Regional Productivity Differentials in Poland, Hungary and the Czech Republic

This paper starts by describing the distribution of GVA, employment and productivity growth across the regions of Poland, Hungary and the Czech Republic. Next, we investigate in what extent regional per capita income gaps to the European average can be attributed to differences in productivity per worker. Finally, we extend Esteban’s (2000) shift-share analysis to measure how regional productivity gaps are due to differences in industrial mix as opposed to region-specific factors. The results point out the greater influence of the second element and therefore support policies benefiting homogenously all the sectors in the least developed regions.