The Verdoorn Law in the Portuguese Regions: A Panel Data Analysis

TL;DR

This paper tests the Verdoorn Law in Portuguese regions using panel data from 1986 to 1999, analyzing regional growth, polarization, and the applicability of different theoretical specifications across sectors.

Contribution

It provides an empirical analysis of the Verdoorn Law in Portugal with alternative model specifications across multiple regions and sectors over different periods.

Findings

Evidence of increasing returns to scale in Portuguese regions.

Differences in Verdoorn Law applicability across sectors.

Insights into regional divergence and polarization processes.

Abstract

This work aims to test the Verdoorn Law, with the alternative specifications of (1)Kaldor (1966), for five regions (NUTS II) Portuguese from 1986 to 1994 and for the 28 NUTS III Portuguese in the period 1995 to 1999. Will, therefore, to analyze the existence of increasing returns to scale that characterize the phenomena of polarization with circular and cumulative causes and can explain the processes of regional divergence. It is intended to test, even in this work, the alternative interpretation of (2)Rowthorn (1975) Verdoorn's Law for the same regions and periods. The results of this work will be complemented with estimates of these relationships to other sectors of the economy than the industry (primary and services sector), for each of the manufacturing industries operating in the Portuguese regions and for the total economy of each region (3)(Martinho, 2011).