Supply effects on the Andalusian economy of the structural fonds in infraestructures: the Community Support Framework 1994-1999

The aim of this paper is to analyse the supply effects of the EU funds received by the Andalusian region, with special emphasis in the Community Support Framework 1994-1999 (CSF 94-99). To that end, we examine the effects derived from a greater and better endowment of productive factors and infrastructure on Andalusian production and employment, through the estimation (using cointegration techniques with time series) of an aggregate private-sector production function where the stock of public capital appears as a separate and different productive factor, as well as a demand for labour function. The simulations suggest that the infrastructure investments financed under the CSF 94-99 the Andalusian economy has grown, during the 1994-2001 period, at an accumulative rate of 3.42 per cent, whereas it would have grown at a 3.15 per cent due to such funds. Regarding the labour market, the simulation results indicate that the CSF 94-99 would have generated or maintained an average of 79,034 employments during the 1994-2001 period, resulting in an average reduction of 2.87 percentage points in the unemployment rate.