How does the degree of rurality affect different determinants of economic growth?

Abstract: The heterogeneity in regional growth rates within the European Union has been subject to a vast array of studies and research. However, there exists surprisingly little literature focusing on the impact of regional structural development on the economic growth processes. Given that the treaty on the functioning of the European Union emphasises the strengthening of the economic and social cohesion by reducing disparities in the level of development between regions, a deeper understanding of regional growth processes is vital to achieve that goal. In this thesis, the interaction effects of regional rurality on a selection of growth variables are empirically analysed to assess differences in the growth mechanisms of 226 urban and rural European NUTS-2 regions. The findings show that regional typology is significantly relevant to the growth impact of several important determinants as their effects can vary greatly with regional rurality taken into account. The results are robust to several different estimation techniques that account for country fixed effects, endogeneity and spatial autocorrelation.