Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 14, No. 4, pp.70-91
ISSN: 1225-0279 (Print)
Print publication date 30 Nov 2001

Kaldorian Approach to the Economic Growth of Greek Regions

Paschaloudis D. ; Alexiadis S.

Abstract

The present paper reports an attempt to examine the tendencies of regional growth and convergence with respect to Greek regions. It does so by establishing the validity of Kaldor's second Law of growth (or Verdoorn's Law) and tests for regional convergence in the ‘conventional’ framework introduced by Barro and Sala-i-Martin. The empirical results suggest that regions of Greece converge at an extremely slow rate. This slow rate can be attributed to differences in regional specialisation. Moreover, is established that both the manufacturing and the service sector are subject to increasing returns. Therefore, the service sector should not be considered as a ‘passive’ sector, but rather as one of the ‘leading’ sectors of the Greek economy.

Acknowledgments

We are grateful to three anonymous referees for critical comments and helpful suggestions for improvement on an earlier draft of the paper. Any errors or omissions remain our responsibility.

References

  • Acs, Z. (Ed.) Regional Innovation, Knowledge and Global Change, Pinter, 2000.
  • Alexiadis, S. Verdoorn's Law and the Process of Cumulative Causation: The case of Greece, Unpublished MA Dissertation University of Kent, 1998.
  • Armstrong, H., and Taylor, J. (Eds.) The Economics of Regional Policy, London, 2001.
  • Arrow, K. “The Economic Implications of Learning by Doing.” Review of Economic Studies 29 (1962): 155-73. [https://doi.org/10.2307/2295952]
  • Barro, R., and Sala-i-Martin, X. “Convergence.” Journal of Political Economy 100 (1992): 223-51. [https://doi.org/10.1086/261816]
  • Barro, R. “Regional Growth and Migration: A Japanese-US Comparison.” Journal of the Japanese and the International Economics 6 (1992a): 256-78. [https://doi.org/10.1016/0889-1583(92)90002-L]
  • Barro, R. Economic Growth, 2nd edition Mit Press, 1995.
  • Barro, R. “Technology Diffusion, Convergence and Growth.” Journal of Economic Growth 2 (1997): 1-25.
  • Bernat, G. A. Does "Manufacturing Matter? A Spatial Econometric View of Kaldor's Laws'." Journal of Regional Science 36 (1996): 463-77. [https://doi.org/10.1111/j.1467-9787.1996.tb01112.x]
  • Baumol, W. J. “Productivity Growth. Convergence and Welfare: What the Long-Run Data show.” American Economic Review 76 (1986): 1072-85.
  • Borts, G. H., and Stein J. L. Economic Growth in a Free Market, New York, Columbia University Press, 1964.
  • Casetti, E., and Tanaka, K. “The Spatial Dynamics of Japanese Manufacturing Productivity: An Empirical Analysis by Expanded Verdoorn Equations.” Papers of Regional Science Association 71 (1992): 1-13. [https://doi.org/10.1111/j.1435-5597.1992.tb01744.x]
  • Chisholm, M. Regions in Recession and Resurgence, London: Allen and Unwin, 1990.
  • Dixon, and Thirlwall. “A Model of Regional Growth Rate Differences on Kaldorian Lines.” Oxford Economic Papers 27, 1975. [https://doi.org/10.1093/oxfordjournals.oep.a041312]
  • Drakopoulos, S., and Theodossiou, I. “Kaldorian Approach to Greek Economy.” Applied Economics, December, 1991. [https://doi.org/10.1080/00036849100000133]
  • Fingelton, B., and McCombie, J. S. L. “Increasing Returns and Economic Growth: Some Evidence from the European Union Regions.” Oxford Economic Papers 50 (1998): 89-105. [https://doi.org/10.1093/oxfordjournals.oep.a028638]
  • Harrison, B. “Industrial Districts: Old Wine in New Bottles?” Regional Studies 26 (1992): 469-83. [https://doi.org/10.1080/00343409212331347121]
  • Kaldor “A Model of Economic Growth.” Economic Journal LXVII, 1957. [https://doi.org/10.2307/2227704]
  • Kaldor, N. Causes of the Slow Rate of Economic Growth of the United Kingdom Cambridge University Press, 1966.
  • Kaldor, N. “The Case for Regional Policies.” In Targetti, and Thirlwall (Eds.) (1990) “The Essential Kaldor” London: Duckworth, 1970.
  • Krugman, P. “Increasing Returns and Economic Geography.” Journal of Political Economy 99 (1991): 82-499. [https://doi.org/10.1086/261763]
  • Krugman, P. Development, Geography and Economic Theory, MIT Press, Cambridge, MA, 1995. [https://doi.org/10.7551/mitpress/2389.001.0001]
  • Leon-Ledesma, M. “Economic Growth and Verdoorn's Law in the Spanish Regions, 1962-91.” International Review of Applied Economics (No. 1 2000): 55-69. [https://doi.org/10.1080/026921700101489]
  • Markusen, A. “Sticky Places in Slippery Space: A Typology of Industrial Districts.” Economic Geography (1996): 293-313. [https://doi.org/10.2307/144402]
  • Martin, R., and Sunley, P. “Paul Krugman's Geographical Economics' and its implications for Regional Development theory: A Critical Assessment.” Economic Geography 72 (1996): 259-92. [https://doi.org/10.2307/144401]
  • Martin, R., and Sunley, P. “Slow Convergence? New Endogenous Growth Theory and Regional Development.” Economic Geography 74 (1998): 201-27. [https://doi.org/10.2307/144374]
  • McCombie, J. “Kaldor's Laws in Retrospect.” Journal of Post Keynesian Economics (Spring 1983): [https://doi.org/10.1080/01603477.1983.11489380]
  • McCombie, J., and deRidder, J. “The Verdoorn's Law Controversy: Some New Evidence Using US Data.” Oxford economic papers, June, 1984.
  • McCombie, J., and Thirlwall, A. P. Economic Growth and Balance of Payment Constraint. London: St. Martins Press, 1994. [https://doi.org/10.1007/978-1-349-23121-8]
  • McCombie, J. “The Dynamic Harrod Foreign Trade Multiplier and the Demand-oriented Approach to Economic Growth: An Evaluation.” International Review of Applied Economics 11 (1997): 5-26. [https://doi.org/10.1080/02692179700000001]
  • Novell, J. P., and Marshal, E. V. “Kaldor's Laws and Spatial Dependence: Evidence for the European Regions.” Regional Studies 33 (1999): 443-51. [https://doi.org/10.1080/00343409950081284]
  • Romer, D. Advanced Macroeconomics, McGraw-Hill, 1996.
  • Romer, P. “Increasing Returns and Lung Run Growth.” Journal of Political Economy 94 (1986): 1002-37. [https://doi.org/10.1086/261420]
  • Romer, P. “Growth Based on Increasing Returns due to Specialisation.” American Economic Review 77 (1987): 56-62.
  • Romer, P. “Endogenous Technological Change.” Journal of Political Economy 98 (1990): S71-102. [https://doi.org/10.1086/261725]
  • Romer, P. “Are Non-Convexities Important for Understanding Growth?” American Economic Review 80 (1990a): 97-103. [https://doi.org/10.3386/w3271]
  • Romer, P. “Ideas Gaps and Object Gaps in Economic Development.” Journal of Monetary Economics 32 (1993): 543-73. [https://doi.org/10.1016/0304-3932(93)90029-F]
  • Romer, P. “The Origins of Endogenous Growth.” Journal of Economic Perspectives 8 (1994): 3-22. [https://doi.org/10.1257/jep.8.1.3]
  • Richardson, H. Regional Growth Theory, Macmillan, 1973. [https://doi.org/10.1007/978-1-349-01748-5]
  • Siriopoulos C., and Asteriou, D. “Testing for Convergence Across the Greek Regions.” Regional Studies 32 (1998): 537-46. [https://doi.org/10.1080/00343409850119102]
  • Storper, M. “The Limits to Globalisation: Technology Districts and International Trade.” Economic Geography 62 (1992): 60-93. [https://doi.org/10.2307/144041]
  • Targetti, T., and Thirlwall, A. P. (Eds.) The Essential Kaldor, London: Duckworth, 1990.
  • Thirlwall, A. P. “A Plain Man's Guide to Kaldor's Growth Laws.” Journal of Post Keynesian Economics, Spring, 1983. [https://doi.org/10.1080/01603477.1983.11489375]
  • Verdoorn, P. “Fattori Che Regolano lo Sviluppo Della Productivita del Lovoro,” L'Industria. Translated by A.P. Thirlwall, 1949.