The elusive quest for the holy grail of an impact of EU funds on regional growth

Jan Fidrmuc, Martin Hulényi and Olga Zajkowska
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Martin Hulényi: Institute for Strategy and Analysis (ISA)

No 332, NBP Working Papers from Narodowy Bank Polski

Abstract: We analyse the impact of EU structural and cohesion funds on economic growth of European regions using 2SLS to tackle their potential endogeneity and estimating a spatial model to account for inter-regional spillovers. We use the presence of environmentally protected areas as instruments for Cohesion Policy funds. We find that the European funds have a significant and positive effect on regional economic growth in the EU. However, there is considerable heterogeneity in the effect of Cohesion Policy across individual EU member states: the effect is stronger in the new member states, and weak or negative in the countries hit by the recent austerity measures. The inter-regional spillovers in the effect of Cohesion Policy on regional growth are found to be important: most of the effect takes place outside the recipient region rather than inside. Finally, our results also confirm the positive impact of institutional quality.

Keywords: Regional aid; growth; environmental conservation; 2SLS; spatial. (search for similar items in EconPapers)
JEL-codes: C21 C36 E62 F36 O11 P48 (search for similar items in EconPapers)
Pages: 46
Date: 2020
New Economics Papers: this item is included in nep-fdg, nep-mac, nep-sbm and nep-ure
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Working Paper: The Elusive Quest for the Holy Grail of an Impact of EU Funds on Regional Growth (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpmis:332

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