Francesco Pigliaru

Structural change and convergence: an Italian regional perspective

Abstract The recent empirical literature on convergence among countries and regions reveals a tendency to overlook the importance of the continuous process of sectoral reallocation of resources that accompanies economic growth. The observed aggregate convergence has been interpreted as an unambiguous corroboration of the mechanistic equilibrium process implied by Solows one-sector growth model, a process independent of differences and changes in economic structures. The aim of this paper is to evaluate whether structural change is a key element in accounting for aggregate convergence for the Italian regions over the past two decades. We obtain the following results: (1) aggregate convergence is largely a matter of structural change and cannot be interpreted as strong evidence in favour of the β convergence hypothesis; and (2) the process of structural change associated with aggregate convergence seems to be limited to the transitory shift from agriculture to manufacture.

How fast are small tourism countries growing? Evidence from the data for 1980-2003.

This paper analyses the empirical relationship between growth, country size and tourism specialization by using a data set covering the period 1980–2003. It finds that tourism countries are small and grow significantly faster than all the other subgroups considered in the analysis. Tourism appears to be an independent determining factor for growth: controlling for initial per capita income and for trade openness does not weaken the positive correlation between tourism specialization and growth. Another finding of the paper is that small states are fast growing only when they are highly specialized in tourism. In contrast with some previous conclusions in the literature, smallness per se is not good for growth.

European regional growth: do sectors matter?

The recent theoretical and empirical works on economic growth based on Solows model have generally neglected the role played by the sectoral mix and structural change on aggregate growth. However, as many development economists have remarked, sectors are characterized by enormous differences in terms of technological change, inter-sectoral linkages and the degree of scale economies. In this paper we show that indeed sectors matter in determining aggregate growth across European regions. More specifically, we show that large part of convergence is induced by a structural change process of shifting employment from low to high productive sectors that is relatively faster in the initially less productive southern European regions.

Why Are Tourism Countries Small and Fast-Growing?

International tourism is today one of the most important tradable sectors, with expenditure on tourist goods and services representing some 8% of total world export receipts and 5% of world GDP. Cross-country data for 1985-95 on tourism specialisation and economic growth reveal the following regularities - (i) many tourism countries have grown faster compared to the other countries; and (ii) they are small. We use a two-sector endogenous growth model to obtain explanatory hypotheses about these two findings. In particular, we define the conditions required for small countries to specialise in tourism and to enter the faster growth path. Our suggestion is that what matters is a countrys relative endowment of the natural resource, rather than its absolute size.

Technological Diffusion, Spatial Spillovers and Regional Convergence in Europe

In this paper we study two closely related issues. First, the role of technology heterogeneity and diffusion in the convergence of GDP per worker observed across the European regions, in the absence of data on regional TFP. Second, the spatial pattern of the observed regional heterogeneity in technology and the relevance of this pattern for the econometric analysis of regional convergence in Europe. As for the first issue, our aim is to assess whether the convergence observed across European regions is due to convergence in technology as well as to convergence in capital-labor ratios. We first develop a growth model where technology accumulation in lagging regions depends on their own propensity to innovate and on technology diffusion from the leading region, and convergence in GDP per worker is due to both capital deepening and catch-up. We use data (1978-97) on 131 European regions. Propensities to innovate are computed by assigning each patent collected by the European Patent Office to its region of origin. Our findings are consistent with the hypothesis that technology differs across regions and that convergence is partly due to technological catch-up. As for the second empirical issue, we study to what extent each region s propensity to innovate is correlated with that of the surrounding regions. Our results show, first, that the performance of each region does depend on that of the surrounding areas. Second, that the intensity of such spillovers fades with distance. Taken together, these findings suggest the existence of significant localized spillovers of technological knowledge. Finally, we show that these spillovers are strong enough to play a role that cannot be ignored in the econometric analysis of the convergence process in Europe.

Tourism and development: a recent phenomenon built on old (institutional) roots?

Is tourism an opportunity for lagging countries in the elusive quest for growth (Easterly, 2002)? Recent empirical evidence suggests that the answer is a cautious yes. Aggregate cross-country data show that tourism specialization is likely to be associated with higher per capita GDP growth rates than those observed in industrialized countries. However, this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems. In this paper we frame our starting question within the general debate about the importance of good/bad institutions as fundamental determinants of economic growth (Acemoglu et al., 2001) and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth enhancing institutions. Our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables. By means of descriptive statistics and some simple cross-country regressions we confirm that the quality of institutions is important for growth. Yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher-than-average growth. (This abstract was borrowed from another version of this item.)

Is dualism still a source of convergence in Europe

This paper aims at assessing whether dualistic mechanisms represent a significant component of the aggregate labour productivity convergence observed across the European regions in the 1980s. The potential of an explanation of convergence based - in part, at least - on the existence of dualism in some of the initially poorer regions has been largely ignored by the literature. We use a dualistic model based on Dixit (1970) and on Mas-Colell and Razin (1973) to obtain hypotheses to be tested in cross-region growth regressions. In particular, we wish to test whether a high initial allocation of labour in agriculture in fact generates -- in each sector as well as at the aggregate level -- the specific impact on productivity growth (and therefore on convergence) implied by the theory of the dual economy. We use the data-base Regio-Eu set up by CRENoS, with aggregate and sectoral data for 109 territorial units from 1980 to 1990. Our cross-section results are consistent with the major predictions of the dualistic model. While part of the influence exerted by dualistic mechanisms is not easily distinguishable from the one exerted by other mechanisms such as technology diffusion, still the former appears to be a significant component of the whole process of convergence. Ignoring such component could lead to misleading interpretations of the relative roles played by each of the forces behind the process, and to inexact assessments of what actions should be taken - if any - by the European regional policy to help the process become more pervasive. Keywords: Dualism, Growth, Convergence, Regions, Europe JEL: O40, O41, O52, R11

The economics of tourism and sustainable development.

Although economics has increasingly become a technical subject, this accessible book aims to present important economics results and relate them explicitly to the policy debate. Using a coherent analytical framework, this unique approach offers prescriptions for moving tourism, and economic development more generally, closer to a sustainable ideal. The authors begin by studying the macroeconomic effect of tourism in terms of growth performance and sources of growth. They also examine how the tourism–growth link is affected by the role of imports in the economy, and how tourism impacts upon land use. Further chapters investigate the important issue of forecasting visitor numbers and explore the need for a comprehensive accounting framework to take account of ecologically sustainable tourism. The authors also examine the microeconomic aspects of sustainable tourism and analyse the increasing popularity of environmentally friendly holidays.

International trade and uneven growth: a model with intersectoral spillovers of knowledge

We analyse a world economy composed of a continuum of small countries producing two final goods, the learning-by-doing potentials of which differ significantly. In autarky, the knowledge accumulated in the high-learning sector spills over into the low-learning one. A steady-state equilibrium common to all countries exists, in which both goods are produced. The steady-state growth rate is higher the larger is the relative share of the leading sector in the economy. Trade leads to complete specialization. In the absence of international spillovers, the growth rates of the trading countries diverge according to their comparative advantage. Both dynamic gains and losses from trade may be present. Further, we explore the possibility of international transmission of knowledge. The latter generates convergence of long-run growth rates across countries, with the duration of such a convergence being a decreasing function of the intensity of the international spillovers.

How fast are small tourist countries growing? The 1980-2003 evidence

We analyze the empirical relationship between growth, country size and tourism specialization by using a dataset covering the period 1980-2003. We find that tourism countries grow significantly faster than all the other sub-groups considered in our analysis. Tourism appears to be an independent determining factor for growth, and the reason for that is neither because they are poorer than the average, nor because they are very open to trade. Another finding of our paper is that small states are fast growing only when are highly specialized in tourism. In contrast with some previous conclusions in the literature, smallness per se is not good for growth.