Technology adoption and club convergence

A model of regional convergence is developed in which the pattern of convergence is attributed to the rate of technological adoption across regions. If absorptive abilities vary across regions, convergence is constrained within a certain group of regions that share common structural characteristics. Whether regions exhibit a pattern of convergence depends on the degree to which infrastructure conditions are appropriate for the adoption of technological improvements. The model is tested using data for the NUTS-2 regions of the EU-27 during the time period 1995-2006. The results suggest that adoption of technology has a significant effect on regional growth patterns in Europe, and hence the analysis has important implications for the direction of regional policy in Europe.