Economics at your fingertips  

Cohesion Policy Meets Heterogeneous Firms

Loredana Fattorini, Mohammad Mahdi Ghodsi () and Armando Rungi ()

Journal of Common Market Studies, 2020, vol. 58, issue 4, 803-817

Abstract: In this study we empirically tested the effect of the EU cohesion policy using a unique dataset of 273,500 European manufacturing firms, combining regional policy data at the UN Nomenclature of Territorial Units for Statistics‐2 level with total factor productivity (TFP) at firm‐level. In a framework of heterogeneous firms and regions' different absorptive capacity, we show that financing by the European regional development fund aimed at direct investments in R&D is associated with the improvement of firms' productivity in a region, while funding designed to support overall business is not. The positive association with research, technology and development spending is stronger in the first quartile of the TFP distributions, for the firms that are the least efficient in a region. This appears to be in line with the priority of the policy, which aims at improving firms' competitiveness, especially that of small and medium enterprises. We finally argue that considering the heterogeneous distribution of firms' inefficiencies in a region is crucial to designing a better cohesion policy and to avoid a misallocation of resources it is better than looking at regional aggregates.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)

Related works:
Working Paper: Cohesion Policy Meets Heterogeneous Firms (2018) Downloads
Working Paper: Cohesion Policy Meets Heterogeneous Firms (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0021-9886

Access Statistics for this article

Journal of Common Market Studies is currently edited by Jim Rollo and Daniel Wincott

More articles in Journal of Common Market Studies from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2020-11-08
Handle: RePEc:bla:jcmkts:v:58:y:2020:i:4:p:803-817