One policy, different effects: Estimating the region‐specific impacts of EU cohesion policy

Abstract

Many academic papers have looked at the economic effects of the EU cohesion policy, which still remain an open empirical issue. The focus of the most recent literature has been on the heterogeneous effects of the policy and the identification of regional conditioning factors. However, most of the existing studies generally assume slope homogeneity for different cross-sectional units (i.e., regions) and they estimate the average effects of the policy for all the European regions and/or selected groups of regions. Past works also employ data covering few programming periods. This paper has two main goals.First, we study the heterogeneous consequences of EU cohesion policy on regional economic growth in Europe over the past three decades, by applying a heterogeneous coefficient approach to new panel-time series data. We calculate the region-specific effects of the policy in terms of long-run gross domestic product growth. Second, we study regional differences in terms of policy effects depending on the level of assistance received by the regions. We make a distinction among cases of effective, ineffective, trigger and marginal policy. We also document that the effectiveness of EU cohesion policy in the long run can be explained by some of the key factors used in the literature. Finally, we discuss the need for ineffective cases to learn from effective and trigger ones.

Making the EU cohesion policy work to support exports at time of Covid-19: Evidence on the Italian regions

“…This is in line with recent evidence highlighting the heterogeneous impact of cohesion funds on regional economic growth ( Di Caro and Fratesi 2022b ). The standard controls have the expected signs and, in particular, we confirm that the total allocation of the EU funds does not necessarily have a positive impact on regional growth during shocks ( Di Caro and Fratesi 2022a ).…”

“…In scenario 2, for each region, we have applied the elasticity of the EU funds absorption estimated for the reference sub-group (i.e. Timely and Late), as obtained from models C and E. This scenario is consistent with the idea that the relation between the cohesion policy and regional exports shows heterogeneity among regions ( Di Caro and Fratesi 2022a ).…”

“…Our work builds on and contributes to the fast-growing literature focusing on the role of the EU cohesion policy during shocks ( Di Caro and Fratesi 2022a ). Despite the EU cohesion funds are long-term oriented, they can be useful to support countercyclical actions directly and indirectly by means of Keynesian multipliers ( Neumark and Simpson 2014 ).…”

“…First, we provide new evidence on the performance of regional exports in Italy during the Covid-19 shock, by applying resilience indexes and mapping techniques. 4 This is useful to show where and to which extent the pandemic crisis has produced the most relevant adverse effects on regional trade, and from a policy perspective, to identify the places that request more assistance to recover, given that implementing the right set of policies to promote export competitiveness is fundamental for regional growth ( Di Caro and Fratesi 2022a ). We also compare regional export resilience at time of pandemic with that observed during the Great Recession in order to document the presence of regional heterogeneity in the two shocks ( Cerqua and Letta 2022 ).…”

Policy options for lagging regions—effects, new approaches and emerging challenges: introduction to the special issue

“…Evidence provided by most recent studies points to significant effects of EU cohesion policy on economic development of lagging regions. However, the effectiveness of placed-based measures and innovation policies seems to differ across regions eligible for assistance (Becker et al 2013;Di Caro and Fratesi 2021). As a consequence, it is not clear whether these policies are factors of convergence or divergence (Izsak and Radošević 2017).…”