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The Effectiveness of Structural Policy in the European Union: An Empirical Analysis for the EU-15 in 1995-2001

  • MAAIKE BEUGELSDIJK
  • SYLVESTER C.W. EIJFFINGER

The main aim of structural policy is to decrease the regional disparities within the European Union (EU). In 2004 ten new member countries joined the EU, and it is expected that this enlargement will cause strong regional disparities within the Union. For this reason the distribution of financial support by structural policy will undergo drastic changes. In this study we consider two main themes. First, convergence of the current EU Member States is empirically tested for the period 1995-2001, and the effect of the structural funds in this context is identified. Structural funds do indeed appear to have had a positive impact, and poorer countries (like Greece) appear to have caught up with the richer countries. The importance of the structural funds in this respect therefore cannot be neglected. Second, we touch on the problem of moral hazard and the substitution effect. It may be expected that receivers of structural funds in some cases are not really eligible and may therefore use the funds inefficiently. Our first and preliminary results seem to indicate that the less clean countries (or as we measure it, more 'corrupt' countries) of the current EU-15 do not gain less economic growth from the structural funds. The hypothesis that structural funds contributed to fewer interregional disparities within the current 15 European countries cannot be rejected. This may mean the intended plans of channelling a big share of the funds to the candidate countries in 2007-13 will probably contribute to higher economic growth in these countries. Copyright Blackwell Publishing Ltd 2005.

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Article provided by Wiley Blackwell in its journal Journal of Common Market Studies.

Volume (Year): 43 (2005)
Issue (Month): 1 (03)
Pages: 37-51

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Handle: RePEc:bla:jcmkts:v:43:y:2005:i:1:p:37-51
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  1. Canova, Fabio, 1999. "Testing for Convergence Clubs in Income per-capita: A Predictive Density Approach," CEPR Discussion Papers 2201, C.E.P.R. Discussion Papers.
  2. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers 629, Yale - Economic Growth Center.
  3. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  4. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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