ECONOMIC CONVERGENCE OF CZECH REGIONS IN TERMS OF GDP AND UNEMPLOYMENT RATE IN RESPONSE TO FDI FLOWS: DO BUSINESSES AND REGIONS FLOURISH?
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Date
2019-07-23
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Abstract
The convergence analysis of regions of the Czech Republic is performed in the period 2000-2017. Two convergence concepts are methodologically described and applied: 1) the regional variability of real gross domestic product per capita is examined by the sigma-convergence method; 2) the tendency of poorer regions to grow faster than the richer is assessed by the concept of beta-convergence. The analysis results do not manifest any palpable tendency of the Czech regions to converge. Furthermore, a role of foreign direct investment flows (FDI) as a catalyst that should contribute to the convergence of the Czech regions in terms of unemployment is assessed based on the relationship between the cumulative regional FDI flows per capita and regional unemployment development in period 2005-2017. The assumption that the FDI flows create new jobs and thereby contributing to the reduction of unemployment is studied by means of the statistical apparatus, regression and correlation analysis. No positive impact of regional FDI flows on regional unemployment was proven.
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Convergence, unemployment rate, gross domestic product, foreign direct investment, subsidy and enterprise