Too much of a good thing? On the growth effects of the EU's regional policy

Sascha Becker, Peter Egger and Maximilian von Ehrlich

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: The European Union (EU) provides grants to disadvantaged regions of member states from two pools, the Structural Funds and the Cohesion Fund. The main goal of the associated transfers is to facilitate convergence of poor regions (in terms of per-capita income) to the EU average. We use data at the NUTS3 level from the last two EU budgetary periods (1994-99 and 2000-06) and generalized propensity score estimation to analyze to which extent the goal of fostering growth in the target regions was achieved with the funds provided and whether or not more transfers generated stronger growth effects. We find that, overall, EU transfers enable faster growth in the recipient regions as intended, but we estimate that in 36% of the recipient regions the transfer intensity exceeds the aggregate effciency maximizing level and in 18% of the regions a reduction of transfers would not even reduce their growth. We conclude that some reallocation of the funds across target regions would lead to higher aggregate growth in the EU and could generate even faster convergence than the current scheme does.

Keywords: EU regional policy; Regional growth; Generalized; propensity score estimation; Quasi-randomized experiment (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (151)

Downloads: (external link)
http://www2.warwick.ac.uk/fac/soc/economics/resear ... s/70.2012_becker.pdf

Related works:
Journal Article: Too much of a good thing? On the growth effects of the EU's regional policy (2012)
Working Paper: Too much of a good thing? On the growth effects of the EU's regional policy (2010)
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: https://EconPapers.repec.org/RePEc:cge:wacage:70

Access Statistics for this paper

More papers in CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE) Contact information at EDIRC.
Bibliographic data for series maintained by Jane Snape ().