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Ripples in a rising tide: Why some EU regions receive more structural funds than others

Listed author(s):
  • Bodenstein, Thilo and Achim Kemmerling

We investigate the distribution of European Union (EU) Structural Funds across EU regions. We draw from literature on the political economy of national intergovernmental grants and on the two-tiered bargaining process in the EU. Bargaining on the distribution of Structural Funds takes place on the level between regions and their respective national governments, but is influenced by bargaining that occurs on the intergovernmental level. We test our claims with a data set containing the distribution of Objective-1 and Objective-2 funds across EU regions, as well as economic, institutional and electoral variables. Adjusting for selection bias, we find that the official allocation criteria are not sufficient determinants for explaining the distribution of regional transfers. For Objective-2 they even bear the opposite sign. As for the political variable 'federalist regions' we find that Objective-1 regions receive significantly more funds, whereas 'stronger electoral competition' significantly increases funding of Objective-2 regions.

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Article provided by European Community Studies Association Austria (ECSA-A) in its journal European Integration online Papers (EIoP).

Volume (Year): 16 (2012)
Issue (Month): (01)
Pages:

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Handle: RePEc:erp:eiopxx:p0220
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  1. 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.
  2. Grossman, Philip J, 1994. "A Political Theory of Intergovernmental Grants," Public Choice, Springer, vol. 78(3-4), pages 295-303, March.
  3. Florence Bouvet & Sandy Dall'Erba, 2010. "European Regional Structural Funds: How Large is the Influence of Politics on the Allocation Process?," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 501-528, 06.
  4. Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009. "Electoral goals and center-state transfers: A theoretical model and empirical evidence from India," Journal of Development Economics, Elsevier, vol. 88(1), pages 103-119, January.
  5. Worthington, Andrew C & Dollery, Brian E, 1998. "The Political Determination of Intergovernmental Grants in Australia," Public Choice, Springer, vol. 94(3-4), pages 299-315, March.
  6. Kemmerling , Achim & Stephan, Andreas, 2008. "The politico-economic determinants and productivity effects of regional transport investment in Europe," EIB Papers 7/2008, European Investment Bank, Economics Department.
  7. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  8. Crain, W Mark & Oakley, Lisa K, 1995. "The Politics of Infrastructure," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 1-17, April.
  9. Cadot, Olivier & Roller, Lars-Hendrik & Stephan, Andreas, 2006. "Contribution to productivity or pork barrel? The two faces of infrastructure investment," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1133-1153, August.
  10. Achim Kemmerling & Thilo Bodenstein, 2006. "Partisan Politics in Regional Redistribution," European Union Politics, , vol. 7(3), pages 373-392, September.
  11. Maaike Beugelsdijk & Sylvester C.W. Eijffinger, 2005. "The Effectiveness of Structural Policy in the European Union: An Empirical Analysis for the EU-15 in 1995-2001," Journal of Common Market Studies, Wiley Blackwell, vol. 43(1), pages 37-51, 03.
  12. Heikki Kauppi & Mika Widgrén, 2004. "What determines EU decision making? Needs, power or both?," Economic Policy, CEPR;CES;MSH, vol. 19(39), pages 221-266, 07.
  13. Kemmerling, Achim & Stephan, Andreas, 2002. "The Contribution of Local Public Infrastructure to Private Productivity and Its Political Economy: Evidence from a Panel of Large German Cities," Public Choice, Springer, vol. 113(3-4), pages 403-424, December.
  14. Eva Johansson, 2003. "Tactical Redistribution Between Regions When Parties and Voters Care About Ideology," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(1), pages 95-120, 01.
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