Think tank europe

Examining the Impact of European Regional Policy
09/09/2009
Author : Institute for World Economics (IWE - Hungary)
By Zsuzsanna Trón
 
It is generally accepted that financial support from the European Union generates a large growth surplus. These positive expectations are backed by potential effects of the structural funds calculated in model simulations by the European Commission.

However, empirical studies of the real effects of the funds, measuring growth surpluses attributed to the process of catching up with richer EU economies, are few and far between. This paper aims to remedy this on the following logical basis.

It first examines the processes and types of evaluation that have developed in the EU, and then some of the lessons to be drawn about the methods of analysis, by looking more closely at case studies, model simulations and econometric analyses employed. The conclusion that emerges is that the regional policy intentions are only partly realized for various reasons, including the crowding-out effect of the financial aid, rent-seeking behaviour, and the moral hazard of the governments involved.

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