布鲁盖尔-Income-convergence-during-the-crisis_-did-EU-funds-provide-a-buffer__20页_4mb

Summary of "Income convergence during the crisis: did EU funds provide a buffer?"

Core Content

This paper investigates whether EU structural and cohesion funds, particularly the convergence funds (Objective 1), acted as a buffer against the economic crisis by promoting income convergence in disadvantaged regions of the EU. The analysis focuses on the period from 2000 to 2014, with particular attention to the period from 2007 to 2014, which coincides with the onset and progression of the economic crisis.

Main Findings

• Economic Convergence:

  • The EU as a whole showed absolute beta convergence at a rate of about 2% per year from 2000 to 2014.
  • However, no statistically significant convergence was observed in the EU14 and EA11 (euro area 11) during the crisis period (2007–2014), with some regions even showing divergence at a rate of about 1.4% per year.
  • The euro area periphery (Greece, Ireland, Italy, Portugal, Spain) and EU14 were particularly affected by the crisis, with convergence slowing or stopping.

• Role of EU Funds:

  • The study constructs a quasi-experimental framework using formal eligibility rules for Objective 1 funds to compare treated and control regions.
  • It finds that regions eligible for Objective 1 funds grew faster than those not eligible, suggesting that convergence funds played a significant role in mitigating the negative effects of the crisis.
  • There is evidence of income convergence within the group of regions that received funds, indicating that these funds helped poorer regions catch up with average EU income levels.

• Policy Implications:

  • The findings highlight the importance of regional policy in stabilizing economic growth and convergence during crises.
  • They suggest that EU cohesion policy, especially through convergence funds, was effective in supporting disadvantaged regions during the crisis.
  • The effect was stronger in the euro area periphery and EU14, where the crisis had a more severe impact.

Key Information

• Cohesion Policy:

  • The EU's cohesion policy was established during the Mediterranean enlargement (Spain, Portugal, Greece) in the 1980s.
  • The policy aims to reduce regional disparities and promote economic and social cohesion.
  • The Single European Act (SEA) of 1987 introduced the term "cohesion" to the EU policy framework.

• Funds Allocation:

  • Objective 1 funds are allocated to NUTS2 regions where per capita GDP in PPS is below 75% of the EU average.
  • Cohesion funds are allocated to member states with per capita GNI below 90% of the EU average.
  • The convergence objective was restructured in 2007–2013, combining previous objectives and reducing complexity.

• Methodology:

  • The study uses beta convergence analysis (both absolute and conditional) based on NUTS3 region data.
  • Conditional convergence is tested by including variables such as population growth, R&D expenditure, and initial industry share.
  • The results show that R&D investment had a strong and positive correlation with growth during the crisis, suggesting that it played a key role in promoting convergence.
  • Population growth was found to be negatively correlated with GDP growth, consistent with neoclassical growth theory.

Conclusion

• EU Funds as a Buffer:

  • The study concludes that convergence funds acted as a buffer during the crisis, helping to maintain convergence in disadvantaged regions.
  • The effect was strongest in the euro area periphery and EU14, where the crisis had a more pronounced impact.
  • The effectiveness of these funds was not uniform across all regions, with some areas benefiting more due to their lower initial income levels and higher need for support.

• Policy Relevance:

  • The findings support the importance of cohesion policy in economic recovery and income convergence.
  • They also highlight the need for more targeted and effective policy instruments to ensure that funds reach the most vulnerable regions.
  • The results are particularly relevant in the context of growing skepticism about EU policies and the impact of the crisis on regional disparities.

Key Regions and Eligibility

• EU14: Includes EA11 (euro area 11) plus Denmark, Sweden, and the UK.
• EA11: Comprises Austria, Belgium, Germany, Greece, Spain, Finland, France, Ireland, Italy, Netherlands, Portugal.
• EA18: Includes EA11 plus Luxembourg.
• Eligible Regions for Objective 1 Funds:
  • Austria: Burgenland (transitional support)
  • Belgium: Province du Hainaut (transitional support)
  • Bulgaria: All territory
  • Czech Republic: Střední Čechy, Jihozápad, Severozápad, Severovýchod, Jihovýchod, Střední Morava, Moravskoslezsko
  • Germany: Brandenburg-Nordost, Mecklenburg-Vorpommern, Chemnitz, Dresden, Dessau, Magdeburg, Thüringen
  • Estonia: All territory
  • Greece: Anatoliki Makedonia, Thraki, Thessalia, Ipeiros, Ionia Nisia, Dytiki Ellada, Peloponnisos, Voreio Aigaio, Kriti
  • Spain: Galicia, Castilla-La Mancha, Extremadura, Andalucía
  • France: Guadeloupe, Martinique, Guyane, Réunion

Critical Points

• Criticisms of Cohesion Policy:

  • The policy has faced criticisms for being too complex and bureaucratic.
  • Some argue it has become a "catch-all" policy without a clear mission.
  • Despite these criticisms, the study shows that convergence funds had a positive impact on regional convergence during the crisis.

• Theoretical Background:

  • The neoclassical growth model predicts that capital flows to poorer regions to promote convergence.
  • The technological gap theory suggests that technology imitation can lead to faster growth in poorer regions.
  • The study uses formal eligibility as a natural experiment to assess the impact of funds on convergence.

Final Note

The paper emphasizes the importance of EU funds in maintaining income convergence during the economic crisis, particularly in disadvantaged regions. It provides empirical evidence that these funds helped stabilize growth and reduce disparities, reinforcing the role of regional policy in the EU's broader economic strategy.