Geographies of Growth
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Geographies of Growth

Innovations, Networks and Collaborations

Edited by Charlie Karlsson, Martin Andersson and Lina Bjerke

Today we can observe an increasing spatial divide as some large urban regions and many more medium-sized and small regions face growing problems such as decreasing labour demand, increasing unemployment and an ageing population. In view of these trends, this book offers a better understanding of the general characteristics and specific drivers of the geographies of growth. It shows how these may vary in different spatial contexts, how hurdles and barriers to growth in different types of regions can be dealt with, how and to what extent resources in different areas can develop, and how the potential of these resources to stimulate growth can be realized.
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Chapter 5: Is the convergence debate over? Structural changes and labour productivity

Innovations, Networks and Collaborations

Amjad Naveed

Extract

Convergence has been a core area of research in both theoretical and empirical literature over the past two decades. In order to test the convergence or catching-up hypothesis, in previous studies1 the per capita convergence concept has ususally been used. However, convergence or regional disparities can also be attributed to the enhancement of technology, an improvement in living standards and in particular labour productivity convergence. In the long run, an increase in productivity not only affects the living standards but also reduces the disparities across regions and countries (Melachroinos and Spence, 1999; Filippetti and Peyrache, 2013). Reducing regional disparities in the long run across EU economies was also the main focus of the EU commission (2011). Furthermore, labour productivity is also affected by structural change which is defined by the shift of employment from a low sector to a high sector (Van Ark, 1997). Moreover, the differences in the levels of labour productivity are still considerable in EU economies, a point that can be attributed to the structural changes that occur over time. These differences in labour productivity exist for most countries at regional and industry levels.2 Therefore, the main focus of this chapter is to carefully consider the role of structural change on the process of labour productivity convergence at aggregate (country) and disaggregate (regional and industry) levels. The convergence debate was started by Abramovitz (1996), Baumol (1986), Dollar and Wolff (1988), Dollar (1993), Barro and Xavier (1992), Quah (1993, 1996), O’Leary (1997), and Doyle and O’Leary (1999) and has continued ever since. Most of the studies on this issue have tested the convergence separately between countries, regions and industries and have reached diverging conclusions. For example, some studies found a greater degree of convergence at aggregate (country) level than at the disaggregate (regions and industry) level, while others have found the opposite. For instance, Sondermann (2014) found no convergence at the aggregate level but did find strong evidence of convergence at a disaggregate level for some sectors. Conversely, Bernhard and Jones (1996) found convergence at the aggregate level but not for some sectors at the lower level. Furthermore, the results of productivity convergence at different disaggregation levels of sectors and Nomenclature of Units for Territorial Statistics (NUTS) also differ from one study to another. Therefore, the current study will extend the debate of productivity convergence at country, region and industry levels simultaneously.

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