The evidence of persistent differentials in the growth and in the labour market performance among 'regions' of Europe calls for a comprehensive analysis of the recent evolution of the position of the more 'backward' area within the European Union. Evolution of regional differentials in GDP per head cannot be understood, according to the point of view expressed in this paper, without a joint analysis of the tendencies at the level of of the two complementary factors in the determination of total product of an area: productivity of the employed population, and the employment rate (employed to total population). Dispersion of income, productivity, and employment rates among the regions belonging to the 'Objective I' area of European regional policies are investigated; an analysis of the evolution of measures of a 'development gap' of these regions with respect to average European standards is considered. In general, it appears that 'convergence' of income and a 'catch up' process, for the regions within the 'Objective I' area, has been taken place, nothwithstanding the evidence of 'convergence' of productivity, by stagnant or declining employment rates reflecting inability ot match labour supply through additional flows of jobs. We have tentatively called this situation of locally improving productivity performance and lack of sufficient capacity of absorption of labour, as one of a 'neodualistic' growth.