Convergence at Local Level: An Exploratory Spatial Analysis Applied to the Portuguese Municipalities

Abstract

Following the enlargement process of the European Union that occurred from the 1980s onward, regional policies have been reinforced decreasing the disparities of GDP per capita among the European Union-15 Member States. However, this convergence trend is not observed at the intra-national level in which regional economic disparities are increasing. In the present paper we proceed with an empirical exercise of convergence of continental Portuguese municipalities between 1998 and 2009. Differently from the common literature, we use a spatial econometric approach as a means to embody the role of space and geography, considering both spatial dependence and spatial heterogeneity. The first conclusion points to the existence of a strong beta-convergence process during this period. The results also sustain the existence of two convergence clubs, a former composed by the inland municipalities with higher convergence velocity and a latter formed by the coastal municipalities with lower but still significant convergence velocity. The presence of spatial dependence on the convergence process of the coastal municipalities represents our third and final result.