beta convergence in Finland: regional differences in speed of convergence

This paper estimates beta convergence across the 88 Finnish small-scale subregions from 1934 to 1993 using taxable per capita income as an indicator of income level. The results resemble those obtained in other studies for larger areas: regional beta convergence in Finland has been about 2% per year in the long run, whereas in the short run beta has tended to be unstable. Furthermore, this paper finds that it is possible to identify regional factors which tend to determine growth rates and steady-state income levels. These determinants are found to affect regions' individual beta convergences. The steady-state level and speed of a region's individual beta seems to be inversely related: the higher the beta the lower the steady-state level.