Gokcen Yilmaz (p)

Chris Pitelis

The spatial distribution of resources is a research interest due to its relationship with regional disparities that can impede development when they result in giant cities that offer limited employment opportunities or poverty-stricken rural areas with high social and economic costs. These phenomena indicate a misallocation of resources between regions. Along with factors such as natural resources and transportation costs, public policy is one of the determinants of the spatial distribution of resources. This paper explores the impact of the geographical composition of government expenditure and land on the optimality of spatial equilibrium within a country using a two-region setting. It demonstrates that, in a spatial equilibrium framework, the maximisation of income does not always lead to an optimal regional allocation of production factors when individuals take regional prices as given. Analyses reveal that public policy can potentially have both a distorting and corrective impact on the regional allocations of labour and private capital. Productivity of government expenditure and the substitutability of regional outputs arise as factors that reduce the welfare loss from the misallocation of resources. In case of a change in the functional composition of government expenditure between regions, the sector with the higher productivity determines the regional allocation of production factors.

Valter Di Giancito (p), Sergio Destefanis

Gokcen Yilmaz

This paper focuses on the impact of EU structural funds (SFs) on the GDP per capita of 183 European NUTS2 regions throughout the 1990-2016 period. To allow for the endogeneity of funds allocation to regions, we estimate a bivariate structural panel VAR model, allowing for unobserved heterogeneity through a rich menu of deterministic controls. Our main identifying restriction is rooted in the widely documented long lags affecting the implementation of EU’s Cohesion Policy. Through a spatial VAR specification, we also estimate spillovers from local SF expenditure on other areas. We find significant multipliers measuring the local response of GDP to an exogenous shock in local SF expenditure, with a long-run value settling at 2.6. Spillovers for GDP from an exogenous shock to SFs are also positive and significant, but much smaller (about one fifth of the within-region responses). When partitioning our sample according to features suggested by the literature (stage of development, EU funding regimes, size), we find that within-region multipliers are higher in lagging regions, especially if located in countries supported by the Cohesion Fund, and in regions with a larger population. Spillovers are also heterogenous across different groups of regions, turning out to be negative in regions belonging to countries not supported by the Cohesion Fund. All this evidence is validated in qualitative terms by robustness checks concerned with model specification and choice of spatial weights.

Anabela Santos (p), Marie Lalanne, Alex Coad

Valter Di Giacinto

The concept of governance is associated with the process of decision-making (political and administrative) at all levels and the complex systems in place to ensure the sound management of the territory’s affairs. The most known regional index for measuring the Quality of Governance (QoG), was developed by Charron et al. (2015), and is the result of survey data to capture the perceptions about the QoG. Our paper contributes to existing literature by proposing a novel and objective indicator to measure the QoG of Research and Innovation funding in the EU regions (Nuts 2-level), using data of the programming period 2014-2020. It includes seven dimensions: (i) Equitability and competition; (ii) Inclusiveness; (iii) Participation; (iv) Effectiveness; (v) Transparency and accountability; (vi) Consistency and; (vii) Openness. To estimate the index, we use data from different sources namely: (a) micro-level data on Cohesion policy (including INTERREG) and H2020 beneficiaries from Kohesio, Keep.eu and Cordis webpages respectively; (b) data about Cohesion policy evaluation and spending of funds from Cohesion Open data platform;(c) EUROSTAT data on characteristics of territories regarding their R&D expenditures and GVA by sectors.
Our study will allow regional-level mapping of the quality of the R&I funding spending of the different EU regions. Bearing in mind that this spending is associated with government and managerial choices (with the system designed to implement the policy actions), our indicator is a good proxy to measure governance. To test the validity and consistency of the results of our index, we will assess its correlation with the QoG index developed by Charron et al. (2015), the score/classification of the regions in the Regional Innovation Scoreboard, their level of development (lagging and non-lagging regions), among others.

Chris Pitelis (p), Eleni Piteli, Sam Boran Li (p)

Anabela Santos

We revisit extant perspectives on anti-trust (aka competition) and regional industrial policy and examine their relevance for today’s economies. We explore limitations in extant perspectives and the implications from addressing these. The said limitations and hence research gaps pertain to their limited attention to the emergence and role of digital platform-based international oligopolies, that they are nation-centric hence downplaying international business and relations, and to their limited consideration of sustainability. We go on to propose key tenets of a new anti-trust and industrial-regional policy that addresses these limitations and helps foster sustainable development.