Growth Effects of Spatial Redistribution Policies

Calin Arcalean, Gerhard Glomm () and Ioana Schiopu

No 2007-002, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: We develop a two-region, two sector model with migration and public investment in infrastructure and education. In a numerical example calibrated to Portugal, we find that the structural funds can improve the growth rate of the lagging region and slightly reduce the regional inequality, without necessarily producing convergence. When the mix of national public investment departs from optimum, the allocation of supra-national funds across infrastructure and public education can partially offset this national sub-optimality. We also find that the short-run growth-maximizing mix is different from the long-run mix. Moreover, the rich region has an incentive to bias the allocation of structural funds towards human capital formation.

Keywords: endogenous growth; spatial redistribution; regional policy; European Union (search for similar items in EconPapers)
JEL-codes: H7 R12 R58 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2007-01
New Economics Papers: this item is included in nep-dge, nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Growth effects of spatial redistribution policies (2012)
Working Paper: Growth Effects of Spatial Redistribution Policies (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:inu:caeprp:2007002

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