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Too much of a good thing? On the growth effects of the EU's regional policy
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Becker, Sascha O., Egger, Peter and von Ehrlich, Maximilian (2010) Too much of a good thing? On the growth effects of the EU's regional policy. Discussion Paper. Coventry: Centre for Economic Policy Research. (CEPR Discussion Paper. (Unpublished)
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Official URL: http://www.cepr.org/pubs/dps/DP8043.asp
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). Using generalized propensity score estimation, we analyze to which extent the goal of fostering growth in the target regions was achieved with the funds provided and whether more transfers generated stronger growth effects or not. 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 efficiency maximizing level and in 18% percent 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.
| Item Type: | Working or Discussion Paper (Discussion Paper) |
|---|---|
| Subjects: | H Social Sciences > HB Economic Theory J Political Science > JN Political institutions (Europe) |
| Divisions: | Faculty of Social Sciences > Economics |
| Series Name: | CEPR Discussion Paper |
| Publisher: | Centre for Economic Policy Research |
| Place of Publication: | Coventry |
| Date: | October 2010 |
| Number: | No.8043 |
| Status: | Not Peer Reviewed |
| Publication Status: | Unpublished |
| Access rights to Published version: | Restricted or Subscription Access |
| Funder: | Scottish Institute for Research in Economics (SIRE), German Science Foundation (DFG) |
| URI: | http://wrap.warwick.ac.uk/id/eprint/45515 |
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