Regional disparities in Central and Eastern Europe rose substantially since 1990. Still, prima facie evidence of beta-convergence is often found in the CEE data. To reconcile this seeming paradox, we sketch out and test empirically a hybrid model of regional growth that draws on the regional...

The majority of the literature on fiscal decentralization has tended to stress that the greater capacity of decentralized governments to tailor policies to local preferences and to be innovative in the provision of policies and public services, the greater the potential for economic efficiency...