Chapter 28: Impact assessment of EU Cohesion policy: theoretical and empirical issues
The treaties of the European Union (EU) state that the EU ‘shall promote economic, social and territorial cohesion, and solidarity among Member States’, which implies that ‘the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions’. This is implemented with different objectives along programming periods, each seven years in length. Overall, the Structural Funds and the Cohesion Fund represent approximately one-third of the European Union’s budget. This is the most closely scrutinised policy at regional level, due to relatively good data availability and its existence in similar forms since at least 1989, which allows for long-run analyses. A large number of academic papers have been published in the last 15 years aiming to assess its economic impact, but there is still no consensus on whether and to what extent the policy has really been effective. This is due to theoretical and empirical issues arising when trying to empirically assess this policy. For this reason, this chapter analyses the many issues which can arise with the appraisal of the impact of Cohesion policy, which presents a large number of difficulties, some of which are standard to policy assessment, while others are due to the specific characteristics of Cohesion policy. Each issue is discussed theoretically and the way in which the literature confronts it is presented. Too often some issues are either neglected or, due to the difficulties in addressing them, relinquished. Among the discussed relevant issues are: on which variables the impact should be assessed, after how long, at what geographical scale, which disturbance factors are relevant, whether the impact should be confined to the region receiving funds, the interaction with other policies, how the impact changed in time, the possible existence of threshold effects, the overlapping of programming periods, the differentiated impact by regional characteristics, the changes in objectives in time, and the interplay between eligibility, growth and political support. The chapter concludes by noting that it is not very interesting, either theoretically or from a policy point of view, to observe that there has been some effectiveness of Cohesion policy, and that it is hence time also for econometric researchers to analyse how to improve effectiveness, which can be done by investigating not whether Cohesion policy has been effective, but when, where and how it has been so.
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