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The Effectiveness of Objective 1 Structural Funds in the EU 15: New Empirical Evidence from NUTS 3 Regions

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Author Info

  • Martin Falk

    (WIFO)

  • Franz Sinabell

    (WIFO)

Abstract

Based on a sample of 1,084 European regions (EU 15) over the period of 1995–2004, we estimate the determinants of regional growth of GDP per capita, allowing for both spatial lag and spatial error dependence. We find that robust LM tests cannot reject the null hypothesis of no spatial dependence when country dummy variables are included in the growth equation. OLS and robust regression methods show that population density and industry share are significantly and positively related to economic growth. Regions that received EU structural funds have a significantly higher growth of GDP per capita, but the effect is only marginally significant. Blinder-Oaxaca decompositions reveal that the growth differential between Objective 1 regions and the remaining regions is solely due to the difference in the characteristics and not to differences in the coefficients. Finally, we find that the added value gained in Objective 1 regions is much lower than the resources that have been allocated to them.

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Bibliographic Info

Paper provided by WIFO in its series WIFO Working Papers with number 310.

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Length: 17 pages
Date of creation: 20 Feb 2008
Date of revision:
Handle: RePEc:wfo:wpaper:y:2008:i:310

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Related research

Keywords: regional growth; EU structural funds; Objective 1 funding; spatial dependence; urbanisation;

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  1. Jan Fagerberg & Bart Verspagen, 1996. "Heading for Divergence? Regional Growth in Europe Reconsidered," Journal of Common Market Studies, Wiley Blackwell, vol. 34(3), pages 431-448, 09.
  2. Monchuk, Daniel C. & Miranowski, John & Hayes, Dermot J. & Babcock, Bruce A., 2005. "Analysis of Regional Economic Growth in the U.S. Midwest (An)," Staff General Research Papers 12294, Iowa State University, Department of Economics.
  3. Sjef Ederveen & Henri L .F. Groot & Richard Nahuis, 2006. "Fertile Soil for Structural Funds?A Panel Data Analysis of the Conditional Effectiveness of European Cohesion Policy," Kyklos, Wiley Blackwell, vol. 59(1), pages 17-42, 02.
  4. Andres RodrIguez-Pose & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 97-113.
  5. Aadne Cappelen & Fulvio Castellacci & Jan Fagerberg & Bart Verspagen, 2003. "The Impact of EU Regional Support on Growth and Convergence in the European Union," Journal of Common Market Studies, Wiley Blackwell, vol. 41, pages 621-644, 09.
  6. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
  7. Ben Gardiner & Ron Martin & Tyler Peter, 2004. "Competitiveness, Productivity and Economic Growth across the European Regions," ERSA conference papers ersa04p333, European Regional Science Association.
  8. Attfield, C. L. F. & Cannon, Edmund S. & Demery, D. & Duck, Nigel W., 2000. "Economic growth and geographic proximity," Economics Letters, Elsevier, vol. 68(1), pages 109-112, July.
  9. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
  10. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2004. "Space and Growth," Tinbergen Institute Discussion Papers 04-129/3, Tinbergen Institute.
  11. Enrique López-Bazo & Esther Vayá & Manuel Artís, 2004. "Regional Externalities And Growth: Evidence From European Regions," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 43-73.
  12. Deller, Steven C. & Gould, Brian W. & Jones, Bruce L., 2003. "Agriculture and Rural Economic Growth," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 35(03), December.
  13. Roberto Esposti, 2007. "Regional Growth and Policies in the European Union: Does the Common Agricultural Policy Have a Counter-Treatment Effect?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 116-134.
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