After two decades during which the region of Andalusia has been receiving financing from the European Structural Funds with the objective of developing, through these investments, the economic sectors that can boost economic growth in the region, this paper proposes an analysis that will reveal the economic impact of the European funds obtained by Andalusia during the period 2000 to 2006. With this purpose, the Social Accounting Matrix for Andalusia in year 2005 and a linear multipliers model are used. This model will help identify the sectors that benefit the most from the transfer of income provided by these funds, and to show how these exogenous injections bring about an impact on the endogenous accounts. The results underscore the significant contribution of the European funds to the growth of the region during the period analysed (2000 to 2006).JRC.J.4-Agriculture and Life Sciences in the Econom

CARDENETE FLORES MANUEL ALEJANDRO

DELGADO LOPEZ Maria Del Carmen

JRC Publications Repository

The Empirical Economics Letters, 11(11): (November 2012)      ISSN 1681 8997 
Impact assessment of the European Structural Funds in 
Andalusia: 2000 to 2006 
 
M. Alejandro Cardenete   
 
European Commission (JRC-IPTS)   
Department of Economics, Quantitative Methods and Economic History 
University of Pablo de Olavide 
 
Email: macardenete@upo.es     
 
María del  Carmen Delgado 
Department of Economics, Quantitative Methods and Economic History 
University of Pablo de Olavide, Spain 
 
 Email: mcdellop@upo.es     
Abstract: After two decades during which the region of Andalusia has been receiving 
financing from the European Structural Funds with the objective of developing, through 
these investments, the economic sectors that can boost economic growth in the region, 
this paper proposes an analysis that reveals the economic impact of the European funds 
obtained by Andalusia during the period 2000 to 2006. With this purpose, the Social 
Accounting Matrix for Andalusia in year 2005 and a linear multipliers model are used. 
This model helps identify the sectors that benefit the most from the transfer of income 
provided by these funds, and to show how these exogenous injections bring about an 
impact on the endogenous accounts. The results underscore the significant contribution 
of the European funds to the growth of the region during the period analysed (2000 to 
2006). 
 
Keywords: Social Accounting Matrix, Multipliers Model, European Regional Policy, 
Impact Analysis 
 
JEL Classification Number: C67 
 
1. Introduction 
 
Ever since the accession of Spain to the European Union (EU), Andalusia has been the recipient of 
European Funds. Classified as an Objective 1 Region, it was included from the beginning among the 
beneficiaries of the actions of the European Regional Policy, due to its structural weaknesses caused 
by a lack of basic infrastructures.  
 
According to the Dirección General de Fondos Comunitarios (Directorate General of Community 
Funds) of the Spanish Ministry of Economy, Objective 1 of the Structural Funds is the main priority 
of the EU cohesion policy. This is the reason why two thirds of the credits granted as Structural 
The Empirical Economics Letters, 11(11): (November 2012) 1158
Funds (more than  135 000 million euros) are devoted to the recovery of the most disadvantaged 
regions, those called “Objective 1 Regions”, which have a gross domestic product (GDP) below 75 
% of the European average.  
 
This work presents an analysis that is framed within general equilibrium models, namely within 
SAM linear models1. It implements a linear multipliers model that allows revealing the economic 
impact of the European funds received by the region of Andalusia between 2000 and 2006. This 
model is an extension of the Leontief Model, which applies the same methodology as the input-
output models and is based on the accounting identities of the matrix that allow putting in relation 
the exogenous injections of income with the accounts that are considered endogenous. This way, it is 
possible to analyse the impact of the Community aid on all the sectors of the Andalusian economy. 
The Social Accounting Matrix for Andalusia in 20052 is used with this purpose. 
 
2. Estimation of the Impact of the Structural Funds on the Andalusian Economy in 
the Period 2000 to 2006 
 
In order to calculate the impact of the Structural Funds on the Andalusian economy during the 
seven-year period under study, a variation of the work by Cámara and Marcos (2009) is developed in 
which to alternative scenarios are considered: 
 
1) The basic or reference scenario3, which emerges from eliminating all the Structural Funds 
received in the period 2000 to 2006 from the database, so as to start from a situation 
without funds.4  
 
2) A second scenario in which all the Structural Funds received in the period 2000 to 2006 are 
injected into the Andalusian economy without funds in order to analyse each fund’s 
contribution to it. These Funds are: European Regional Development Fund (ERDF), the 
Guidance Section of the European Agricultural Guidance and Guarantee Fund (EAGGF-
G) and the European Social Fund (ESF). 
 
 
 
                                                 
1 See, among other works applying this model, Lima and Cardenete (2007) and Cardenete, Fuentes 
and Mainar (2012). 
2 Cardenete, Fuentes and Polo (2010) 
3 Data obtained from Programa Operativo Integrado de Andalucía (POIA, Integrated Operative 
Programme of Andalusia) in 2001. 
4 In the case studied by Cámara and Marcos (2009), the funds received by the region of Madrid were 
subtracted from the Social Accounting Matrix for Madrid in 2000. 
The Empirical Economics Letters, 11(11): (November 2012) 1159
Table 1: Variation of the Total Output of the Endogenous Accounts (thousand 
euros) 
 
  
Productive sectors 
Variation 
Total Output 
without 
Funds (%) 
Variation 
Total 
Output 
with ERDF 
(%) 
Variation 
Total Output 
with 
EAGGF-G 
(%) 
Variation 
Total 
Output 
with ESF 
(%) 
1 Agriculture -6.26 1.59 4.33 0.54 
2 Stockbreeding -28.26 5.55 23.78 2.27 
3 Fishing -14.54 9.87 2.99 2.9 
4 Extraction of energy product -4.24 3.21 0.34 0.77 
5 Other extractive industries -8.83 8.08 0.16 0.73 
6 Oil refining and nuclear waste treatment -3.43 2.65 0.3 0.52 
7 
Production and distribution of electric 
energy -5.65 4.2 0.57 1.02 
8 
Production and distribution of gas, water 
steam and warm water -8.72 6.56 0.51 1.98 
9 Water capture, treatment and distribution -4.78 3.15 1.19 0.56 
10 Food -2.57 1.19 1.14 0.28 
11 Textiles and leather -1.85 1.3 0.07 0.5 
12 Wood manufactures -5.8 4.72 0.41 0.79 
13 Chemical industry -3.53 2.59 0.42 0.57 
14 Mining and iron and steel industry -5.47 4.71 0.15 0.69 
15 Metal manufactures -8.58 7.6 0.42 0.72 
16 Machinery -14 13.49 0.22 0.46 
17 Vehicles -2.05 1.45 0.11 0.51 
18 Construction materials -11.2 10.64 0.18 0.52 
19 Transport -4.41 3.08 0.16 1.26 
20 Other manufactures -3.44 2.77 0.19 0.52 
21 Construction -13.24 12.96 0.08 0.29 
22 Trade -4.07 2.86 0.84 0.44 
23 Transport and Communications -4.71 3.81 0.42 0.56 
24 Other services -3.6 2.77 0.36 0.52 
25 Sale-oriented services -5.48 2.43 0.15 3.06 
26 Non-sale oriented services -11.82 9.91 0.01 2.34 
  Total -6.63 5.12 1.52 0.97 
Source: Own elaboration from Lima, Cardenete and Usabiaga (2010). 
 
The Empirical Economics Letters, 11(11): (November 2012) 1160
3. Results 
 
After the simulation, we are going to explain the results. Table 1 shows the branches of activity that 
are most affected by the removal of the funds. Those are: Stockbreeding (2), with a negative 
variation of 28.26 %; Fishing (3), with a 14.54 % reduction of its output; Machinery (16), with a 
decrease of 14 % and Construction (21), where the negative variation amounts to 13.24 %. On the 
contrary, the branches of activity that are least affected by the removal of the funds are: Textiles and 
leather (11), with a reduction of 1.85 %; Vehicles (17), with a negative variation of 2.05 %; Food 
(10), where the negative variation reaches 2.57 %, and Other manufactures (20), with a 3.44 % 
reduction of the output.  
 
In addition, this table describes the second scenario, in which the Structural Funds received in the 
period 2000 to 2006 are injected into the Andalusian economy without funds, with the aim of 
analysing the contribution made by each fund. So: 
 
1) With the injection of ERDF Funds, the total output is increased by 16 738 329 thousand 
euros, an amount that represents approximately a 5 % increment. The activity branches 
with a greater output increase are: Machinery (16), with a 1.49 % variation; Construction 
(21), with an increase of 12.96 %; Construction materials (18), where the %age reaches 
10.64; Non-sale-oriented services (26), with a 9.91 % increment, and Fishing (3), with a 
9.87 % variation. On the contrary, the branches of activity that are least affected by the 
injection of ERDF are: Food (10), with a 1.19 % increment; Textiles and leather (11), with 
a 1.30 % variation; Vehicles (17), with a 1.45 % increase; Agriculture (1), with 1.59 %, 
and Sale-oriented services (25), with a 2.43 % variation. Some accounts increased their 
output in a greater degree than others that nevertheless receive more financing from the 
ERDF. This is, for example, the case of the Construction Materials sector (18), the output 
of which increases to a greater extent than that of the Non-sale oriented services (26), 
despite its receiving less funding from that source. 
 
2) With the injection of EAGGF-G Funds, the total output increases by 2 110 049 thousand 
euros, with an average increase of approximately 1.5 %. The branches of activity that 
experience a higher increase of their output are: Stockbreeding (2), with a 23.78 % 
variation; Agriculture (1), with a 4.33 % increase; Fishing (3), which reaches a 2.99 %; 
Water capture, treatment and distribution (9), with a 1.19 % increase, and Food (10), with a 
1.14 % variation. On the contrary, the branches of activity that are least affected by the 
injection of EAGGF-G are: Non-sale-oriented services (26), with a 0.01 variation; Textiles 
and leather (11), with a 0.07 % increase; Construction (21), with a close 0.08 % increase; 
Vehicles (17), with a 0.11 % variation, and Sale-oriented services (25), with a 0.15 % 
increment of the output. It is also worth remarking that certain accounts that do not directly 
receive an injection of EAGGF-G, such as Water capture, treatment and distribution (9), are 
The Empirical Economics Letters, 11(11): (November 2012) 1161
nevertheless benefited from that injection to a greater extent than other accounts receiving 
direct funds from this source. 
 
3) With the injection of ESF Funds, the total output is increased by 2 335 990 thousand euros, 
an increment of approximately 1 %. The branches of activity in which the output increases 
the most are: Sale-oriented services (25), with a 3.06 % increase; Fishing (3), with a 2.90 % 
variation; Non-sale-oriented services (26), where the increase reaches 2.34; Stockbreeding 
(2), with a 2.27 % increment, and Production and distribution of gas, water steam and warm 
water (8), with a 1.98 % increase. On the contrary, the branches of activity that are least 
affected by the injection of ESF are: Food (10), with a 0.28 % variation; Construction (21), 
with a 0.29 % increase; Trade (22) with a 0.44 % increase; Machinery (16) with 0.46 %, and 
Textiles and leather (11), with a 0.5 % increase of the output. 
 
The increment in the output of Stockbreeding (2) is very similar to that of the Sale-oriented services 
(25), but the ESF destined to the latter are comparatively larger than the ones received by the former. 
 
4. Concluding Remarks 
 
This work aims at identifying the Andalusian productive sectors that are most benefited by the 
reception of European Structural Funds. With this purpose, the Social Accounting Matrix for 
Andalusia in 2005 has been used and a linear multipliers model has been applied. The results 
obtained allow classifying the sectors of the Andalusian economy according to their capacity to 
absorb the exogenous injections of income derived from these funds and to experience structural 
changes that may boost the growth of the regional economy. These results reveal the region’s need 
to receive those funds. They demonstrate that the output variations in every sector, once the 
injections of income associated to the funds are introduced, are quite significant. 
 
It is therefore possible to conclude that the European Structural Funds clearly help promoting the 
development of Andalusia through the investments made in this region by the European Regional 
Policy, which, as it was underlined above, not only affect those sectors that are the direct recipients 
of the funds, but also influence all the other economic sectors.  
 
Acknowledgements 
 
The first author wishes to thank the funding received from projects MICINN-ECO2009-11857, 
SGR2009-5781 and SEJ479, while the second author thanks the funding received from Project 092-
2011 of the Centro de Estudios Andaluces (CENTRA). The opinions, analyses and results of this 
work are the exclusive responsibility of the authors and do not represent the position of the European 
Commission. 
 
We thank Prof. Lima for the data on the distribution of the European Funds by sectors. 
 
The Empirical Economics Letters, 11(11): (November 2012) 1162
References 
 
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Cardenete, M.A., Fuentes, P. and Polo, C., 2010, Una estimación de la Matriz de Contabilidad Social 
de Andalucía de 2005 a precios de adquisición, mimeo. 
Cardenete, M.A., Fuentes, P. and Mainar, A., 2012, Engogenization of the Rest of the World account 
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Consejería de Economía y Hacienda, 2001, Plan de desarrollo regional, marco comunitario de apoyo 
y programa operativo integrado de Andalucía 2000-2006, Sevilla. 
Lima, M. C. and Cardenete, M. A., 2007, The effects of European funds on a regional economy: an 
applied general equilibrium analysis, Applied Economics Letters, 14:11, 851 – 855. 
Lima, M. C., Cardenete, M. A. and Usabiaga, C., 2010, Andalucía y el MAC 2000-2006: Una 
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