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Do EU structural funds promote regional growth? New evidence from various panel data approaches

  • Mohl, P.
  • Hagen, T.

This paper analyses the economic growth effects of EU structural funds extending the current literature by at least three aspects: Firstly, we make use of a new structural funds dataset of 126 NUTS-1/NUTS-2 regions as well as more precise measures of structural funds by distinguishing between Objective 1, 2, and 3 payments. In doing so, we include the Financial Perspective 2000-2006, which has not been analysed before. Secondly, we address the problem of endogeneity in a panel context by basing the identification on internal instruments via a system GMM estimator. Finally, we control for spatial spillover effects by applying a spatial panel econometric estimator. Our results show that Objective 1 payments in particular do, in fact, promote regional economic growth, whereas the total amount of Objectives 1, 2, and 3 do not have a positive and significant impact on the EU regions' growth rates.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 40 (2010)
Issue (Month): 5 (September)
Pages: 353-365

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Handle: RePEc:eee:regeco:v:40:y:2010:i:5:p:353-365
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