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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)

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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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Publisher 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
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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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References listed on IDEAS
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  2. Andrés RodrÍguez-Pose* & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor and Francis Journals, vol. 38(1), pages 97-113, February. [Downloadable!] (restricted)
    Other versions:
  3. 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, Blackwell Publishing, vol. 41, pages 621-644, 09. [Downloadable!] (restricted)
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  6. 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, American Agricultural Economics Association, vol. 89(1), pages 116-134, 02. [Downloadable!] (restricted)
  7. Sjef Ederveen & Richard Nahuis & Henri de Groot, . "Fertile soil for Structural Funds? A panel data analysis of the conditional effectiveness of European cohesion policy," CPB Discussion Papers 10, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  8. Daniel C. Monchuk & John A. Miranowski & Dermot J. Hayes & Bruce A. Babcock, 2007. "An Analysis of Regional Economic Growth in the U.S. Midwest," Review of Agricultural Economics, American Agricultural Economics Association, vol. 29(1), pages 17-39, 03. [Downloadable!] (restricted)
    Other versions:
  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. [Downloadable!] (restricted)
  10. Jan Fagerberg & Bart Verspagen, 1996. "Heading for Divergence? Regional Growth in Europe Reconsidered," Journal of Common Market Studies, Blackwell Publishing, vol. 34(3), pages 431-448, 09. [Downloadable!] (restricted)
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  12. 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. [Downloadable!] (restricted)
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