Technological convergence across European regions

Abstract

Research background: Given the pivotal role of innovations and technological progress in shaping the economic development of regions and the crucial significance of spatial dimension of innovation processes at the regional level, the assessment of technological convergence in the regional scope becomes an essential research problem. Technological convergence could be identified on the basis of the analysis of total factor productivity (TFP). The significance of the technological convergence analysis results from the fact that income convergence can be both accelerated or impeded, depending on whether the initial differences in the level of technology (TFP) decrease or increase over time. Purpose of the article: The aim of the paper is twofold. Firstly, we attempt to develop a theoretical framework for the analysis of the technological convergence. Secondly, we investigate the technological convergence (on the basis of the TFP analysis) across European regions. Methods: During the first stage of the research, we employ the multiplicatively-complete Fare-Primont index to calculate TFP. The second stage of the study includes estimation of spatial panel models applied to assess the level of technological convergence across European regions. The research sample consists of 273 NUTS 2 European Union (EU) regions over the period 2010? 2016. Findings & Value added: The results of the study confirm a clear division of Europe into the Western European regions with high TFP values and the Eastern European regions with low TFP level. The research also shows that in the Eastern European regions the process of reducing the differences in the productivity levels is faster than in Western European regions. Since the issue of technological convergence is still not sufficiently explored in the relevant literature our paper attempts to fill a cognitive and methodological gap in the investigation of the technological convergence in the European regional space.