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Digital archive of theses discussed at the University of Pisa


Thesis etd-10082015-123937

Thesis type
Tesi di dottorato di ricerca
Thesis title
Academic discipline
Course of study
tutor Prof. Fiaschi, Davide
  • economic convergence
  • economic growth
  • emissions and growth
  • labour productivity
Graduation session start date
Understanding why some countries are prosperous while others fail in achieving high standards of welfare and wellbeing is one of the most interesting and investigated topics in economics. Several candidate exlplanations have been proposed, for instance cultural factors (Banfield 1958, Putnam 1993), geographical determinism (Diamond 1997), institutional determinants (North 1990, Acemoglu 2000, Acemoglu 2012). Interestingly, a common feature of any theoretical argument is that each of them fits well with the recent European history. If it is the theory which has been adapted to Europe or if it is Europe which presents the characteristics suited to successful economic growth is debatable. According to Landes (1999), it is just a stylized fact that Europe took and kept the lead for at least the last one thousand years. Therefore, even though "some would say that Eurocentrism is bad [..], hence to be avoided", it can be understood as an aknowledgement of history. Of course, there is not full agreement on the topic and different perspectives on the matter have been proposed (Hobson 2004). Whatever the story is, the European case is an interesting one, both in historical and in current terms. Indeed, since the Nineteenth century Europe (and the Western World) has been undertaking a continuous growth process, achieving unprecedented levels of wealth. Such a historical path allowed the Western countries to take the lead economically and politically. Using Landes (1999) words, "we live in a world of inequality and diversity, in which there are three kinds of nations: those that spend lots of money to keep their weight down; those whose people eat to live; and those whose people don't know where the next meal is coming from". Europe and the West have been constantly in the first kind.

However, richies have never been evenly distributed also within rich countries and this is true for Europe as well. In particular, European geography has been characterized by a growing dichotomy. On the one hand, some countries have been performing succesfully, maintaining levels of wealth which are top standards on a global scale. This is the case for continental countries, including Scandinavian economies and the United Kingdom. On the other hand, other countries have been falling behind and have not been able to keep in touch with the fast growing core. In this group we find the so called South of Europe, i.e. the Mediterranean countries, as well as the former sovietic Eastern economies. Of course, disparities have always been with us and this is not necessarily bad, since growth does not need to be a perfectly balanced process (Hirschman 1958). However, such an issue becomes relevant as long as national and regional disparities either do not reduce or worsen overtime. This is even more important if the diverging economies belong to the same political entity. This is precisely the case of Europe, in particular of the European Union, a political and economic construct in which policy interventions have been implemented in the last decades to foster convergence and cohesion between economies.

This dissertation investigates some of the main topics in the empirical literature on economic growth. The scope is to assess empirically the validity of some theoreatical statements and policy provisions, focussing mostly on European economies because of their peculiar economic history. A broader cross-country analysis is also provided in the last section.

As a first step we will test whether under some specific circumstances economies will tend to get closer and closer in terms of wealth. Theoretically, following Solow (1957), the standard neoclassical model predicts that one should find evidence of convergence, in the sense that poorer economies ar expected to grow faster than richer ones (Barro 1992, Mankiw 1990). Of course, this holds as long as economies are similar in terms of structural characteristics (as the composition of output and the distribution of labour force across sectors) and technology. Hence, the first part of this dissertation will address unconditional convergence in European regions from 1990 to 2007, a relitvely homogeneous set of economies, emphasizing the role of sectoral dynamics in shaping aggregate outcome.

The analysis of the dynamics of economic output provides an insightful picture of trends in economic growth and inequality between regions, fully describing the evolution of the distribution. Even though some policy implications can be drawn, they are quite limited. Indeed, such an unconditional analysis does not allow to tell which factors are positively associated with economic performance and which are not. The second section of this dissertation explores this line of research by focusing on two domains which have become particularly relevant after the last crisis in 2008: deregulation and liberalization of the labour market, fiscal parameters.

The last part of this work takes a broader perspective on economic growth and correlated phenomena, also enlarging the sample under analysis beyond the European Union. One of the emerging topic in the empirical literature concerns the investigation of the relationship between environment degradation and economic growth. If at a first glance a positive relationship may be the more obvious pattern, some theoretical arguments suggest that under specific conditions environmental degradation may start declining at higher levels of GDP. In particular, three factors may be fostering such a process: environmental friendly technological innovation, structural change towards less energy-intensive activities, change in individual preferences together with regulation. Given this set of hypothesis, starting from the Nineties a large amount of empirical studies has been investigating the relationship between various indicators of environmental degradation and GPD. The main scope is to test empirically the so called Environmental Kuznetz Curve hypothesis, which states that environmental degradation increases with income until a threshold level, after which the relationship turns negative. The main idea is that at a sufficiently high level of income the three mechanisms above will trigger the switch in the relationship. We will test this hypothesis for a large sample of countries, augmenting the standard model in order to account for convergence in environmental degradation.