The factors behind European regional growth: Trade, human capital and innovation

This article investigates the growth factors of EU regions in the 1990s. We test the hypothesis that regional growth is determined by endogenous growth factors, trade and technological catching-up in a growth accounting framework. For estimation, a spatial autoregressive econometric model is used. The results suggest that growth of EU regions depends on capital accumulation, increases of human capital, innovation and international technology transfer for which trade openness is an important conditional variable. Regional growth also shows spatial dependency so that growth clusters appear.