Spatial Effects in Convergence of Portuguese Product

TL;DR

This paper investigates how spatial effects influence economic convergence among Portuguese parishes from 1991 to 2001, highlighting the role of spatial autocorrelation and spillover effects in regional economic development.

Contribution

It provides empirical evidence of spatial autocorrelation and spillover effects impacting product convergence in Portuguese regions, using cross-section estimation methods and Moran's I statistics.

Findings

No evidence of convergence in Portuguese parishes' economies.

Positive spatial autocorrelation in regional product development.

Spatial spillover effects significantly influence economic convergence.

Abstract

This study analyses, through cross-section estimation methods, the influence of spatial effects in the conditional product convergence in the parishes' economies of mainland Portugal between 1991 and 2001 (the last year with data available for this spatial disaggregation level). To analyse the data, Moran's I statistics is considered, and it is stated that product is subject to positive spatial autocorrelation (product develops in a similar manner to product in neighbouring regions). Taking into account the estimation results, it is stated that there are not indications of convergence (the population is in the littoral of Portugal) and it can be seen that spatial spillover effects, spatial lag (capturing spatial autocorrelation through a spatially lagged dependent variable) and spatial error (capturing spatial autocorrelation through a spatially lagged error term) condition the convergence of product of Portuguese parishes in the period under consideration (1)(Martinho, 2011).