European Regional Development Policies: History and Current Issues

The objective of this paper is to demonstrate that the European regional development funds do not allow simultaneous achievement of goals of efficiency and equity when they are dedicated to financing transportation infrastructures. The paper first gives some insights on the history and the nature of regional development funds. Then we focus on the degree to which Ireland, Spain and Portugal (but not Greece), the main beneficiaries of regional policies, have been able to move to the European average (in terms of per capita income) since their membership in the EU, which also corresponds to the time when regional assistance was initiated in these countries. Empirical evidence also reveals that income disparities are increasing among regions within each of these countries and this raises the question as to whether the impact of regional funds is or is not rather favorable to this particular convergence pattern, given that one of the primary objectives of regional funding has been to ensure greater cohesion over the whole European territory. The answer comes mainly from the type of infrastructure regional funds finance. Since a significant part of regional funds is devoted to transportation issues, their impact on regional development has to be seen in the light of characteristics of the transport sector and the specific requirements in transport of each individual sector. The paper concludes that transportation infrastructures promote the country's aggregate growth but cannot be seen as an efficient instrument to reduce interregional disparities in Europe.published or submitted for publicatio

SPATIAL AND SECTORAL PRODUCTIVITY CONVERGENCE BETWEEN EUROPEAN REGIONS, 1975-2000

This paper analyzes the evolution of labor productivity disparities among 145 European regions over 1975-2000 according to the concepts of ƒã- and ƒÒ-convergence and emphasizes the importance of including spatial effects and a disaggregated analysis at a sectoral level. We detect a significant -convergence only in aggregate labor productivity and in the services sectors among peripheral regions. We also show that omitting spatial effects leads to biased measures of -convergence. We then estimate a pooled -convergence model including spatial autocorrelation and sectoral differentiation. The results indicate that disparities in productivity levels between core and peripheral regions persist by vary by sector.convergence, spatial econometrics, labor productivity, sectoral approach

REGIONAL CONVERGENCE AND THE IMPACT OF EUROPEAN STRUCTURAL FUNDS OVER 1989-1999: A SPATIAL ECONOMETRIC ANALYSIS

This paper estimates the impact of structural funds on the convergence process between 145 European regions over 1989-1999. Since the majority of these funds finance transportation infrastructures, they induce spillover effects, industry relocation and do not necessarily succeed in reducing regional inequalities. To estimate their impact, including spillover effects, we first apply spatial econometrics on a conditional beta-convergence model; second, we simulate their impact on the targeted region and then on all the other regions. The results show that structural funds have positively benefited to the targeted regions’ growth, but that spillover effects are very small in peripheral regions.European structural funds, beta-convergence, spatial econometrics, geographic spillovers

Evaluating the temporal and the spatial heterogeneity of the European convergence process, 1980-1999

In this paper, we suggest a general framework that allows testing simultaneously for temporal heterogeneity, spatial heterogeneity and spatial autocorrelation in beta-convergence models. Based on a sample of 145 European regions over the 1980-1999 period, we estimate a Seemingly Unrelated Regression model with spatial regimes and spatial autocorrelation for two sub-periods: 1980-1989 and 1989-1999. The assumption of temporal independence between the two periods is rejected and the estimation results highlight the presence of spatial error autocorrelation in both sub-periods and spatial instability in the second sub-period, indicating the formation of a convergence club between the peripheral regions of the European Union.beta-convergence models, spatial autocorrelation, convergence clubs, temporal instability

Spatial econometric analysis of the evolution of the European regional convergence process, 1980-1999

beta-convergence, convergence clubs, European regions, spatial econometrics

Geographic Spillover Effects of Regional Funds and their Impact on the European Convergence Process over 1989-1999

The aim of this paper is to highlight the role of geographic spillover effects due to the regional funds on the convergence process of 145 European regions over 1989-1999. With the aim of enhancing cohesion, these funds are primarily allocated to the least developed regions. First the most important part of these funds is devoted to transportation infrastructures, which induce strong spillover effects. However they do not necessarily contribute to a more even regional development. Their impact has therefore to be seen in the light of growth rate variations of the targeted region and of the whole sample. Second, since the wealthiest regions have more ability to accompany regional funds, the role of additional funds in the regional development process is investigated as well. Using the formal tools of spatial econometrics, we first detect strong evidence of spatial autocorrelation, both on per capita GDP and regional funds. Moreover, two clusters, representative of the core-periphery framework, are persistent over the period and highlight spatial heterogeneity. These spatial effects are then included in the estimation of an appropriate conditional -convergence model, which allows us to control for spatial spillover effects among regions. Finally, with this model, we assess the impact of European regional funds on the regional convergence process using simulation experiments.

Does Agricultural Employment Benefit From Eu Support?

Studies dealing with the impact of public support on employment have given varying results, depending on the estimation process, sample and type of subsidy. In this paper, we investigate the impact of support from the Common Agricultural Policy and Objective 5 funds on agricultural employment changes in European regions. We use a spatial econometric approach to consider the fact that employment dynamics in one region also depend on the dynamics of its neighbors. Our conclusions raise interesting issues for the ongoing debate on the role of support to the agricultural sector and provide several policy perspectives for the new member countries where this sector still influences economic performance.

Incorporating spatial variation in housing attribute prices: A comparison of geographically weighted regression and the spatial expansion method

Hedonic house price models typically impose a constant price structure on housing characteristics throughout an entire market area. However, there is increasing evidence that the marginal prices of many important attributes vary over space, especially within large markets. In this paper, we compare two approaches to examine spatial heterogeneity in housing attribute prices within the Tucson, Arizona housing market: the spatial expansion method and geographically weighted regression (GWR). Our results provide strong evidence that the marginal price of key housing characteristics varies over space. GWR outperforms the spatial expansion method in terms of explanatory power and predictive accuracy.

Structural Convergence of the National Economies of Europe

Analysis of convergence has centered on movement of indices such as per capita incomes or welfare for countries or regions within countries. In this paper, the analysis focuses on the structure of economies in terms of the distribution of production across sectors and explores the implications of convergence of structure for a subset of EU countries. To assist in the exploration, some new methodology is introduced, based on the notion of a field of influence of change. A set of sensitivity indices and an associated importance matrix are constructed for a set of intercountry input-output tables. The results find that sectors at the European level are become more similar than the national economies as a whole.

Distribution of Regional Income and Regional Funds in Europe 1989-1999: an Exploratory Spatial Data Analysis

The efforts of the European Commission to reduce regional inequalities over its territory continues to attract the attention of researchers. The purpose of this paper is to perform an exploratory investigation of the relationship between the spatial distribution of regional income and of regional development funds among 145 European regions over 1989-1999. Using a set of tools of spatial statistics, we first detect the presence of global and local spatial autocorrelation in the distribution of regional per capita incomes, traducing that rich (poor) regions tend to be clustered close to other rich (poor) regions, and in the distribution of regional growth rate and regional funds. Second, the results of LISA statistics conclude to the presence of spatial heterogeneity in the form of two spatial clusters of rich and poor regions over the decade, highlighting the persistence of a significant core-periphery pattern among European regions. Finally, an exploratory analysis reveals a negative correlation between growth and initial income, that tends to indicate beta-convergence. A positive relationship between regional growth and structural funds is identified among the significant results as well. Only Andalucia, Galicia and Sterea Ellada show atypical linkages. These results suggest that further research should include spatial effects and the distribution of regional funds in the spatial econometric estimation of regional convergence in Europe