Dall'erba, Sandy and Le Gallo, Julie. (2003) "Regional convergence and the impact of European structural funds over 1989-1999: A spatial econometric analysis". In: UNSPECIFIED, Nashville, TN. (Unpublished)
Abstract
The aim of this paper is to assess the impact of structural funds on the convergence process of 145 European regions over 1989-1999. With the aim or enhancing cohesion, these funds are primarily allocated to the least developed regions. The most important part of these funds is devoted to transportation infrastructures, which induce strong spillover effects. However, they do not necessarily contribute to a more even regional development. Their impact has, therefore, to be seen in the light of growth rate variations of the targeted region and of the whole sample. Using the formal tools of spatial econometrics, we fast detect strong evidence of spatial autocorrelation in the distribution of per capita GDP. Moreover, two clusters, representative of the core-periphery framework, are persistent over the period and highlight spatial heterogeneity. These spatial effects are then included in the estimation of an appropriate conditional B-convergence model, which allows us to control for spatial spillover effects among regions. Finally, with this model, simulation experiments assess the impact of shocks proportional to per capital structural funds, first on the growth rate of the targeted region, and second on the growth rate of all the regions of our sample. The results show that structural funds have positively benefited to the growth of the targeted regions, but that growth in the least developed regions suffers from the small extent of regional spillover effects.
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