The Link Between Quality of Government and Regional Resilience in Europe

Abstract This study analyzes the robustness of the link between quality of government and resilience in a sample of 264 NUTS-2 regions of 28 European countries during the Great Recession. Bayesian Model Averaging techniques are used to analyze the relevance of the quality of government together with a large set of macroeconomic, institutional, innovation, socio-demographic and labor market and sectoral specialization factors that may affect observed resilience patterns in Europe. The robustness of individual covariates is measured through posterior inclusion probabilities. The empirical analysis provides conclusive evidence on the role played by the regional quality of government as it appears to be one of the most robust drivers of resilience. In a second step, posterior jointness is investigated finding that factors related to the knowledge and innovation environment reinforce the relevance of quality of government while others such as trade openness act as substitutes.