Does EU Cohesion Policy Promote Growth? Evidence from Regional Data and Alternative Econometric Approaches

54 Pages Posted: 11 Nov 2008

See all articles by Philipp Mohl

Philipp Mohl

ZEW – Leibniz Centre for European Economic Research

Tobias Hagen

Frankfurt University of Applied Sciences - ReLUT - Research Lab for Urban Transport

Date Written: 2008

Abstract

This paper analyses the growth effects of EU structural funds using a new panel dataset of 124 NUTS-1/NUTS-2 regions over the time period 1995-2005. We extend the current literature with regard to at least three aspects: First of all, we extend the time period of investigation, using structural funds payments of the last Financial Perspective 2000-2006 that have not been analysed before. Second, we use more precise measures of structural funds by distinguishing between Objective 1, 2 and 3 payments and by investigating the impact of time lags more carefully. Third, we examine the robustness of our results by comparing different econometric approaches highlighting specific methodological problems. Apart from "classical" panel data methods like system GMM, we apply spatial panel econometric techniques. The empirical evidence indicates that the Objective 1 payments in particular have a positive and significant impact on growth, whereas Objective 2 and 3 payments negatively affect the regions' growth rates. Furthermore, our results show that the growth impact occurs with a time lag of approximately two to three years.

Keywords: EU structural funds, economic growth, spatial econometrics

JEL Classification: R11, R12, O47, C21

Suggested Citation

Mohl, Philipp and Hagen, Tobias, Does EU Cohesion Policy Promote Growth? Evidence from Regional Data and Alternative Econometric Approaches (2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-086, Available at SSRN: https://ssrn.com/abstract=1298935 or http://dx.doi.org/10.2139/ssrn.1298935

Philipp Mohl (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Tobias Hagen

Frankfurt University of Applied Sciences - ReLUT - Research Lab for Urban Transport

Germany

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