Quality of government in European regions: do spatial spillovers matter?

This paper examines the role played by spatial spillovers in shaping the regional distribution of quality of government across the European Union. To do so, it constructs a hybrid spatial weights matrix combining geographical, technological and social distances between the European regions. The results reveal that the quality of government in neighbouring regions has a positive and statistically significant effect on one region?s quality of government, which highlights the relevance of spatial effects in this context. This finding is robust to the inclusion in the analysis of different variables that may affect regional governance. Likewise, the observed effect of neighbouring regions does not depend on the specific dimension of governance considered, the spatial weights matrix used to describe the spatial linkages between the European regions, or the econometric specification employed to capture the nature of spatial spillovers. The results also show that policy innovations related to governance spread from regions with high and intermediate levels of quality of government.