The first part of the Deliverable addresses three main questions: i) How has the process of EU convergence in standards of living evolved over the last two decades? ii) Have recent trends such as digital transformation, globalisation and migration affected it? iii) Do geographical factors play a significant role?
The results suggest moderate diverging tendencies, with the higher income slightly diverging from the mean upwards, and the lowest one marginally diverging from the mean downwards. Capital regions and metropolitan areas are generally concentrated in the highest-income club, suggesting a tendency towards urban-rural polarisation. Indicators of technological change, globalisation and migration increase the likelihood of being in the high-income club. Additionally, better labour market and educational outcomes are associated with a higher probability of being in low poverty and low-inequality clubs. Digital transformation seems to increase the likelihood of belonging to the higher clubs of poverty or inequality, especially working via the labour market demand.
The second part, on the other hand, focuses on how these three trends will shape Europe. The relationship between these trends and regions is reciprocal: trends affect regions differently, and the way regions respond to challenges varies. It examines regional convergence and divergence in Europe since the financial crisis and takes a deeper look into 13 selected European regions. Thus, it asks: i) How are regions in Europe performing in terms of socio/economic variables. ii) What is the development pattern when comparing NUTS-2 regions within different varieties of capitalism on some key social/economic indicators. iii) What is the development trend among NUTS-2 regions on key social/economic indicators?
The findings highlight the significant progress made by Eastern European countries, which have markedly caught up with the rest of Europe over the past 25 years. This convergence is particularly noteworthy compared to the more gradual and less pronounced development observed in other places in the EU. The Mediterranean regions, in particular, seem constrained by their social models, limiting their ability to break out of established patterns and improve their socioeconomic position. Addressing these differences presents a significant challenge, especially when viewed through the lens of general European policy principles.