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 (1994-99 and 2000-06) 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 effciency 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 69.
Date of creation: 2012
Date of revision:
Contact details of provider:
Postal: CV4 7AL COVENTRY
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/
More information through EDIRC
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," European Economic Review, Elsevier, vol. 56(4), pages 648-668.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-09 (All new papers)
- NEP-EUR-2012-09-09 (Microeconomic European Issues)
- NEP-GEO-2012-09-09 (Economic Geography)
- NEP-URE-2012-09-09 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988.
"Industrialization and the Big Push,"
NBER Working Papers
2708, National Bureau of Economic Research, Inc.
- Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
- Martin, Philippe, 1999.
"Public policies, regional inequalities and growth,"
Journal of Public Economics,
Elsevier, vol. 73(1), pages 85-105, July.
- J. Hirshleifer, 1958. "On the Theory of Optimal Investment Decision," Journal of Political Economy, University of Chicago Press, vol. 66, pages 329.
- Becker, Sascha & Egger, Peter H & Fenge, Robert & von, Ehrlich Maximilian, 2008.
"Going NUTS: The Effect of EU Structural Funds on Regional Performance,"
Stirling Economics Discussion Papers
2008-27, University of Stirling, Division of Economics.
- Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2010. "Going NUTS: The effect of EU Structural Funds on regional performance," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 578-590, October.
- Sascha O. Becker & Peter Egger & Maximilian Von Ehrlich & Robert Fenge, 2008. "Going NUTS: The Effect of EU Structural Funds on Regional Performance," CESifo Working Paper Series 2495, CESifo Group Munich.
- Jochen Kluve & Hilmar Schneider & Arne Uhlendorff & Zhong Zhao, 2007.
"Evaluating Continuous Training Programs Using the Generalized Propensity Score,"
Discussion Papers of DIW Berlin
752, DIW Berlin, German Institute for Economic Research.
- Jochen Kluve & Hilmar Schneider & Arne Uhlendorff & Zhong Zhao, 2007. "Evaluating Continuous Training Programs Using the Generalized Propensity Score," Ruhr Economic Papers 0035, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Kluve, Jochen & Schneider, Hilmar & Uhlendorff, Arne & Zhao, Zhong, 2007. "Evaluating Continuous Training Programs Using the Generalized Propensity Score," IZA Discussion Papers 3255, Institute for the Study of Labor (IZA).
- Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.
- Kosuke Imai & David A. van Dyk, 2004. "Causal Inference With General Treatment Regimes: Generalizing the Propensity Score," Journal of the American Statistical Association, American Statistical Association, vol. 99, pages 854-866, January.
- Widgrén, Mika, 2008. "The Impact of Council Voting Rules on EU Decision-Making," Discussion Papers 1162, The Research Institute of the Finnish Economy.
- Becker Sascha O & Muendler Marc-Andreas, 2008. "The Effect of FDI on Job Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-46, April.
- Mohl, Philipp & Hagen, Tobias, 2008. "Which is the Right Dose of EU Cohesion Policy for Economic Growth?," ZEW Discussion Papers 08-104, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- d'Artis Kancs & Boriss Siliverstovs, 2012.
"R&D and Non-Linear Productivity Growth of Heterogeneous Firms,"
JRC-IPTS Working Papers on Corporate R&D and Innovation
2012-06, Institute of Prospective Technological Studies, Joint Research Centre.
- d'Artis Kancs & Boriss Siliverstovs, 2012. "R&D and Non-Linear Productivity Growth of Heterogeneous Firms," JRC-IPTS Working Papers JRC77247, Institute for Prospective and Technological Studies, Joint Research Centre, revised Dec 2012.
- d'Artis Kancs & Boriss Siliverstovs, 2012. "R&D and Non-linear Productivity Growth of Heterogeneous Firms," LICOS Discussion Papers 32112, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Boriss Siliverstovs & D’Artis Kancs, 2012. "R&D and Non-linear Productivity Growth of Heterogeneous Firms," KOF Working papers 12-315, KOF Swiss Economic Institute, ETH Zurich.
- Peter H. Egger & Maximilian von Ehrlich & Douglas R. Nelson, 2012.
"Migration and Trade,"
The World Economy,
Wiley Blackwell, vol. 35(2), pages 216-241, 02.
- Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers 2/13, Sapienza University of Rome, DISS.
- Pavel Ciaian & d'Artis Kancs & Jerzy Michalek, 2011.
"SPS Capitalization into Land Value : Generalized Propensity Score Evidence from the EU,"
LICOS Discussion Papers
29311, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Ciaian, Pavel & Kancs, d'Artis & Michalek, Jerzy, 2011. "SPS Capitalization into Land Value: Generalized Propensity Score Evidence from the EU," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/319541, Katholieke Universiteit Leuven.
- Olper, Alessandro & Raimondi, Valentina & Cavicchioli, Daniele & Vigani, Mauro, 2011.
"Does Common Agricultural Policy Reduce Farm Labour Migration? A Panel Data Analysis Across EU Regions,"
2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland
114597, European Association of Agricultural Economists.
- Olper, Alessandro & Raimondi, Valentina & Cavicchioli, Daniele & Vigani, Mauro, 2013. "Does Common Agricultural Policy Reduce Farm Labor Migration? A Panel Data Analysis Across EU Regions," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152326, International Agricultural Trade Research Consortium.
- Commission of Experts for Research and Innovation (EFI), Berlin (ed.), 2013. "Research, innovation and technological performance in Germany - EFI Report 2013," Research, innovation and technological performance in Germany: Report, Expertenkommission Forschung und Innovation (EFI), volume 127, number 2013e.
- Olper, Alessandro & Raimondi, Valentina & Cavicchioli, Daniele & Vigani, Mauro, . "Reallocation of Agricultural Labor and Farm Subsidies: Evidence From the EU Regions," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126645, International Association of Agricultural Economists.
- Philipp Breidenbach & Timo Mitze & Christoph Schmidt, 2011. "Evaluating EU Regional Policy: Many Empirical Specifications, One (Unpleasant) Result," ERSA conference papers ersa11p1144, European Regional Science Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Snape).
If references are entirely missing, you can add them using this form.