Six convergence clubs divide 98 regions across four EU economies
Income levels across 98 regions in Germany, France, Italy, and Spain cluster into six distinct convergence clubs rather than a single European baseline. A Banco de España paper covering 1998 to 2025 finds that human capital drives long-run regional output more than physical capital accumulation.
German regions dominate top tiers
The analysis by Mateo Cacho Uzal, M. Daniela Filip, and Diana Posada Restrepo rejects uniform European convergence across 98 NUTS 2 regions.
Using the Phillips and Sul log-t algorithm, the authors identify six convergence clubs.
Clubs 1 and 2, comprising 26 primarily German regions alongside Île-de-France, sustain GDP per capita levels well above the sample average.
Conversely, Clubs 3 through 6 encompass 72 regions across Spain, France, and Italy converging toward lower relative equilibria.
Dynamic panel estimations yield an annual error-correction speed of 0.49 across the panel.
Long-term output elasticity stands at 0.29 for physical capital stock, compared to a higher semielasticity of 0.45 for secondary and tertiary educational attainment.
Spanish territories locked in lower tiers
Spanish autonomous communities remain entirely absent from the top two clubs.
Madrid, the Basque Country, and Aragón sit in Club 3, though their initial relative income advantage narrowed over the 1998–2025 period.
Andalusia and the Canary Islands lag in Club 6, where the income gap with core European regions widened further.
Most Spanish regions exhibit lower educational attainment and physical capital stock than club medians, limiting their ability to absorb investment effectively.
Uniform transfers cannot bridge the divide
European cohesion policy fails when it treats convergence as a simple volume game of capital transfers.
Regional returns depend on local absorptive capacity and education rather than blunt cash injections.
Without deep structural reforms in lagging areas, structural funds only cement existing divides.