Evaluating EU Regional Policy: Many Empirical Specifications, One (Unpleasant) Result
Numerous studies have focused on the role of EU regional policy in fostering growth and convergence among European regions, why conducting another one? We argue that two facts are still lacking in the actual academic debate in order to get a sound empirical identification strategy and reliable results: First, one should take the theoretical underpinnings of regional growth models more serious, and second, a likewise careful account of the role of spatial dependence in the underlying data is needed. Though research has increasingly become aware of the latter point as important control factor for regional heterogeneity and omitted variables, in empirical operationalization still the ad-hoc inclusion of a hardly interpretable â€˜catch-allâ€™ spatial lag term of the endogenous variable is the first choice. We rather follow the lines of new theoretical and empirical approaches aiming at directly quantifying interregional spillovers associated with the amount of funds granted to lagging regions and their neighborhood. The dataset includes 127 NUTS1/-2 regions within the EU15 over the decade 1997-2007. In the spotlight of the investigation are the Objective 1 payments which are provided for lagging regions with a GDP p.c. of less than 75% of the EU average. These payments shall represent the main instrument to fulfill the central aim of European regional policy, the boost of convergence and harmonic growth over the EU. They represent about two third of the whole European cohesion policy. In our estimations we run a neoclassical convergence model in mainly four different specifications. On the one hand we separate in the aspatial and spatial models. On the other hand we run additive and multiplicative applications in order to consider the right coefficient interpretations. We estimate the model in various econometric specifications to point out the effectiveness of these funding. Our results all hint to the unpleasant result that EU structural funds objective 1 funding has a remarkably little or even negative direct impact on regional growth within the EU15. The spatial funding effects turn into negative significance in the most model specifications.
|Date of creation:||Sep 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ersa.org
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cem Ertur & Wilfried Koch, 2007.
"Growth, technological interdependence and spatial externalities: theory and evidence,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 22(6), pages 1033-1062.
- Cem Ertur & Wilfried Koch, 2005. "Growth, Technological Interdependence and Spatial Externalities - Theory and Evidence," ERSA conference papers ersa05p651, European Regional Science Association.
- ERTUR, Cem & KOCH, Wilfried, 2005. "Growth, Technological Interdependence and Spatial Externalities: Theory and Evidence," LEG - Document de travail - Economie 2005-03, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
- Ramon Moreno & Bharat Trehan, 1997.
"Location and the growth of nations,"
Working Papers in Applied Economic Theory
97-02, Federal Reserve Bank of San Francisco.
- David Roodman, 2007.
"A Note on the Theme of Too Many Instruments,"
125, Center for Global Development.
- Thomas J. Holmes, 2010. "Structural, Experimentalist, And Descriptive Approaches To Empirical Work In Regional Economics," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 5-22.
- Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
- Parent, Olivier & LeSage, James P., 2012. "Spatial dynamic panel data models with random effects," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 727-738.
- N. Gregory Mankiw & David Romer & David N. Weil, 1990.
"A Contribution to the Empirics of Economic Growth,"
NBER Working Papers
3541, National Bureau of Economic Research, Inc.
- Dan S. Rickman, 2010. "Modern Macroeconomics And Regional Economic Modeling," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 23-41.
- Becker, Sascha O. & Egger, Peter H. & Von Ehrlich, Maximilian, 2012.
"Too much of a good thing? On the growth effects of the EU's regional policy,"
CAGE Online Working Paper Series
70, Competitive Advantage in the Global Economy (CAGE).
- Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2012. "Too much of a good thing? On the growth effects of the EU's regional policy," European Economic Review, Elsevier, vol. 56(4), pages 648-668.
- Becker, Sascha O. & Egger, Peter & von Ehrlich, Maximilian, 2010. "Too much of a good thing? On the growth effects of the EU's regional policy," CEPR Discussion Papers 8043, C.E.P.R. Discussion Papers.
- Blundell, Richard & Bond, Stephen, 1998.
"Initial conditions and moment restrictions in dynamic panel data models,"
Journal of Econometrics,
Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Pfaffermayr, Michael, 2009.
"Conditional [beta]- and [sigma]-convergence in space: A maximum likelihood approach,"
Regional Science and Urban Economics,
Elsevier, vol. 39(1), pages 63-78, January.
- Michael Pfaffermayr, 2007. "Conditional Beta- and Sigma-Convergence in Space: A Maximum Likelihood Approach," Working Papers 2007-17, Faculty of Economics and Statistics, University of Innsbruck.
- de la Fuente, Angel, 2002.
"On the sources of convergence: A close look at the Spanish regions,"
European Economic Review,
Elsevier, vol. 46(3), pages 569-599, March.
- de la Fuente, A, 1996. "On the Sources of Convergence : A Close Look at the Spanish Regions," UFAE and IAE Working Papers 362.96, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- de la Fuente, Angel, 1996. "On the Sources of Convergence: A Close Look at the Spanish Regions," CEPR Discussion Papers 1543, C.E.P.R. Discussion Papers.
- 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.
- Becker, Sascha & Egger, Peter H & Fenge, Robert & von, Ehrlich Maximilian, 2008. "Going NUTS: The Effect of EU Structural Funds on Regional Performance," Stirling Economics Discussion Papers 2008-27, University of Stirling, Division of Economics.
- Sascha O. Becker & Peter Egger & Maximilian Von Ehrlich & Robert Fenge, 2008. "Going NUTS: The Effect of EU Structural Funds on Regional Performance," CESifo Working Paper Series 2495, CESifo Group Munich.
- John Bradley, 2006. "Evaluating the impact of European Union Cohesion policy in less-developed countries and regions," Regional Studies, Taylor & Francis Journals, vol. 40(2), pages 189-200.
- Mohl, P. & Hagen, T., 2010. "Do EU structural funds promote regional growth? New evidence from various panel data approaches," Regional Science and Urban Economics, Elsevier, vol. 40(5), pages 353-365, September.
- repec:kas:wpaper:2004-55 is not listed on IDEAS
- Manfred Fischer, 2011. "A spatial Mankiw–Romer–Weil model: theory and evidence," The Annals of Regional Science, Springer, vol. 47(2), pages 419-436, October.
- Giuseppe Arbia & Julie Le Gallo & Gianfranco Piras, 2008. "Does Evidence on Regional Economic Convergence Depend on the Estimation Strategy? Outcomes from Analysis of a Set of NUTS2 EU Regions," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(2), pages 209-224.
- Alecke, Björn & Mitze, Timo & Untiedt, Gerhard, 2010.
"Regionale Wachstumseffekte der GRW-Förderung?: Eine räumlich-ökonometrische Analyse auf Basis deutscher Arbeitsmarktregionen
[Regional Growth Effects of Private Sector Investment Grants in Germany?," MPRA Paper 22643, University Library of Munich, Germany.
- Björn Alecke & Timo Mitze & Gerhard Untiedt, 2011. "Regionale Wachstumseffekte der GRW-Förderung? - Eine räumlich-ökonometrische Analyse auf Basis deutscher Arbeitsmarktregionen," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 46, 03.
- Bjoern Alecke & Timo Mitze & Gerhard Untiedt, 2010. "Regionale Wachstumseffekte der GRW-Förderung? Eine räumlich-ökonometrische Analyse auf Basis deutscher Arbeitsmarktregionen," Working Papers 5-2010, GEFRA - Gesellschaft fuer Finanz- und Regionalanalysen.
- Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, vol. 77(2), pages 211-220, October.
- Peter Egger & Michael Pfaffermayr, 2006. "Spatial convergence," Papers in Regional Science, Wiley Blackwell, vol. 85(2), pages 199-215, 06.
- Sandy Dall'erba & Julie Le Gallo, 2008.
"Regional convergence and the impact of European structural funds over 1989-1999: A spatial econometric analysis,"
Papers in Regional Science,
Wiley Blackwell, vol. 87(2), pages 219-244, 06.
- Sandy Dall'erba & Julie Le Gallo, 2003. "Regional Convergence And The Impact Of European Structural Funds Over 1989-1999: A Spatial Econometric Analysis," Urban/Regional 0310005, EconWPA, revised 12 Feb 2004.
- Ramajo, Julián & Márquez, Miguel A. & Hewings, Geoffrey J.D. & Salinas, María M., 2008. "Spatial heterogeneity and interregional spillovers in the European Union: Do cohesion policies encourage convergence across regions?," European Economic Review, Elsevier, vol. 52(3), pages 551-567, April.
- Mohl, Philipp & Hagen, Tobias, 2008. "Which is the Right Dose of EU Cohesion Policy for Economic Growth?," ZEW Discussion Papers 08-104, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Bernard Fingleton, 2001. "Equilibrium and Economic Growth: Spatial Econometric Models and Simulations," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 117-147.
- Durlauf, Steven N., 2001. "Manifesto for a growth econometrics," Journal of Econometrics, Elsevier, vol. 100(1), pages 65-69, January.
- J. Barkley Rosser, 2009. "Introduction," Chapters, in: Handbook of Research on Complexity, chapter 1 Edward Elgar.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa11p1144. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If references are entirely missing, you can add them using this form.