GDP per capita in selected EU countries: Economic growth factors and spatio-temporal interactions examined at the NUTS2 level

Abstract

This article evaluates the macroeconomic policy tools at which central authorities may focus in times of economic slowdown and/or to boost economic cohesion. For this purpose, a complex spatio-temporal regression model is provided, which controls for spatial and temporal dependencies in data, as well as individual effects and relevant regional macroeconomic conditions. Empirical findings firmly favors GDP-boosting policy actions oriented towards supporting knowledge-based economic activities: enhancing research and development, improving labor force structure towards specialized professional, scientific and technical activities. In contrast, transportation infrastructure (proxied by motorway density) does not enact statistically significant improvement in GDP growth. In this article, regional macroeconomic growth dynamics and its key constituent factors are analyzed using the sample of 11 EU member states (Austria, Belgium, Czechia, Denmark, Germany, Hungary, Luxembourg, the Netherlands, Poland, Slovakia, Slovenia), observed annually (from 2010 to 2016) at the NUTS2 level. Substantial effort is directed towards verification of model robustness and the corresponding validity of the conclusions drawn.