Too much of a good thing? On the growth effects of the EU's regional policy
AbstractThe European Union (EU) provides grants to disadvantaged regions of member states from two pools, the Structural Funds and the Cohesion Fund. The main goal of the associated transfers is to facilitate convergence of poor regions (in terms of per-capita income) to the EU average. We use data at the NUTS3 level from the last two EU budgetary periods (1994–1999 and 2000–2006) and generalized propensity score estimation to analyze to which extent the goal of fostering growth in the target regions was achieved with the funds provided and whether or not more transfers generated stronger growth effects. We find that, overall, EU transfers enable faster growth in the recipient regions as intended, but we estimate that in 36% of the recipient regions the transfer intensity exceeds the aggregate efficiency maximizing level and in 18% of the regions a reduction of transfers would not even reduce their growth. We conclude that some reallocation of the funds across target regions would lead to higher aggregate growth in the EU and could generate even faster convergence than the current scheme does.
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Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 56 (2012)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/eer
EU regional policy; Regional growth; Generalized propensity score estimation; Quasi-randomized experiment;
Other versions of this item:
- Becker, Sascha O. & Egger, Peter H. & Von Ehrlich, Maximilian, 2012. "Too much of a good thing? On the growth effects of the EU's regional policy," CAGE Online Working Paper Series 70, Competitive Advantage in the Global Economy (CAGE).
- Becker, Sascha O. & Egger, Peter & von Ehrlich, Maximilian, 2010. "Too much of a good thing? On the growth effects of the EU's regional policy," CEPR Discussion Papers 8043, C.E.P.R. Discussion Papers.
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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