An evolutionary approach to regional development traps in Europe

Abstract

This paper proposes an evolutionary take on regional development traps. Our definition of regional traps centres around the structural inability of regions to develop new complex activities. We distinguish between several different traps. Using industry data, we follow European regions over time and provide evidence on which regions in the European Union are trapped, and what kinds of traps they have fallen into. Our econometric analysis shows that being trapped has a negative impact on employment and wage growth in regions. We also find evidence that our development trap indicator explains well whether regions are stuck in a regional development trap, defined as persistent levels of slow economic growth.