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Regional Cohesion from Local Isolated Actions: Ii. Conditioning Regional Cohesion from Local Isolated Actions: Ii. Conditioning

This paper develops an empirical procedure to assess alternative explanations for differing patterns of growth and convergence. It finds that positive spatial spillovers account for a large part of inequality dynamics across Europe as a whole, the Cohesion economies (Greece, [Ireland,] Spain, and Portugal), and selected non-Cohesion EU member states. The analysis shows that when the Cohesion economies see their incomes increase and experience higher tendencies towards greater equality, so will the non-Cohesion economies of France, Italy, and the UK experience similar outcomes: moreover, it is the relatively poor non-Cohesion economies that will benefit most from improving conditions in the Cohesion economies.