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On the effectiveness of EU structural funds during the Great Recession: Estimates from a heterogeneous local average treatment effects framework

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  • Julia Bachtrögler

    (Department of Economics, Vienna University of Economics and Business)

Abstract

This study investigates the heterogeneity of European NUTS-2 regions with regard to their ability to take advantage of European Union (EU) structural funds aimed at convergence. It considers a concept of absorptive capacity based on regional policy design, and additionally accounts for the programming period 2007-2013 in the empirical analysis. A fuzzy regression discontinuity design allowing for heterogeneous treatment effects is applied to evaluate convergence funds in 250 NUTS-2 regions from 2000 (and 1989) to 2013. The main results suggest a positive conditional impact of funds payments on regional GDP per capita growth. However, based on a time-varying treatment effects model, we are able to identify a deterioration in the effectiveness of convergence funds during the programming period 2007-2013. Furthermore, the analysis reveals an inverted U-shaped relationship between the share of committed funds paid out and GDP per capita growth. The latter finding indicates that the marginal benefits from EU convergence funds might be decreasing.

Suggested Citation

  • Julia Bachtrögler, 2016. "On the effectiveness of EU structural funds during the Great Recession: Estimates from a heterogeneous local average treatment effects framework," Department of Economics Working Papers wuwp230, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp230
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    Cited by:

    1. Julia Bachtrögler & Christoph Hammer & Wolf Heinrich Reuter & Florian Schwendinger, 2017. "Spotlight on the beneficiaries of EU regional funds: A new firm-level dataset," Department of Economics Working Papers wuwp246, Vienna University of Economics and Business, Department of Economics.
    2. Julia Bachtrögler & Christoph Hammer & Wolf Heinrich Reuter & Florian Schwendinger, 2019. "Guide to the galaxy of EU regional funds recipients: evidence from new data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(1), pages 103-150, February.
    3. Konstantins Benkovskis & Oļegs Tkačevs & Naomitsu Yashiro & Beata Javorcik, 2019. "Importance of EU regional support programmes for firm performance," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 34(98), pages 267-313.
    4. Konstantins Benkovskis & Olegs Tkacevs & Naomitsu Yashiro, 2018. "Importance of EU Regional Support Programmes for Firm Performance," Working Papers 2018/01, Latvijas Banka.

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    More about this item

    Keywords

    Structural Funds; Heterogeneous Treatment Effects; Regional Heterogeneity; Absorptive Capacity; Cohesion; European Union;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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