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International Public Transfers and Convergence in the European Union

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  • Alfredo M. Pereira

    (College of William and Mary)

Abstract

This article investigates the effects of international public transfer programs from the European Union (EU) on the investment and growth paths of the recipient economies-Greece, Ireland, Portugal, and Spain—and, ultimately, on the convergence of these economies to EU standards of living. Numerical simulation results based on endogenous growth models of the recipient economies suggest that the absolute gains induced by the transfer programs, as measured by the evolution of gross domestic product per capita, are substantial for Greece and Portugal and more modest for Ireland and Spain. In terms of the relative gains (i.e., of the convergence to EU standards), Greece, Portugal, and Spain greatly improve their status quo gains through the transfer programs, but Ireland's status quo gains do not seem to improve noticeably. The most striking aspect of the simulation results, however, is how far the recipient economies will still be from the EU standards even after the EU transfer programs. This suggests that these administrative programs, although useful, have a limited scope, and greater progress in achieving convergence needs to come from structural market reforms.

Suggested Citation

  • Alfredo M. Pereira, 1999. "International Public Transfers and Convergence in the European Union," Public Finance Review, , vol. 27(2), pages 194-219, March.
  • Handle: RePEc:sae:pubfin:v:27:y:1999:i:2:p:194-219
    DOI: 10.1177/109114219902700204
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    References listed on IDEAS

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    Cited by:

    1. Marta Espasa, 2001. "Territorial redistribution through the EU budget. Empirical evidence at national and regional levels," Working Papers 2001/1, Institut d'Economia de Barcelona (IEB).
    2. Marco PERCOCO, 2005. "The Impact Of Structural Funds On The Italian Mezzogiorno, 1994-1999," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 21, pages 141-153.
    3. Alfredo Marvão Pereira, 1999. "The impact of the euro on long-term growth in Portugal," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    4. Mari-Carmen Puigcerver-PeUNICODE{0xf1}alver, 2004. "The Impact of Structural Funds Policy on European Regions Growth. A Theoretical and Empirical Approach," Econometric Society 2004 Latin American Meetings 141, Econometric Society.
    5. Espasa, Marta, 2000. "Fiscal Regional Flows In Europe: The Redistributive Effects Of The European Union Budget," ERSA conference papers ersa00p446, European Regional Science Association.

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