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Undermining the Principle of Concentration? Eu development policies and the Socio-Economic Disadvantage Of European Regions

Listed author(s):
  • Riccardo Crescenzi

A number of empirical analyses has found evidence that the impact of the EU structural funds on the growth performance of assisted regions is comparatively weak and has failed to promote the objective of economic and social cohesion. This literature explains this lack of convergence in terms of the policies implemented, which, from this perspective, should be considered as social (or redistributive) rather than as development policies. This paper puts forward a different explanation for the failure to deliver the expected cohesion, namely that the distribution of the funds to the regions may have been à priori distorted by either political equilibriums or inaccurate assumptions over the most cost-effective allocation of the funds. As a consequence the principle of concentration has been undermined, as, among the poorest regions in the EU there is little correlation between expenditure and socio-economic disadvantage. In order to assess this potential explanation the geographical distribution of both sources of socio-economic disadvantage and the regional allocation of structural funds are compared, by means of a Heckman two-step selection model. The results show that the sources of disadvantage are more spatially concentrated than the funds devoted to compensating such disadvantage and uncover a weak association between structural disadvantage and EU funding. Consequently, structural policies could prove helpful to promote development in the EU’s lagging regions provided that the necessary corrections are introduced in their allocation mechanism in order to increase the geographical concentration of the funds and by more adequately earmarking the available resources to the most disadvantaged regions, which the analysis indicates as having the best potential for convergence.

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Paper provided by Department of Economics - University Roma Tre in its series Departmental Working Papers of Economics - University 'Roma Tre' with number 0073.

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Length: 31
Date of creation: Mar 2007
Handle: RePEc:rtr:wpaper:0073
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  1. Philippe Martin, 1998. "Can Regional Policies Affect Growth and Geography in Europe?," The World Economy, Wiley Blackwell, vol. 21(6), pages 757-774, 08.
  2. Fabio Canova, 2004. "Testing for Convergence Clubs in Income Per Capita: A Predictive Density Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 49-77, 02.
  3. Rodriguez-Pose, Andres, 2002. "The European Union: Economy, Society, and Polity," OUP Catalogue, Oxford University Press, number 9780198742869.
  4. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
  5. Cheshire, Paul C. & Magrini, Stefano, 2002. "The distinctive determinants of European urban growth: Does one size fit all?," ERSA conference papers ersa02p100, European Regional Science Association.
  6. Rodriguez-Pose, Andres, 1998. "Dynamics of Regional Growth in Europe: Social and Political Factors," OUP Catalogue, Oxford University Press, number 9780198233831.
  7. Philippe Martin, 1999. "Are European regional policies delivering?," Sciences Po publications info:hdl:2441/9343, Sciences Po.
  8. Karen Helene Midelfart-Knarvik & Henry G. Overman, 2002. "Delocation and European integration: is structural spending justified?," Economic Policy, CEPR;CES;MSH, vol. 17(35), pages 321-359, October.
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