Testing The Convergence Hypothesis Using Time Series Techniques: The Case Of Greece 1971-1996

Abstract

Over the last five years, few issues have proven more controversial in empirical economics than the so-called convergence hypothesis. This paper considers the issue of convergence across Greek regions, using time series techniques. 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 the poor countries (like Greece) have in comparison with the rich ones. The 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. Also, the same argument can be used as an explanation for the regional differences -the fact that the poor regions do not have previous experience and knowledge for efficient investments.