Regional economic change in the European Union

Theoretical Perspectives on the Growth Process The neo-dassical corrvergence processes In traditional neo-classical growth theory under free market conditions, growth leads to convergence in regional per capita income values as the poorer regions catch up with those initially richer. In the more modern versions of this theory (see Barro and Sala-i-Martin 1992; Mankiw 1995), the picture painted is a little more complex, but still an optimistic convergence one:• regional per capita incomes still converge, but not to a single (,steady state') value• major shocks to the system, such as the 1970s oil crises, may lead to a temporary widening of disparities where they hit some regionsharder than others (Barro 1991). Eventually, however, the convergence processes come back on stream.