Does Human Factor Matter for Economic Growth? : Determinants of Economic Growth Process in CEE Countries in Light of Spatial Theory

This paper tries to explain the process of economic growth and convergence in 211 regions of 10 Central and Eastern European countries during the period 1999−2008. The theoretical foundation of this research is constituted by a growth model with spatial externalities, resulting from growth of neighbouring regions. Other factors, which are assumed to have an additional impact on the economic growth, are: initial level of output, levels of physical and human capital. The analysis is performed with application of spatial econometric models, the spatial lagged model and the spatial error model. The results confirm the existence of absolute and conditional convergence in the investigated sample. The process of regional growth is also determined by the level and changes in human capital, as well as by location of the region, i.e. the regions which are located in dynamically developing areas may benefit from their location and grow faster.