“The winner takes it all” or a story of the optimal allocation of the European Cohesion Fund

Benoit Dicharry, Phu Nguyen-Van and Thi Kim Cuong Pham ()

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Abstract: This paper aims to determine an optimal allocation of the European Cohesion Fund (ECF) and compares it with the observed allocation. This optimal allocation is the solution of a donor optimization problem which maximizes recipient countries' GDP per capita to achieve economic convergence in the European Union. Compared to the observed allocation, our solution can identify the recipient countries that can benefit from higher ECF transfers than the observed levels, as those having low relative GDP per capita, large population size and where the ECF has a strong capacity to support economic growth. Result is robust to changes in the specification of the donor's utility function.

Keywords: Economic growth; European cohesion policy; Foreign aid (search for similar items in EconPapers)
Date: 2019-09
Note: View the original document on HAL open archive server: https://hal.univ-lorraine.fr/hal-02514874v1
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Citations: View citations in EconPapers (7)

Published in European Journal of Political Economy, 2019, 59, pp.385-399. ⟨10.1016/j.ejpoleco.2019.05.003⟩

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Journal Article: “The winner takes it all” or a story of the optimal allocation of the European Cohesion Fund (2019)
Working Paper: 'The winner takes it all' or a story of the optimal allocation of the European Cohesion Fund (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02514874

DOI: 10.1016/j.ejpoleco.2019.05.003

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