Federico Fantechi (p), Ugo Fratesi

Lefteris Topaloglou

The issue of the “Border Effects” has long been studied in the regional literature. Since its identification, it has been at the central element of many studies and has become the focus of specific territorial cooperation policies from the European Union.

Many empirical studies have been published, based on a gravitational model approach aiming to estimate the costs of a border in terms of missed trade, production costs and territorial growth. Moreover, qualitative studies, sometimes based on cases, have been investigating the situation of border areas or the consequences of processes of aggregation and disaggregation of countries. Finally, analytical studies have been investigating the consequences of borders, for example on firm productivity and on their production and investment choices.

Recently, some papers have highlighted different potential effects and obstacles generated by the physical presence of the border, differentiating between “endowment needs” and “efficiency needs”, and showing the importance of institutional, physical and socio-cultural obstacles in limiting the exploitation of different growth assets.
This wide scientific literature is largely macroeconomic, as are most interregional policies, which follow a similar macro-economic perspective to improve territorial cooperation either at regional (NUTS-2) or provincial (NUTS-3) level.

Improving from this stream of literature, this paper focuses instead on microeconomic outcomes by looking at how the presence of the border impacts the competitiveness of firms located in border and near-border, and does it by adopting an analytical perspective in which the effects are territorialized.

The empirical analysis uses the case of Italian land borders to study the difference competitiveness of firms located in border regions, (i) for different industries; (ii) in centres of provision of services vs remote municipalities, (iii) in areas physically close to the border vs areas belonging to border regions but farer away.

Methodologically, the paper employs a counterfactual strategy with an innovative “double” matching design.

The results produced in the paper are only specific for the Italian Land-Borders considered in the study - and other European border territories sharing the same characteristics - but provide important policy indications on the effect of the border that cannot be individuated with a macroeconomic approach. In this way, they provide a contribution on a better territorialization of cross-border EU policies.

Lefteris Topaloglou (p), Panos Manetos, Veggelis Rasvanis, Dimitris Kallioras, Nikos Kapitsinis

Federico Fantechi

This Case Study offers a comprehensive analysis of the investment flows from Greece to Bulgaria through the lens of the current COVID-19 pandemic. Within this context, an assessment of the impacts of the current pandemic on the Greek FDI flows towards Bulgaria and of the countermeasures to mitigate adverse effects is made. The effects of the macroeconomic shock of the pandemic are placed in the context of pre-existing conditions pertaining to the Greek and Bulgarian economy. It is evident that the pandemic further contributes to lower investment, unemployment, and the deterioration of the budget balance, public debt, and global trade linkages in both countries. Nevertheless, it seems that this urgent situation may offer opportunities for governments to redesign their growth strategies and to attract and (re)allocate resources towards higher-productivity sectors, increasing physical and human capital intensity and diversification, expediting technological adoption, and increasing the resilience to such global-scale (health, financial and environmental) risks. Particularly in Bulgaria, the outbreak of the COVID-19 pandemic stopped, rather abruptly, several years of robust economic growth, which had lifted income per capita above half of the OECD average. The COVID-19 pandemic hit at a time when the Bulgarian economy was performing strongly; economic growth had exceeded 3% annually for five consecutive years, real wages had been rising rapidly and unemployment had fallen to historically low rates.