Undermining the Principle of Concentration? Eu development policies and the Socio-Economic Disadvantage Of European Regions
AbstractA number of empirical analyses has found evidence that the impact of the EU structural funds on the growth performance of assisted regions is comparatively weak and has failed to promote the objective of economic and social cohesion. This literature explains this lack of convergence in terms of the policies implemented, which, from this perspective, should be considered as social (or redistributive) rather than as development policies. This paper puts forward a different explanation for the failure to deliver the expected cohesion, namely that the distribution of the funds to the regions may have been à priori distorted by either political equilibriums or inaccurate assumptions over the most cost-effective allocation of the funds. As a consequence the principle of concentration has been undermined, as, among the poorest regions in the EU there is little correlation between expenditure and socio-economic disadvantage. In order to assess this potential explanation the geographical distribution of both sources of socio-economic disadvantage and the regional allocation of structural funds are compared, by means of a Heckman two-step selection model. The results show that the sources of disadvantage are more spatially concentrated than the funds devoted to compensating such disadvantage and uncover a weak association between structural disadvantage and EU funding. Consequently, structural policies could prove helpful to promote development in the EU’s lagging regions provided that the necessary corrections are introduced in their allocation mechanism in order to increase the geographical concentration of the funds and by more adequately earmarking the available resources to the most disadvantaged regions, which the analysis indicates as having the best potential for convergence.
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Date of creation: Mar 2007
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Regional Policy; Regional development; socio-economic;
Find related papers by JEL classification:
- C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-24 (All new papers)
- NEP-EEC-2007-03-24 (European Economics)
- NEP-GEO-2007-03-24 (Economic Geography)
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