How does Sub‐National Autonomy Affect the Effectiveness of Structural Funds?

Cornelius Bähr

Kyklos, 2008, vol. 61, issue 1, 3-18

Abstract: One of the European Union's explicitly formulated goals is reducing the lags in development and narrowing the gaps in income between its member states and regions. In order to attain these goals, the Union's regional policy employs a system of vertical conditional grants known as the Structural Funds. Various attempts have been made to evaluate the effectiveness of this policy in promoting convergence. This paper adds to the existing literature in focusing the investigation on the role of the member states' federal structure. A short discussion drawing mainly on the theory of fiscal federalism provides the basis for an empirical model. Using a sample of 13 European countries in the period from 1975–1995 we estimate the effect varying decentralization among the member states has on the conditional effectiveness of Structural Funds expenditure. The results suggest that Structural Funds are more effective in promoting growth when the states exhibit a higher degree of decentralization.

Date: 2008
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https://doi.org/10.1111/j.1467-6435.2008.00389.x

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