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More bucks, more growth, more justice? The effects of regional structural funds on regional economic growth and convergence in Germany

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  • Jonathan Eberle

    (Philipps University Marburg, Deutschhausstr. 10, 35032 Marburg, Germany)

  • Thomas Brenner

    (Philipps University Marburg, Deutschhausstr. 10, 35032 Marburg, Germany)

Abstract

This paper analyzes the impact of the German structure program "Joint Task for the Improvement of Regional Economic Structure" (GRW) on regional economic growth. The paper extends the existing literature by several aspects. First of all, using the popular augmented Solow model by Mankiw et al. (1992) as starting point, we develop an enhanced growth model by including employment as well as technological spatial spillovers to the model. Secondly, the program has not been analyzed within a dynamic spatial panel framework on the level of the 402 German small scale regions before. We used a detailed dataset on this regional level and adress the problem of endogeneity by using a System Generalized Method of Moments (GMM) estimator. Finally, we investigate the impact of regional conditions on the effects of the GRW program. The result illustrates that the impact of public subsidies is overestimated in the current literature. In fact, the infrastructure program even emanates a negativ direct impact on regional economic growth, especially in sparely populated regions as well as in non-innovative regions.

Suggested Citation

  • Jonathan Eberle & Thomas Brenner, 2016. "More bucks, more growth, more justice? The effects of regional structural funds on regional economic growth and convergence in Germany," Working Papers on Innovation and Space 2016-01, Philipps University Marburg, Department of Geography.
    • Handle: RePEc:pum:wpaper:2016-01
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    Cited by:

    1. Mindaugas Butkus & Alma Maciulyte-Sniukiene & Renata Macaitiene & Kristina Matuzeviciute, 2021. "A New Approach to Examine Non-Linear and Mediated Growth and Convergence Outcomes of Cohesion Policy," Economies, MDPI, vol. 9(3), pages 1-28, July.
    2. Mindaugas Butkus & Alma Mačiulytė-Šniukienė & Kristina Matuzevičiūtė, 2020. "Mediating Effects of Cohesion Policy and Institutional Quality on Convergence between EU Regions: An Examination Based on a Conditional Beta-Convergence Model with a 3-Way Multiplicative Term," Sustainability, MDPI, vol. 12(7), pages 1-37, April.
    3. K. Haaf & C.J.M. Kool, 2017. "Determinants of regional growth and convergence in Germany," Working Papers 17-12, Utrecht School of Economics.
    4. Mindaugas Butkus & Alma Maciulyte-Sniukiene & Kristina Matuzeviciute, 2020. "Heterogeneous growth outcomes of the EU’s regional financial support mediated by institutions with some empirical evidences at NUTS 3 level," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 40(1), pages 33-66, April.

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    More about this item

    Keywords

    Regional economic growth; ß-convergence; Structural funds; Spatial panel econometrics; Generalized Methods of Moments (GMM) Estimation;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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