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Does EU Cohesion Policy Promote Growth? Evidence from Regional Data and Alternative Econometric Approaches

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Author Info
Mohl, Philipp
Hagen, Tobias

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Abstract

This paper analyses the growth e®ects of EU structural funds using a new panel dataset of 124 NUTS-1 / NUTS-2 regions over the time period 1995-2005. We extend the current literature with regard to at least three aspects: First of all, we extend the time period of investigation, using structural funds payments of the last Financial Perspective 2000{2006 that have not been analysed before. Second, we use more precise measures of structural funds by distinguishing between Objective 1, 2 and 3 payments and by investigating the impact of time lags more carefully. Third, we examine the robustness of our results by comparing different econometric approaches highlighting specific methodological problems. Apart from \classical" panel data methods like system GMM, we apply spatial panel econometric techniques. The empirical evidence indicates that the Objective 1 payments in particular have a positive and significant impact on growth, whereas Objective 2 and 3 payments negatively affect the regions' growth rates. Furthermore, our results show that the growth impact occurs with a time lag of approximately two to three years. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-086.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7428

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Related research
Keywords: EU structural funds; economic growth; spatial econometrics;

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Find related papers by JEL classification:
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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    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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  8. Cornelius Bähr, 2008. "How does Sub-National Autonomy Affect the Effectiveness of Structural Funds?," Kyklos, Blackwell Publishing, vol. 61(1), pages 3-18, 02. [Downloadable!] (restricted)
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  9. Sandy Dall'erba & Julie Le Gallo, 2008. "Regional convergence and the impact of European structural funds over 1989-1999: A spatial econometric analysis," Papers in Regional Science, Blackwell Publishing, vol. 87(2), pages 219-244, 06. [Downloadable!] (restricted)
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  10. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November. [Downloadable!] (restricted)
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  13. Wolfgang Eggert & Maximilian von Ehrlich & Robert Fenge & Günther König, 2007. "Konvergenz- und Wachstumseffekte der europäischen Regionalpolitik in Deutschland," Working Papers 3, University of Paderborn, CIE Center for International Economics. [Downloadable!]
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  14. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March. [Downloadable!] (restricted)
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