Countries might converge, unlike provinces
Albert van der Horst Researcher CPB, Netherlands Bureau for Economic Policy Analysis Van Stolkweg 14 2585 JR The Hague The Netherlands Phone: +31 703383402 Email: vanderhorst@cpb.nl Web: www.cpb.nl/nl/general/org/homepages/avdh/ Countries might converge, unlike provinces The European Union is one of the most prosperous parts of the world. Yet there are large regional disparities in productivity, wages, and employment, and they have only increased with the recent enlargement. Thus, there seems to be ample justification for helping lagging regions to catch up, both at the national and the European level. Unfortunately, regional policy appears to be ineffective. Well known are the fruitless attempts of Italy to bridge the gap between the Mezzogiorno and the North, of Germany to bridge the gap between the Neue Länder and the West, and of the European Commission to reduce regional disparities in general. This study validates one explanation of the ineffectiveness of regional policy. We set