The Role of Economic Growth and Spatial Effects in Poverty in Northern Hungary

The study examines how the recent economic crisis and the related unfavourable economic features affect poverty. As economic crisis is usually associated with many economic and social problems, it tries to determine to what extent it influences poverty. The paper attempts to prove that economic recession contributes not only to the impoverishment of a significant section of society, but also increases the depth of poverty significantly. If the research supports this hypothesis, it is worth examining to what extent one percent economic growth or economic decline can decrease or increase the rate of the poor and the depth of poverty. Besides the effect of economic growth on the given area, the paper also analyses the effect of the economic growth of the neighbouring areas. The initial hypothesis states that the economic growth of the neighbouring regions can also alleviate poverty. As for spatial effects, spatial autocorrelation is examined in the average income level to reveal how the economic growth of the neighbouring areas affects a given region. The study examines Northern Hungary, one of the most backward regions in Hungary (based on GDP per capita). Eurostat (2010) reports this region is among the poorest twenty regions within the European Union (based on GDP per capita PPP, Northern Hungary is the 259th among the 271 regions of the European Union)