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Structural Reforms and Regional Convergence

Author/Editor: Antonio Spilimbergo | Natasha Xingyuan Che
Authorized for Distribution: April 1, 2012
Electronic Access: Free Full Text (PDF file size is 1,220KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Which structural reforms affect the speed the regional convergence within a country? We found that domestic financial development, trade/current account openness, better institutional infrastructure, and selected labor market reforms facilitate regional convergence. However, these reforms have mixed effects on the growth of regions closer to the country’s development frontier. We also document that regional income disparity and average income are inversely correlated across countries so that speeding up regional convergence increases national income. We also present a theoretical model to discuss these results.
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Series: Working Paper No. 12/106
Subject(s): Economic growth | Economic models | Fiscal reforms | Labor market policy | Labor market reforms
Author's keyword(s): Structural reforms; regional convergence; economic growth; income inequality
    Published:   April 1, 2012        
    ISBN/ISSN:   9781475503272/1018-5941   Format:   Paper
    Stock No:   WPIEA2012106   Pages:   34
    Price:   US$18.00
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