We model the evolution of regional asymmetries, and the associated intra-distribution mobility, as the outcome of adoption decisions taken by firms at different locations. We characterise the following equilibria: Persistent asymmetry where nobody adopts, Leapfrogging where low quality firms adopt, Forging ahead where high quality firms adopt, and Catching up where everybody adopts. We study th...

The catching up process in Czech Republic, Hungary, and Poland is analyzed by investigating the integration properties of log-differences in per-capita GDP versus the EU15 and a Mediterranean country group. We account for structural changes by using unit root tests that allow for two endogenous breaks in the level and the trend. We find that Czech Republic and Hungary are stochastically converg...