.<\/p>\n

\n