The elusive quest for the holy grail of an impact of EU funds on regional growth

Jan Fidrmuc, Martin Hulényi and Olga Zajkowska

No 332, NBP Working Papers from Narodowy Bank Polski

Abstract: We analyse the impact of EU structural and cohesion funds on economic growth of European regions using 2SLS to tackle their potential endogeneity and estimating a spatial model to account for inter-regional spillovers. We use the presence of environmentally protected areas as instruments for Cohesion Policy funds. We find that the European funds have a significant and positive effect on regional economic growth in the EU. However, there is considerable heterogeneity in the effect of Cohesion Policy across individual EU member states: the effect is stronger in the new member states, and weak or negative in the countries hit by the recent austerity measures. The inter-regional spillovers in the effect of Cohesion Policy on regional growth are found to be important: most of the effect takes place outside the recipient region rather than inside. Finally, our results also confirm the positive impact of institutional quality.

Keywords: Regional aid; growth; environmental conservation; 2SLS; spatial. (search for similar items in EconPapers)
JEL-codes: C21 C36 E62 F36 O11 P48 (search for similar items in EconPapers)
Pages: 46
Date: 2020
New Economics Papers: this item is included in nep-fdg, nep-mac, nep-sbm and nep-ure
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Working Paper: The Elusive Quest for the Holy Grail of an Impact of EU Funds on Regional Growth (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpmis:332

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