The effect of Structural Fund spending on the Spanish regions: an assessment of the 1994-99 Objective 1 CSF
This paper uses a simple supply-side model estimated with a panel of regional data to quantify the growth and employment effects of the 1994-99 Community Support Framework (CSF) for the Objective 1 Spanish regions and to construct measures of the effectiveness of various types of CSF- financed expenditure. The results suggest that the impact of the Structural Funds in Spain has been quite sizable, adding around a percentage point to annual output growth in the average Objective 1 region and 0.4 points to employment growth. Over the period 1994-2000, the Framework has resulted in the creation of over 300,000 new jobs and has eliminated 20% of the initial gap in income per capita between the assisted regions and the rest of the country. Under plausible assumptions about the response of private investment, returns on direct public investment are significantly higher than those on subsidies to the private sector.
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