How does space affect the distribution of the EU RDP funds? An econometric assessment

This paper aims at investigating what influences the distribution of the RDP funds across the EU space. Eventually, funds allocation is the consequence of some political decision. Nonetheless, this political decision can not be directly observed. While the allocation across countries and, when present, across NUTS2 regions is explicitly decided ex-ante, the allocation at a lower territorial level can only be observed ex-post. This “local” allocation depends not only on the top-down decision taken at some national or local political level but also on the bottom-up (or local) capacity to attract and use these funds. To investigate this more “local” level, funds distribution across 1300 EU NUTS3 regions is considered. Three different effects are admitted as major drivers of this spatial allocation. The country effect takes into account the well known differentials in the size and intensity of support across EU countries. The rural effect captures the fact that, at least in principle, the more rural a given region is the larger is the amount of RDP support it is expected to receive. In practice, however, this effect may vary according to alternative definition of rurality, The last effect is the pure spatial effect and expresses the influence on the amount of support received by a region of the bordering regions and, in particular, of their degree of rurality. These effects are estimated adopting and estimating alternative spatial model specifications: the spatial Durbin model, the SEM and the SAR model.