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Regional Community Policy: Does Aid Received from the EU Displace Funding by Member States?

Author

Listed:
  • Cristina García Nicolás

    (Universidad de Castilla-La Mancha)

  • José María Cantos Cantos

    (Universidad de Castilla-La Mancha)

Abstract

The implementation of the EU regional policy has been characterized by the establishment of multian¬nual public investment programs in the Member States that are co-financed by the EU through mat¬ching grants. According to the additionality principle, governments receiving aid should increase their financial efforts in relation to the pre-existing situation. Using data on the implementation of regional policy, this paper has two aims: to verify whether Community aid displaces local funds for public in¬vestment, and to uncover whether there is endogenous behaviour regarding Community aid as a result of local political processes. We have obtained evidence that funding from the EU crowd-out local fi¬nancing of public investment. On the other hand, although there is some evidence of an endogenous behaviour of Community aid, we find that this endogeneity is not statistically significant.

Suggested Citation

  • Cristina García Nicolás & José María Cantos Cantos, 2018. "Regional Community Policy: Does Aid Received from the EU Displace Funding by Member States?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 224(1), pages 87-112, March.
    • Handle: RePEc:hpe:journl:y:2018:v:224:i:1:p:87-112
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    References listed on IDEAS

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    Cited by:

    1. Lukasz Pietak, 2021. "Structural Funds and Convergence in Poland," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 3-37, March.

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    More about this item

    Keywords

    Regional policy; intergovernmental transfers; public investment.;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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