Regional productivity differentials in three new member countries: What can we learn from the 1986 enlargement to the south?

The recent enlargement of the European Union (EU) will lead to unprecedented reforms of regional policies. We examine the regional distribution of gross value added, employment, and productivity for the Polish, Hungarian, and Czech regions, and compare them to the EU-15 average for the 1990-2000 period. We study their per capita incomes relative to the EU average and how these gaps are related to differences in productivity per worker. Finally, we use Esteban's (2000) shift-share analysis to explore the extent to which regional productivity gaps are due to differences in industrial mix as opposed to region-specific factors. The results are compared to figures for the Spanish and Portuguese regions a decade before their entrance to the EU.