Testing for convergence across the Greek regions

During the last five years, few issues have proved more controversial in empirical economics than the so-called convergence hypothesis. This paper examines the issue of convergence across Greek regions, following the theoretical basis of the neoclassical model of economic growth. Our empirical results support the popular view prevailing in Greece about the existence of dualism across the southern and northern regions of Greece. A possible explanation for this may be the lack of experience that poor countries (like Greece) have in comparison with the rich ones. Rich countries have the combined ability to educate themselves as they grow rich and the endogenous ability to accumulate the knowledge upon which these efforts are made. The same argument can be also used as an explanation for regional differences - the fact that poor regions do not have previous experience and knowledge for efficient investments.