How does space affect the allocation of the EU Rural Development Policy expenditure? A spatial econometric assessment

Beatrice Camaioni, Roberto Esposti, Francesco Pagliacci and Franco Sotte

European Review of Agricultural Economics, 2016, vol. 43, issue 3, 433-473

Abstract: This article focuses on the main drivers of the distribution of the Rural Development Policy expenditure throughout the European Union (EU). Ex-post funds distribution across EU NUTS3 regions is considered. Three effects are considered as major drivers: a ‘country effect’; a ‘rural effect’ (i.e. the more rural a region the larger the amount of support); a ‘pure spatial effect’ (i.e. the influence of bordering regions and of their degree of rurality). These effects are estimated adopting alternative spatial model specifications: Spatial Durbin Model, Spatial Error Model, Spatial AutoRegressive Model and Spatial Lag of X Model. Results slightly differ across alternative specifications and definitions of rurality, but prevalent evidence suggests that rurality matters in a counterintuitive direction while also spatial spillovers play a role.

Date: 2016
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