Wilfried Koch

Growth and Spatial Dependence in Europe

Recent theoretical and empirical work generally often focus on the interdependence of nations and regions underlying that the economy of one country or region is not independent of the economies of others. However, these models generally ignores the impact of location and neighborhood in explaining growth. This paper presents an augmented Solow model that includes spatial externalities and spatial interdependence among economies. I obtain a spatial econometric reduce form which allows testing the effects of the rate of saving, the rate of population growth and the location on income per capita and on the conditional convergence process in Europe.