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Preparing for the next MFF: Where did the money go in the past?

Author

Listed:
  • Daniel Gros

    (Centre for European Policy Studies)

  • Roberto Musmeci

    (Centre for European Policy Studies)

Abstract

This paper presents the state of play of the preparations for the next Multiannual Financial Framework (MFF) of the EU for the period 2021-2027. It then turns to an analysis of the allocation of regional support funding over the last two MFFs, using a standard growth model to interpret the results. It finds that: First, the distribution of Cohesion spending across regions (as proportion of regional GDP) can be explained to a large extent by a few variables, namely income per capita, unemployment and the importance of agriculture. However, there are also important differences across different clusters of regions. Regions in Southern Europe received less funding than those in Central and Eastern Europe even accounting for differences in these determinants. Second, regions in Southern Europe have a relatively high capital/output ratio and thus a lower productivity of capital. Moreover, their investment rates do not seem to be affected by the Structural Funds they receive. These results suggest the need for a change in emphasis from infrastructure investment to measures that improve overall allocation of resources.

Suggested Citation

  • Daniel Gros & Roberto Musmeci, 2019. "Preparing for the next MFF: Where did the money go in the past?," Working Papers LuissLab 19147, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    • Handle: RePEc:lui:lleewp:19147
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    File URL: http://www.luiss.it/RePEc/pdf/lleewp/19147.pdf
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    References listed on IDEAS

    as
    1. Jorge Núñez Ferrer, 2018. "Financial Instruments and Promotional Banking in the EU are Growing — But is this Justified?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 53(6), pages 326-331, November.
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      More about this item

      Keywords

      Fiscal transfers; Structural Funds; Cohesion Policy;
      All these keywords.

      JEL classification:

      • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
      • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
      • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
      • 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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