A long-run perspective on Latvian regional gross domestic product inequality, 1925–2016

ABSTRACT

This paper for the first time calculates the historical regional GDP (rGDP) for an Eastern European country by using the methodology of Frank Geary and Tom Stark [2002. Examining Ireland's post-famine economic growth performance. The Economic Journal, 112(482):919–935]. The estimates cover the period 1925–1935 and are made for the historical Latvian regions Kurzeme, Vidzeme, Zemgale, Latgale, and Riga as well as within the contemporary NUTS3 units. The results are compared with the GDP disparity of the NUTS3 regions of the restored independent Latvia (2001–2016). The main findings are that the sigma divergence remained stable. Direct comparisons of regional growth rates indicate that economically more advanced regions were more sensitive to business cycles than less advanced regions. Hence, sigma divergence seems to prevail in times of high growth and convergence in times of low growth.

KEYWORDS:

• Regional gross domestic product
• cross-regional economic inequality
• interwar Latvia
• restored independent Latvia
• sigma convergence
• beta convergence

JEL CODES:

• R11
• E01
• N94

Acknowledgements

The authors acknowledge the financial support from the Baltic Research Programme project ‘Quantitative Data About Societal and Economic Transformations in the Regions of the Three Baltic States During the Last Hundred Years for the Analysis of Historical Transformations and the Overcoming of Future Challenges’ (BALTIC100), project No. EEA-RESEARCH-174, under the EEA Grant of Iceland, Liechtenstein and Norway Contract No. EEZ/BPP/VIAA/2021/3. We also thank Ilmars Mežs for the research assistance.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 To ensure comparability, we use our findings about Zemgale in its interwar limits.

2 Not including Riga.

Additional information

Funding

This work was supported by Baltic Research Programme project ‘Quantitative Data About Societal and Economic Transformations in the Regions of the Three Baltic States During the Last Hundred Years for the Analysis of Historical Transformations and the Overcoming of Future Challenges’ [grant number EEZ/BPP/VIAA/2021/3].

Notes on contributors

Ola Honningdal Grytten

Ola Honingdal Grytten is a professor in economic history at the Department of Economics, NHH Norwegian School of Economics in Bergen. His major fields of research are macroeconomic history, financial history, historical entrepreneurship, and labour market history. Currently, he is senior researcher at the international project BALTIC100: ‘Quantitative Data About Societal and Economic Transformations in the Regions of the Three Baltic States During the Last Hundred Years for the Analysis of Historical Transformations and the Overcoming of Future Challenges“.

Zenonas Norkus

Zenonas Norkus is a professor of comparative historical sociology at the Institute of Sociology and Social Work, Faculty of Philosophy, Vilnius University. His most recent book publications are ‘The Great Restoration: Post-Communist Transformations from the Viewpoint of Comparative Historical Sociology of Restorations‘ (Brill 2023) and ‘Post-Communist Transformations in Baltic Countries, A Restorations Approach in Comparative Historical Sociology‘ (Springer 2023), and his most recent completed research project is on the comparative historical sociology of modern restorations.

Jurgita Markevičiūtė

Jurgita Markevičiūtė is a senior researcher at the Institute of Sociology and Social Work, Faculty of Philosophy, Vilnius University, and an associated professor at the Institute of Applied Mathematics, Faculty of Mathematics and Informatics, Vilnius University. Her research areas are probability theory and applications in statistics and econometrics; data science; applications of statistics and data science in sociology, social policy, history, medicine, and economics.

Jānis Šiliņš

Jānis Šiliņš is a researcher at the Vidzeme University of Applied Sciences; and a researcher at the Latvian National Archives. His main research field is Latvian political and economical history of the early 20th century. His most recent book publication (co-authored with Gatis Krūmiņš, Ieva Bērziņa, Māris Andžāns, Anna Broka, Jānis Buholcs, Agnese Dāvidsone, et al) is ‘How Not to Get Lost in the Future? The Role of Belonging and Participation in Strengthening a Democratic Society in Latvia‘ (2021, in Latvian).