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Impact Of Structural Funds On Regional Growth: How To Reconsider A 9 Year-Old Black Box

Author

Listed:
  • Sandy DALL’ERBA

    (School of Geography and Development, University of Arizona (USA))

  • Rachel GUILLAIN

    (LEG, Universite de Bourgogne)

  • Julie LE GALLO

    (CRESE, Universite de Franche-Comte)

Abstract

Econometric estimations of the impact of structural funds on the growth process of the European regions started 9 years ago. However, it is striking to realize that all previous estimations in this field are based on some form of the neoclassical growth model. This model is still widely used despite the numerous critics it has raised and its lack of consideration for increasing returns to scale, which are at the heart of agglomeration and growth processes according to endogenous growth theories and new economic geography models. In addition, few estimations have paid attention to the nature of the cohesion objectives under study. For example, the expected impact of objec-tive 1 funds, devoted to public infrastructures, is indeed theoretically and empirically very different from the one of objective 3 funds devoted to long-term unemployed. As a result, the aim of this paper is to propose a careful assessment of the impact of structural funds on the manufacturing sector of 145 European regions in the context of a Verdoorn’s law for the period 1989-2004. First, the results are presented with total structural funds and funds differen-tiated by objective. Second, interregional linkages are included by means of spatial econometric techniques. Third, potential endogeneity of the explanatory variables is taken into account.

Suggested Citation

  • Sandy DALL’ERBA & Rachel GUILLAIN & Julie LE GALLO, 2009. "Impact Of Structural Funds On Regional Growth: How To Reconsider A 9 Year-Old Black Box," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 30, pages 77-100.
    • Handle: RePEc:tou:journl:v:30:y:2009:p:77-100
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    References listed on IDEAS

    as
    1. Harris, Richard I D & Lau, Eunice, 1998. "Verdoorn's Law and Increasing Returns to Scale in the UK Regions, 1968-91: Some New Estimates Based on the Cointegration Approach," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 201-219, April.
    2. Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2010. "Going NUTS: The effect of EU Structural Funds on regional performance," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 578-590, October.
    3. Miguel Leon-Ledesma, 2000. "Economic Growth and Verdoorn's Law in the Spanish Regions, 1962-91," International Review of Applied Economics, Taylor & Francis Journals, vol. 14(1), pages 55-69.
    4. Sandy Dall’erba & Julie Le Gallo, 2007. "The Impact of EU Regional Support on Growth and Employment," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(7-8), pages 324-340, September.
    5. 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.
    6. Miguel A. LeÛn-Ledesma, 2002. "Accumulation, innovation and catching-up: an extended cumulative growth model," Cambridge Journal of Economics, Oxford University Press, vol. 26(2), pages 201-216, March.
    7. Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1999. "Kaldor's Laws and Spatial Dependence: Evidence for the European Regions," Regional Studies, Taylor & Francis Journals, vol. 33(5), pages 443-451.
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    More about this item

    Keywords

    GROWTH; REGIONAL POLICY; INCREASING RETURNS; EUROPE; SPATIAL ECONOMETRICS;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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