The components of regional disparities in Europe

The aim of this paper is to analyse the components of development disparities across the EU NUTS 2 regions by means of a new method of decomposition of per capita GDP. Decomposition first provides evidence of a remarkable inconsistency of the per capita GDP indicator at regional NUTS 2 level. This is addressed by proposing an “adjusted” development index. The analysis highlights in general the relatively greater importance of productivity and employment differentials over structural features, such as industry mix and demographic structure, although the picture becomes more complex when the focus shifts to the lagging-behind EU regions.