The Determinants of Economic Growth in European Regions

This paper uses Bayesian Model Averaging (BMA) to find robust determinants of economic growth in a new dataset of 255 European regions between 1995 and 2005. The finds that income convergence between countries is dominated by the catching-up of regions in new member states in Central and Eastern Europe (CEE), whereas convergence within countries is driven by regions in old EU member states. Regions containing capital are growing faster, particularly in CEE countries, as do regions with a large share of workers with higher education. The results are robust to allowing for spatial spillovers among European regions.