abstract: 'The literature on economic growth has placed special focus on analysing

  the convergence processes between countries and regions. Within the

  growth theories, two alternative approaches have been developed to

  explain the differences observed in per capita income across countries

  over time. Neoclassical growth models predict a process of convergence

  between economies where the relatively poor economies will grow at a

  faster rate than the relatively rich ones, while endogenous growth

  models describe a situation of non-convergence.

  Theoretical developments and empirical studies on convergence have led

  to the development of different definitions of the term and to the use

  of different methodologies for its investigation (Islam, 2003). The

  concepts of sigma and beta convergence have been widely used in

  empirical papers. Sigma convergence refers to the reduction in the per

  capita income dispersion across economies over time, while beta

  convergence refers to the existence of a negative correlation between

  income growth over time and its initial level.

  The concept of absolute or unconditional convergence assumes that per

  capita incomes in the regions will tend to converge in the long term to

  a single steady state, regardless of their initial conditions. In

  contrast, the conditional convergence hypothesis holds that each economy

  converges to its own stationary state, so that economies will converge

  with one another in the long run if they have similar structural

  characteristics (Galor, 1996).

  Neoclassical growth models lead to the hypothesis of conditional

  convergence between economies, but also to the hypothesis of convergence

  clubs, which proposes that regions with similar economic structures can

  converge to different steady states if they start from different initial

  conditions. Therefore, although certain regions have globally

  heterogeneous growth paths, they may be gathered into subgroups that

  exhibit homogeneous growth dynamics.

  At the international level, the empirical evidence confirms the

  existence of convergence clubs between countries (Durlauf and Johnson,

  1995; Canova, 2004, Phillips and Sul, 2007, Monfort et al., 2013, Borsi

  and Metiu, 2015), as well as between regions (Postiglioni et al., 2010;

  Bartkowska and Riedl, 2012; Rodriguez et al., 2016; Tian et al., 2016;

  von Lyncker and Thoennessen, 2016). However, there is still little

  empirical evidence for the existence of convergence clubs in the Spanish

  economy, even though a few papers have been written in this regard.

  Indeed, some research has provided evidence of convergence clubs between

  Spanish regions since the late 1970s, clubs that remain to this day

  (Perez, 2000, Goerlich et al., 2002, Montanes and Olmos, 2014, Brida et

  al., 2015), although none has used a methodology like the one used in

  this article. Perez (2000) notes that the convergence process for per

  capita income in Spain''s Autonomous Communities during the period

  1955-1995 can be characterised by subgroups of regions that converge to

  different stationary states. Goerlich et al. (2002), examining the

  convergence of Spanish regions during the period 19552000, find, by the

  end of the period, the existence of two convergence clubs both when they

  use per capita income and labour productivity as a variable. Brida et

  al. (2015) apply a nonparametric clustering approach to the per capita

  income data of the Spanish Autonomous Communities to analyse regional

  convergence during the period 1955-2009. Their results indicate the

  presence, since the late seventies, of two convergence clubs, one more

  homogeneous composed by the richer regions, and another more

  heterogeneous formed by the remaining regions. They also note that there

  has been more convergence among the regions in the first club and a gap

  between clubs in the last two decades. However, as the authors point

  out, these clubs have not remained stable over time, with their numbers

  ranging from three to five. Finally, Montanes and Olmos (2014), using

  two different indicators, per capita income and an indicator of human

  development, study the possible stochastic convergence between Spanish

  regions for the period 1980-2010. The results show, for the end of the

  period, the existence of two distinct geographical areas (for the two

  indicators used), which is interpreted by the authors as evidence of

  different convergence clubs.

  Bearing this in mind, this paper contributes to the existing literature

  by providing some new evidence on the regional converge process in

  Spain. More specifically, the aim of this work is to analyse whether

  Spanish regions display a full convergence process among them or if, on

  the contrary, they form convergence clubs.

  The contributions of this work are twofold. On the one hand, this paper

  provides new evidence on the existence of regional convergence clubs in

  Spain. On the other hand, even though there are various estimation

  methods that can be applied to test club convergence hypotheses, this

  paper focuses on the implementation of a new methodology, which to the

  best of our knowledge, has not been applied to the Spanish case. In

  particular, this work uses the new panel convergence methodology

  developed by Phillips and Sul (2007).

  Phillips and Sul''s methodology introduces a cross-sectional study, by

  means of an analysis of heterogeneous time series in the parameters of a

  neoclassical growth model, in order to take into account the

  heterogeneity of the transitional temporary variable analysed. This

  approach has clear advantages over other alternative methods. Firstly,

  it can be used to endogenously identify groups of regions converging

  towards the same growth path, and not by applying a predetermined

  criterion. Secondly, although a full convergence hypothesis can be

  rejected, this approach makes it possible to identify convergence clubs

  among regions, as well as the divergent regions. In addition, the speed

  of the convergence parameter can also be estimated with this

  methodology, which allows distinguishing the relative convergence

  empirically.

  The regional convergence process is analysed considering three

  variables: income per capita and its main components, GDP per worker and

  employment per capita for 17 Spanish regions in the period 1980-2008.

  Data comes from the regional dataset BD. MORES.

  The empirical results obtained in this research confirm the existence of

  full convergence for GDP per worker. However, there is also evidence for

  the existence of convergence clubs in terms of both income per capita

  and employment in Spanish regions.

  Regarding income per capita, our findings suggest the existence of three

  convergence clubs, which converge to different income levels: high,

  medium and low; whereas no divergent region was identified.

  With respect to employment per capita, the results are quite similar to

  those above for income per capita. We identify three clubs, but no

  divergent region was detected.

  The composition of clubs respect both variables, income and per capita

  employment, which remained relatively stable in the period analysed.

  Only four regions (Asturias, Cantabria, Castile and Leon and the Basque

  Country) exhibited differences in the composition of the clubs. The

  differences in the clubs'' configuration may be explained by the

  different behaviour of labour productivity in these regions.

  Finally, it is worth noting that this paper is the first step in our

  research. A deeper analysis of the factors responsible for the formation

  of convergence clubs in Spain must be undertaken in order to provide

  useful insight to policy makers regarding the mechanisms needed to

  achieve economic and social cohesion amongst regions.'
affiliation: 'Gonzalez, MCB (Corresponding Author), Univ La Laguna, San Cristobal
  De La Lagu, Spain.

  Barrios Gonzalez, Ma Candelaria, Univ La Laguna, San Cristobal De La Lagu, Spain.

  Martinez Navarro, Ma Angeles, Univ Cadiz, Cadiz, Spain.'
author: Barrios Gonzalez, Ma Candelaria and Martinez Navarro, Ma Angeles
author_list:
- family: Barrios Gonzalez
  given: Ma Candelaria
- family: Martinez Navarro
  given: Ma Angeles
da: '2023-09-28'
files: []
issn: 0213-7585
journal: REVISTA DE ESTUDIOS REGIONALES
keywords: Convergence clubs; Log t test; Spain; Regional analysis
keywords-plus: PER-CAPITA; GROWTH; INCOME; INEQUALITY; SPAIN; CLUBS
language: Spanish
month: MAY-AUG
number: '109'
number-of-cited-references: '54'
orcid-numbers: 'Flores, Esther/0000-0001-5698-6559

  Martinez Navarro, Maria Angeles/0000-0002-3583-2726'
pages: 165-190
papis_id: 1900b027e90b3f97edb19ff03c4a75a9
ref: Barriosgonzalez2017patternsconvergence
researcherid-numbers: 'MARTÍNEZ, M. ÁNGELES/AAA-7893-2019

  '
times-cited: '0'
title: 'Patterns of convergence in Spanish regions: An application of Phillips-Sul''s
  methodology'
type: Article
unique-id: WOS:000424550700007
usage-count-last-180-days: '0'
usage-count-since-2013: '6'
web-of-science-categories: Environmental Studies
year: '2017'