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The purpose of this paper is to provide empirical evidence on the neighboring effects of Internet adoption as measured by the percentage of firms with their own website in the European regions. This is the first study that explicitly analyzes the role played by spatial effects to explain website adoption for the European case. A set of instruments and techniques commonly used in the spatial econometrics framework is employed to test the hypothesis that proximity matters when explaining Internet adoption by firms. Results show that firms in physically adjacent regions register a similar degree of Internet adoption, confirming the presence in this context of positive spatial dependence. Nevertheless, the spatial effects detected are mainly constrained by national borders. Gross domestic product (GDP) per capita, population density, sectoral composition, and education are positively related to geographic distribution of Internet adoption in the enlarged European Union. In addition, regional disparities in Internet adoption were found to be less important than territorial inequalities in GDP per capita. [ABSTRACT FROM AUTHOR]

The majority of the literature on fiscal decentralization has tended to stress that the greater capacity of decentralized governments to tailor policies to local preferences and to be innovative in the provision of policies and public services, the greater the potential for economic efficiency and growth. There is, however, little empirical evidence to substantiate this claim. In this paper we examine, using a panel data approach with dynamic effects, the relationship between the level of fiscal decentralization and economic growth rates across 16 Central and Eastern European countries over the 1990–2004 period. Our findings suggest that, contrary to the majority view, there is a significant negative relationship between two out of three fiscal decentralization indicators included in the analysis and economic growth. However, the use of different time lags allows us to nuance this negative view and show that long-term effects vary depending on the type of decentralization undertaken in each of the countries considered. While expenditure at and transfers to sub-national tiers of government are negatively correlated with economic growth, taxes assigned at the sub-national level evolve from having a significantly negative to a significantly positive correlation with the national growth rate. This supports the view that sub-national governments with their own revenue source respond better to local demands and promote greater economic efficiency [ABSTRACT FROM AUTHOR]