Public capital and convergence in the Spanish regions

The article analyses the evolution of the differences in economic conditions amongst Spanish regions from the perspective provided by the recent advances rnade in economic growth empirics. Although convergence is usually established in terms of gross value added (GVA) per capita, in the case of Spain it is of special interest to break it down into three separate elements: activity rate, employment rate and productivity of labour. Regional diffttrences in unemployment rates, that persist for long periods of time, are identified as a force against convergence. After describing the distinction between conditional and non-conditional convergence, the paper considers the role played by the productive structure in establishing regional differences, with special reference to the weight of the agricultural sector and the role of public capital in conditional convergence. Finally, conditional and non-conditional convergence equations are estimated fix the 17 Spanish regions for the 1955–1991 period. The paper concludes that the convergence process is concentrated in the first half of the period (1955–1979) and that both the productive structure and public capital had a significant role in the convergence process.