It’s not about the money! EU funds, local opportunities, and the Brexit vote. LEQS Paper No. 149/2019 November 2019

Growing Euroscepticism across the European Union (EU) leaves open questions as to what citizens expect to gain from EU Membership and what influences their dissent for the EU integration project. This paper looks at EU Structural Funds, one of the largest and most visible expenditure items in the EU budget, to test the impact of EU money on electoral support for the EU. By leveraging the Referendum on Brexit hold in the United Kingdom, a spatial RDD analysis offers causal evidence that EU money does not influence citizens’ support for the EU. Conversely, the analysis shows that EU funds contribute to mitigate Euroscepticism only where they are coupled with tangible improvements in the local labour market conditions. In order to gain support from its citizens, the European Union needs to produce tangible impacts, generating opportunities at the local level where these are felt the most by voters

UK’s less developed regions stand to suffer most when top-down EU funding is gone

Post Brexit, the ensuing lack of EU agricultural subsidies will have a detrimental effect on the less developed regions of the UK, potentially more so than the end to EU regional development funds that have been benefiting already fairly well-functioning constituencies. In this piece Riccardo Crescenzi and Mara Giua explain the (un)intended consequences of Brexit in this regard

The EU cohesion policy in context: does a bottom-up approach work in all regions?

This paper looks at the European Union as a laboratory to study how ‘spatially-targeted’ policies (i.e. the EU Cohesion and Rural Development Policies) interact with sectoral ‘spatially-blind’ policies (i.e. the Common Agricultural Policy - CAP), jointly shaping regional growth dynamics. The analysis of the drivers of regional growth shows that the EU Regional Policy has a positive influence on economic growth in all regions. However, its impact is stronger in the most socio-economically advanced areas and is maximised when its expenditure is complemented by Rural Development and CAP funds. The top-down funding of the CAP seems to be able to concentrate some benefits in the most deprived areas of the Union. This suggests that bottom-up policies are not always the best approach to territorial cohesion. Top-down policies may – in some cases – be effective in order to channel resources to the most socio-economically deprived areas. Territorial cohesion requires the flexible integration and coordination of both bottom-up and top-down approaches

The EU Cohesion policy in context: regional growth and the influence of agricultural and rural development policies. LEQS Discussion Paper No. 85/2014 December 2014

This paper looks at the Cohesion Policy of the European Union (EU) and investigates how the EU agricultural and rural development policies shape its influence on regional growth. The analysis of the drivers of regional growth shows that the EU Regional Policy has a positive and significant influence on economic growth in all regions. However, its impact is stronger in the most socio-economically advanced areas and is maximised when its expenditure is complemented by Rural Development and Common Agricultural Policy (CAP) funds. The top-down funding of the CAP seems to be able to concentrate some benefits in the most deprived areas. Conversely only the most dynamics rural areas are capable of leveraging on the bottom-up measures of the EU Rural Development Policy. This suggests that EU policy makers in all fields should constantly look for the best mix of bottom-up and top-down measures in order to tackle structural disadvantage

The exaggerated triumph of work from home: the workplace is not dead and (for most of us) is here to stay

Many analysts argue that working from home (WFH) is now a permanent feature of our economies and the workplace as we knew it before COVID is dead. Some even predict the decline of the city centre, the end of crowded commuter trains, and the loss of innovation clusters. However, using novel and previously unexplored population data, Riccardo Crescenzi, Mara Giua, and Davide Rigo found that the diffusion of WFH was possibly exaggerated due to many studies’ strong assumptions of technology adoption and focus on big cities, which overlooks the practical barriers to WFH adoption for the less dynamic segments of the economy. They write that smaller companies and “poor” regions remain the big losers of the digital revolution

FDI inflows in Europe: does investment promotion work?

Can active investment promotion efforts attract FDI towards areas and sectors that would not otherwise be targeted? This paper leverages an ad hoc survey on national and sub-national Investment Promotion Agencies (IPAs) in Europe and applies state-of-the-art policy evaluation methods to estimate the impact of IPAs on FDI attraction. The results show that FDI responds to IPAs even in advanced economies. Sub-national IPAs, operating in closer proximity to investors’ operations, attract FDI in particular towards less developed areas where market and institutional failures are stronger. IPAs influence FDI over and above other policies targeting the general economic improvement of the host economies. Impacts are concentrated in knowledge-intensive sectors where collaborative systemic conditions are more relevant. IPAs work best for less experienced companies - ‘occasional’ investors - more likely to suffer from institutional failures. Finally, IPAs are equally effective in attracting companies from both outside and inside the EU Single Market even if the latter are less likely to suffer from regulatory or information asymmetries. Overall, this evidence sheds new light on the role of sub-national IPAs as local ‘institutional plumbers’ in support of foreign investors and their operations

Eurosceptic votes are less likely when EU interventions visibly boost local job markets

Anti-systemic political movements have emerged in recent years in a large number of countries across the globe. These parties generally fuel their public support with anti-elite and anti-establishment rhetoric, which in Europe often translates into a strong critique to the European Union and its institutions. The EU is regarded by the supporters of anti-system movements as distant from the real, day-to-day, economic challenges and as a binding constraint to the capacity of national governments to deliver a more equitable distribution of prosperity. The inability of mainstream politics – of which the EU is seen as a natural expression – to deliver timely and credible answers to the economic needs of large strata of the electorate has been linked to electoral behaviour by a growing body of research (e.g. Rodrik, 2018; Guiso et al., 2018). However, it remains unclear how the EU can practically make a difference to the economic prospects of millions of EU citizens and, through its visible impact, influence their electoral preferences

It's not about the money. EU funds, local opportunities, and Euroscepticism

Growing Euroscepticism across the European Union (EU) leaves open questions as to what citizens expect to gain from EU Membership and what influences their dissent for EU integration. This paper looks at the EU Structural Funds, one of the largest and most visible expenditure items in the EU budget, to test their impact on electoral support for the EU. By leveraging the Referendum on Brexit held in the United Kingdom, a spatial RDD analysis offers causal evidence that EU money does not influence citizens’ support for the EU. Conversely, the analysis shows that EU funds mitigate Euroscepticism only where they are coupled with tangible improvements in local labour market conditions, the ultimate objective of this form of EU intervention. Money cannot buy love for the EU, but its capacity to generate new local opportunities certainly can