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Agglomeration and economic growth. A New Economic Geography approach for Romania’s counties
Gheorghe Bogdan COPCEA, Sorin TRIFU, Dan VILCEANU

Last modified: 2016-01-06

Abstract


In the last 25 years and especially in the last 10 years Romania registered an important economic growth rate. Nevertheless, the level of economic development is not the same across the country and, as many other states, Romania has a heterogeneous territory with different economic, social and geographical characteristics and therefore with great disparities among regions and among counties. In this respect, build on the New Economic Geography approach, this paper aims to explain the inequalities starting from the location, distribution and spatial organization of economic activities.

Based on the endogenous growth theory and using panel data models in order to determine the role of both agglomeration economies and positive externalities on regional development, our research focuses on Romania’s 41 counties plus Bucharest, analysing data from 2005 to 2012.

The results show a certain positive impact for foreign direct investments, research and development, innovation, education and market potential. However, all this factors are statistically significant only in the long run, given the fact that in the short run it is very difficult to observe and measure their impact on economic growth. By the same vein, even if a different result was expected, in some models, public infrastructure and employment rate seem to have a negative role on regional development in Romania.


Keywords


agglomeration economies; positive externalities; regional disparities, regional development; economic growth.

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