Riccardo Crescenzi , Ugo Fratesi , Vassilis Monastiriotis (p)

Dimitris Kallioras

We examine the impact of Cohesion Policy expenditures on regional investment, along two types of effects. First, the ability of Cohesion Policy to mobilise regional private investment, i.e., to raise gross fixed capital formation at the regional level. We label this as the ‘extensive margin’ of the effects of Cohesion Policy on regional investment, as it concerns the magnitude of such investments. Second, the contribution of Cohesion Policy to raising the productivity of capital – measured as the elasticity of output growth to private investment (‘intensive margin’). To examine these, we estimate separate models for investment (capital formation equation) and output growth (production function, augmented to include Cohesion Policy expenditures in the capital-share parameter) across the population of NUTS2 regions of the EU27 (excluding Croatia) for the two programming periods of 2000-2006 and 2007-2013 using annual data from the European Commission’s Structural Funds database. We complement this analysis with an application of the standard Oaxaca-Blinder decomposition technique, implemented here on an extensive-form growth equation which is estimated separately between two groups of ‘treated’ and ‘non-treated’ regions.

Dimitris Kallioras (p), Vassilis Monastiriotis, George Petrakos, Maria Tsiapa

Jose Tavares

See extended abstract

Pierre Maurice Reverberi (p), Cristina Brasili , Valentina Aiello

Vassilis Monastiriotis

Initially created with the goal of reducing territorial disparities within the European Union and help poorer regions catch up with the richer ones, over the course of its thirty years Cohesion Policy has become the flag of a European policymaking oriented towards: a harmonious, inclusive and sustainable development; based on the cooperation between different authorities and on the inclusiveness of stakeholders and beneficiaries; aimed at conveying the values of solidarity and attachment underpinning the big project of the EU.
Cohesion Policy has been widely studied in terms of its economic impact and its capacity to boost economic growth in less developed regions. Less explored, on the other hand, are the issues related to the degrees of variation in Cohesion Policy delivery schemes, the pro and cons of different governance practices. Europe's regions are very diverse in terms of institutional history, cultural identities as well as administrative and governance functions, and this diversity of the local contexts - as the recent debate has been increasingly stressing - deeply affects the performance of Cohesion Policy. This study takes advantage from a larger research project on Cohesion Policy to run a qualitative analysis of regional variations in the experiences of Cohesion Policy in two case-studies from Italy. Despite being part of the same country, Emilia-Romagna and Calabria are very distant in terms of social, economic, administrative and institutional characteristics. The comparison of these two Italian regions allows thus to disentangle the effects of the key domestic factors and to understand the impact of local contexts on the processes enforced by Cohesion Policy through its multilevel governance system.

João Pereira Dos Santos , José Tavares (p)

Pierre Maurice Reverberi

We exploit a quasi-natural experiment resulting from an administrative increase in access to European Union funds to evaluate their impact on small business creation in “convergence” regions. We use the fact that contiguous regions did not change their status to establish causality in a difference-in-differences intention to treat setting. Our rich dataset allows us to examine the universe of Portuguese mainland municipalities from 2003-2010, controlling for socio-economic, political and demographic variables, including spillovers from EU funds access and from business creation in neighbouring regions. Our findings suggest a causal impact of around 1-2 percent in private sector entry and net entry rates, and no impact on firm exit rates. We use time and space placebos to assure that the impact of our quasi-experiment is conceptually robust. Estimates of the treatment effect for a period that excludes the global financial crisis suggest that EU regional funds have a greater impact in times of distress, as far as entry rates are concerned. An analysis across firm types shows that it is domestic owned micro firms in the primary and tertiary sectors that are impacted the most by regional funds.