Integration, Regional Specialization and Growth Differentials in EU Acceding Countries
percent in Bulgaria and Romania to 69 percent in Slovenia. While the majority of the
ten CEE candidate countries converged toward the EU average, Bulgaria, the Czech
Republic and Romania experienced a decline of their GDP per capita relative to the EU-
15 average in 2000 compared to 1996. The real GDP per capita growth rates in the
period 1996-2000 ranged from -1.6 percent in Romania to 5.2 percent in Poland.
At the regional level, GDP per capita disparities are even larger. The Second
Progress Report on Economic and Social Cohesion of the European Commission
(European Commission (2003)) shows that, in 2000 the GDP per capita in NUTS 2
regions was below 30 percent of EU average in the majority of regions in Bulgaria and
Romania, and several regions in Poland. The GDP per capita was above the EU average
only in the capital region of Prague and around 98 percent in the capital region of
Bratislava.
In addition, several recent studies (Petrakos (1996, 2000); Raagmaa (1996);
Fazekas, (1996, 2000) Nemes-Nagy (1994, 2000); Petrakos / Economou (2002);
Minasian / Totev (1996)) indicate that over the past decade regional disparities within
CEE countries increased. Growing evidence (Petrakos (2000), Petrakos / Totev (2000);
Resmini (2002)) shows two types of winners among the regions in CEE countries -
metropolitan and urban areas and regions close to EU markets, and two types of losers -
rural areas and old (declining) industrial areas.
This paper builds on the results of a previous research on the impact of
economic integration on the location of manufacturing in five EU accession countries2
discussed in Traistaru / Nijkamp / Longhi (2002). We further investigate here the role of
knowledge spillovers and regional manufacturing specialization on regional growth and
patterns of disparities in regional income per capita in Hungary.
We proceed in two steps. We first analyze determinants of regional growth in
Hungary over the period 1994-2000. We focus on the effect of knowledge spillovers -
proxyed with a measure of regional foreign direct investment intensity - and regional
manufacturing specialization controlling for regional economic structures, the degree of
openness and geographical proximity to EU markets. Second, we test whether regional
income per capita in Hungary has converged or diverged.
The choice of the period to be analyzed is based on the availability of regional
GDP data. Although the seven year period is short for assessing the adjustment process
Bulgaria, Estonia, Hungary, Romania and Slovenia