Kurt Geppert

A note on regional convergence within the EU

A recently published article suggested that factor prices within the EU converged between 1980 and 1992 but diverged between 1992 and 1994. However, these findings largely reflect inflation differentials and exchange rate adjustments. Markov chain analysis on the basis of an alternative income aggregate, GDP per capita measured in Purchasing Power Standards, leads to different results: Convergence was close to non-existent from 1980 to 1994 but resumed significantly thereafter. This is likely to be attributable to the establishment of the Single Market and subsequent integration steps.

Regional Patterns of Intangible Capital, Agglomeration Effects and Localised Spillovers in Germany

We use a large micro-dataset to assess the importance of intangible capital - organisation, R&D and ICT capital - for the economic performance of establishments and regions in Germany. In 2003 self-produced intangible capital accounted for more than one fifth of the total capital stock of estab-lishments. More than half of the intangible capital is R&D capital. This high proportion is mainly due to a relatively strong and research-intensive manufacturing sector in Germany. At the regional level, we find descriptive evidence for a positive relationship between intangible capital and the economic performance of regions. This is true both for the level of economic activities and for growth. The results of cross-sectional regressions for the years from 1999 to 2003 indicate that dou-bling the intangible capital intensity of establishments increases the average wage levels by one percent. Regarding the regional economic environment of establishments, we find that the substan-tial net advantages of agglomeration have more to do with broad knowledge and diversity than with regional clustering and specialisation. Separate regressions for the wage levels of non-intangible workers show very similar results. These workers can share the rents of the activities of intangible workers. Thus, intangible capital generates positive externalities not only at the regional level, but also at the level of establishments.

Is There Increasing Regional Specialisation within the General Process of Deindustrialisation

Trade theory and economic geography suggest that the removal of trade barriers is likely to bring about more economic specialisation and potentially more diverse development paths between countries and regions. Thus, the deepening and extending European integration should be accompanied by an increasing regional specialisation. In contrast, our results for the period from 1995 to 2004 show considerably declining differences in the share of manufacturing in total value added across nations and regions of the EU. The decrease in sectoral specialisation is accompanied by a strong and almost uniform process of deindustrialisation. However, this trend is slowing down and manufacturing shares appear to be gradually approaching lower limits. These bounds are specific according to national affiliation and settlement types of regions.