Heterogeneous Regional Convergence in the European Union: Club Dynamics, Structural Breaks, and Spatial Spillovers

This study examines income convergence among EU NUTS-2 regions from 2000 to 2023 using a combination of Phillips-Sul (PS) club convergence methodology, β-convergence, and spatial econometric models. The results reveal that regional convergence in Europe is heterogeneous and nonlinear: four stable convergence clubs emerge, while overall convergence is rejected. Convergence was faster before 2012 and weakened afterward. A single income threshold and two structural breaks (2005 and 2012) mark shifts in growth dynamics. Spatial models reveal that neighboring regions affect each other’s growth, indicating that regional development in Europe depends on both local conditions and interactions across regions.