Regional and Environmental Classifications of the 27 EU Countries

This paper puts forward a theoretical framework for regional classifications and rankings based on the development of environmental indices. This framework can be used to classify European Union countries according to the extent to which they are influenced by supply-side (producer) and demand-side (consumer) responses to their specific bundle of economic and environmental attributes. This kind of classification is useful because it provides information about the relative attractiveness to producers and consumers of the combination of economic and environmental attributes indigenous to each region. It, therefore, has implications for the design and focus of the regional and environmental policies of the European Union. The analysis identifies 4 groups of countries with similar characteristics (high productivity, low productivity, high amenity, low amenity) and the appropriate mix of environmental and regional policies for each one of them.

Introduction

There has been fairly extensive discussion over time regarding the regional disparities and inequalities (see for example Braunerhjelm et al. (2000); Puga (1999); Boldrin and Canova (2001) among others). In Europe Article 158 of the Treaty which establishes the European Community frequently repeats that “. . . the Community shall aim at reducing disparities between levels of development of the various regions. . .” and under these circumstances, large budgets are assigned (by the EU) to regional policy in an attempt to reduce regional disparities. It has been observed that although economic convergence attracted a lot of interest, its progress in Europe has slowed down considerably during the 1980 and early 1990s (Bouvet, 2010). How regional disparities are affected after the economic integration remains an issue of interest due to the Economic Monetary Union (EMU) and the ongoing process for the development of a Single Market.

There are many models which investigate regional disparities and it is still not clear whether they will remain or disappear with further economic integration (Bouvet, 2010). Research on regional policy in the EU generally demonstrates that there are two variables that cause disparities: geographic and economic. Krugman (1991) in an influential publication developed the concepts of core and periphery to describe regional disparities. The concept of this theory is that regions close to the core of activity in a country are developed much better than regions that are distant from the core. In the case of the EU, there is a core which contains high concentration of economic development, modern infrastructure and advanced social indicators. All of the attributes of post-industrial life are concentrated in the core. On the contrary, the periphery contains many regions that would be traditionally designated as underdeveloped. Many of these regions have been outside the main processes of economic development experienced in the core regions. Similarly Partridge et al. (2008) in his research over the period of 1990–2000, also observed large concentrations of people and jobs nearer larger urban centres. Using an urban hierarchy approach, they found lower growth in areas positioned at greater distances from larger (higher-tier) urban areas.

Neira et al. (2010) in their analysis on regional growth in the EU, besides the classical factors, they introduced other parameters such as R&D expenditure, the number of patents, human capital or entrepreneurship rates and social capital (p. 19). The authors pay particular attention to the concept of social capital which is described as multidimensional and complex. Many of the existing definitions include terms like networks, trust, civic co-operation and norms. The research demonstrates that social capital variables constitute, along with human capital, a basic pillar in regional development, although the econometric results obtained are not entirely conclusive. Furthermore, Vázquez-Rozas et al. (2010) examined in their research the relationship between entrepreneurship and economic growth at a regional level in Spanish and Portuguese NUTS II. They added local knowledge variables to the classical model of economic growth which only include labor and capital. In particular they added variables such as research and development, human capital, entrepreneurship and social capita. Glaeser et al. 2010 has also undertaken research in the examination of the impact...