Catching Up or Falling Behind? Economic Performance and Regional Trajectories in the “New Europe”*

Abstract: This paper examines the trajectories of economic development of European national and regional economies in light of the pressures for greater integration and enlargement of the European Union. Using a variety of data sets, we demonstrate that there are significant variations in the speed and direction of change in per capita income and in productivity and employment rates across countries and a sample of European regions, and that falling behind (divergence) occurs as well as catching up (convergence). Making sense of spatial development therefore requires, we argue, that attention be paid to processes of differentiation and, in particular, to the falling behind experienced by less developed areas in East Central Europe and the forging ahead of the most developed, as well as to processes of catch‐up. The paper also contributes to an assessment of the appropriateness of interpretations of growth and spatial development through countering the dominant discourse of convergence in neoclassical and neoliberal formulations and by suggesting that integration brings with it a number of important territorial “costs” associated with increasing inequality.