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

Becker, Sascha O.; Egger, Peter H.; von Ehrlich, Maximilian (2012). Too much of a good thing? On the growth effects of the EU's regional policy. European economic review, 56(4), pp. 648-668. Elsevier 10.1016/j.euroecorev.2012.03.001

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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 (1994–1999 and 2000–2006) 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 efficiency 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.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Public Economics
11 Centers of Competence > Center for Regional Economic Development (CRED)

UniBE Contributor:

von Ehrlich, Maximilian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0014-2921

Publisher:

Elsevier

Language:

English

Submitter:

Simon Büchler

Date Deposited:

26 Jul 2017 14:38

Last Modified:

10 Sep 2017 10:41

Publisher DOI:

10.1016/j.euroecorev.2012.03.001

Uncontrolled Keywords:

EU regional policy; Regional growth; Generalized propensity score estimation; Quasi-randomized experiment

BORIS DOI:

10.7892/boris.94968

URI:

https://boris.unibe.ch/id/eprint/94968

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