Our results highlight the joint importance of structural change and spatial dependence in the formation of convergence clubs. Specifically, the notion of spatial structural change deserves further attention, as it appears to play a major role in the evolution of regional disparities in the European Union.
Spatial dependence across provinces plays an important role in the formation of convergence clubs. The performance of geographical neighbors affects the probability of club membership through spillovers in capital accumulation and structural change.
Through the lens of principal components, spatial dependence, and regionalization methods, the municipalities of Bolivia are endogenously classified according to their similarity in human capital constraints and geographical location.