Ioannis Kaplanis (p), Theano-Maria Tagaraki

Vassilis Monastiriotis

A driving force for regional economic growth is the high rate of innovation as it could be linked to regional competitiveness and increased welfare. Investment in research and development (R&D) is critical for fostering a successful innovation level. In the context of supporting innovative firms, governments promote R&D activities through a variety of instruments such as fiscal incentives and direct grants. The effectiveness of such policies is crucial for achieving sustainability, especially in times of economic rigidity, and needs careful examination.

Investment in R&D in Greece has increased significantly during the last decade, and reached 1.14% of the GDP in 2017. The role of government spending in R&D has been prominent, and even during the crisis the absolute numbers rose from 648 million in 2011 to 885 million in 2017. Regional differences in innovative performance demonstrate the necessity to evaluate the impact of such policies in promoting innovation and in turn, economic growth. We specifically utilize the National Strategic Reference Framework funding program for the 2007-2013 period, and focus on the thematic priorities targeting to reinforce R&D activities in the country. Greek Regional Authorities administered the regional funds following a consultation process through a consortium of local partners that aimed to utilise local capabilities, skills and comparative advantages of each region, and shaped appropriate policies.

Our analysis examines the impact of Greek R&D government spending and regional innovation on individual firm performance, employing various econometric techniques, while controlling for both firm and regional characteristics, such as capital and labour, as well as, human capital, social-economic factors, corporate and market characteristics. To the best of our knowledge, this kind of evaluation takes place for the first time for Greece.
For the firm performance analysis, we utilise a rich source of business data, the National General Commercial Registry (G.E.MI.), where all legal forms of businesses in Greece are obliged to be registered. For the innovation part, we use newly collected and processed data from the Greek Patent Office (Hellenic Industrial Property Organization- OBI), in order to frame and analyze the innovative performance for Greek regions for the period of 1988-2016. Innovative performance is measured by both quantity and quality patent indicators.
Our study provides interesting results relating to R&D government spending effectiveness in promoting enhanced firm performance and innovation in micro level and demonstrates the role of other regional characteristics in this direction, as well.

Paolo Di Caro , Ugo Fratesi (p)

Vassilis Monastiriotis

Cohesion policy exists in a form similar to the current one since 1989, i.e. after the reform which followed the Single European Act of 1986. In this long period of time, a large number of academic papers have investigated the impact of the policy, with results which are often not consistent.
In the last periods of time, the focus of the literature has been on the fact that the impact is not homogeneous, but mediated by the presence of “conditioning factors”, which can increase the impact in the presence, for example, of human capital or a good quality of government.

However, when estimating the effects of cohesion policy funds on regional economic performance with traditional estimation models, such as panel fixed-effects or spatial models, the assumption of slope homogeneity for the different cross-sectional units (i.e. regions in this case) is generally made. This implies that the estimated effects are equal for all the European regions, or for groups of them.

To overcome this, this paper has two main objectives, which are novel contributions to the cohesion literature. First, from a methodological point of view, it applies the dynamic Mean Group (MG) estimator, which allows the slope coefficients to differ across panel members, in order to investigate the individual effects of cohesion policy funds in the different European regions. In the presence of regional differences in economic structures and a different amount of cohesion policy funds allocated to the different regions over the years, it is possible that the coefficients of interest show some degree of heterogeneity across regions and that cohesion policy has region-specific effects on economic and labour market variables.

Using recently made available data on cohesion expenditures covering a period of three decades, this paper is the first to our knowledge to apply the MG estimator for the analysis of cohesion policy. This method is important for disentangling the different patterns of good/bad fund absorption across Europe.

Second, wanting to provide a policy perspective, the paper investigates the causes behind the differences in the individual coefficients quantifying the effects of the cohesion policy in the different European regions.

Georgios Papastamatiou, Vassiliki Delitheou (p), Lefteris Podimatas

Vassilis Monastiriotis

Strengthening the use of financial engineering instruments (FEIs) both during the programming period 2007-2013 and the current 2014-2020 has provided a valuable contribution towards increasing the effectiveness and efficiency of the available EU cohesion policy budget achieving through the recycling of Structural Funds resources to promote their sustainability and through co-operation between public and private sector, mobilization of additional funds and dissemination of experience and know-how between Regional and national authorities, financial intermediaries and final beneficiaries.

Additionally, compared to traditional grants, FEIs have led to a better use of public resources and limitation of dependence between final beneficiaries and public support as funding must be repaid and guarantees must be released or in case of investments in equity must be returned, a fact that has corresponding impact to the behavior of the final recipients.

Taking into account that the available budget for cohesion policy after 2020 is limited due to the forthcoming exit of United Kingdom from the E.U., further use and utilization of FEIs concentrates those desirable characteristics to offset the limited availability of cohesion policy resources through leverage and mobilization of additional public or private co - funding.

However a necessary prerequisite besides the need for less, shorter and clearer rules in front of the new framework for Cohesion Policy of period 2021 – 2027, is the enrichment and adjustment of FEIs both to the needs of enterprises and financial intermediates in order to make the disposal of cohesion policy resources more rapid and more efficient. Additionally as it noted in OECD’s report it is necessary to enlarge the range of financial means that are available to SMEs and entrepreneurs, in order to be able to continue play their role in investments, development, innovation and employment.

The purpose of this article is to highlight and enrich FEIs, with tools and procedures more accessible and flexible to daily needs of enterprises such as factoring and focused to smaller scale investment needs such as leasing in order achieve flexibility and ease of access of SMEs to EU funds for cohesion policy and in parallel quicker absorption of them.