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Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit. LEQS Discussion Paper No. 120/2016 November 2016

Di Cataldo, Marco (2016) Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit. LEQS Discussion Paper No. 120/2016 November 2016. [Discussion Paper]

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    Abstract

    Leaving the European Union will entail for UK regions losing access to the EU Cohesion Policy. Have EU funds been effective in the country, and what may be the consequences of an interruption of EU financial support to the UK’s poorer regions? This paper studies the impact of ‘Objective 1’ funding – the highest form of EU aid – in Cornwall and South Yorkshire, two of the UK’s most subsidised regions. We employ synthetic control, matching and differencein- differences methodologies in order to assess the labour market and economic performance of the two regions. The results indicate that Cornwall and South Yorkshire performed better than counterfactual comparisons throughout the period in which they were classified as Objective 1. Unlike Cornwall, South Yorkshire lost Objective 1 eligibility in 2006 and this massively reduced its share of EU funds. Our findings indicate that, after 2006, South Yorkshire was unable to sustain the gains obtained in previous years. This suggests that while Structural Funds may be effectively improving socio-economic conditions of poorer regions, the performance of subsidised areas could be deeply affected by a reduction (or worse, an interruption) of EU aid.

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    Item Type: Discussion Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > regional policy/structural funds
    EU policies and themes > Policies & related activities > Brexit
    Countries > U.K.
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > London School of Economics and Political Science (European Institute) > LEQS Discussion Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 05 Aug 2018 13:28
    Number of Pages: 56
    Last Modified: 05 Aug 2018 13:32
    URI: http://aei.pitt.edu/id/eprint/93628

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