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Improving government quality in the regions of the EU and its system-wide benefits for Cohesion policy

Author

Listed:
  • Barbero Jiménez, Javier
  • Christensen, Martin
  • Conte, Andrea
  • Lecca, Patrizio
  • Rodríguez-Pose, Andrés
  • Salotti, Simone

Abstract

We quantify the general equilibrium effects on economic growth of improving the quality of institutions at the regional level in the context of the implementation of the European Cohesion Policy for the European Union and the UK. The direct impact of changes in the quality of government is integrated in a general equilibrium model to analyse the system-wide economic effects resulting from additional endogenous mechanisms and feedback effects. The results reveal a significant direct effect as well as considerable system-wide benefits from improved government quality on economic growth. A small 5% increase in government quality across European Union regions increases the impact of Cohesion investment by up to 7% in the short run and 3% in the long run. The exact magnitude of the gains depends on various local factors, including the initial endowments of public capital, the level of government quality, and the degree of persistence over time.

Suggested Citation

  • Barbero Jiménez, Javier & Christensen, Martin & Conte, Andrea & Lecca, Patrizio & Rodríguez-Pose, Andrés & Salotti, Simone, 2022. "Improving government quality in the regions of the EU and its system-wide benefits for Cohesion policy," CEPR Discussion Papers 17045, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17045
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    2. Mussida, Chiara & Parisi, Maria Laura & Pontarollo, Nicola, 2023. "Severity of material deprivation in Spanish regions and the role of the European Structural Funds," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    3. Casas, Pablo & Christou, Tryfonas & García Rodríguez, Abián & Heidelk, Tillmann & Lazarou, Nicholas Joseph & Monfort, Philippe & Salotti, Simone, 2024. "The updated RHOMOLO impact assessment of the 2014-2020 European cohesion policy (including REACT-EU)," MPRA Paper 122873, University Library of Munich, Germany.
    4. Abbasiharofteh, Milad & Kriesch, Lukas, 2024. "Not all twins are identical: the digital layer of “twin” transition market applications," Papers in Innovation Studies 2024/16, Lund University, CIRCLE - Centre for Innovation Research.
    5. Inmaculada C. Alvarez & Javier Barbero & Luis Orea & Andrés Rodríguez-Pose, 2023. "How institutions shape the economic returns of public investment in European regions," JRC Working Papers on Territorial Modelling and Analysis 2023-08, Joint Research Centre.
    6. Monika Bauhr & Nicholas Charron, 2024. "Europe around the corner? How border proximity and quality of government explains European identity," European Union Politics, , vol. 25(2), pages 376-395, June.

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    More about this item

    Keywords

    Government quality; Cohesion; Economic growth; Public investment; Regions; Eu;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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