DP17371 The Regional Development Trap in Europe

Author(s): Andreas Diemer, Simona Iammarino, Andrés Rodríguez-Pose, Michael Storper
Publication Date: June 2022
Keyword(s): Development Trap, Economic Growth, employment, Europe, middle-income, Productivity, regions
JEL(s): R11
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17371

The concept of regional development trap refers to regions that face significant structural challenges in retrieving past dynamism or improving prosperity for their residents. This article introduces and measures the concept of the regional development trap for regions in Europe. The concept draws inspiration from the middle-income trap in international development theory but widens it to shed light on traps in higher-income countries and at the regional scale. We propose indicators-involving the economic, productivity, and employment performance of regions relative to themselves in the immediate past, and to other regions in their respective countries and elsewhere in Europe-to identify regions either in a development trap or at significant near-term risk of falling into it. Regions facing development traps generate economic, social, and political risks at the national scale but also for Europe as a whole.