Factor Mobility, Agriculture, Environment and Quantitative Studies
Edited by Miroslav N. Jovanović
1 Tobias Hagen and Philipp Mohl 1 INTRODUCTION More than one-third of the total budget of the European Union (EU) is spent on the so-called Cohesion Policy2 via the structural funds (SF). Its main purpose is to promote the ‘overall harmonious development’ of the EU, to reduce disparities between the levels of development of the various regions, and to strengthen its ‘economic, social and territorial cohesion’ (Article 158 of the Treaty establishing the European Community). By making explicit the goal of reducing disparities in economic development, the Treaty implicitly requires that EU Cohesion Policy should affect resource allocation and factor endowment to promote growth. Hence, ‘cohesion policies are aimed at increasing investment to achieve higher growth and are not specifically concerned either with expanding consumption directly or with redistribution of income’ (European Commission, 2001, p. 117). European Cohesion Policy is successful if disparities between regions are decreased. Therefore, the convergence process of EU regions is a question of high political importance. Generally, the empirical evidence points to a small convergence effect of all or some European regions at least (Barro and Sala-i-Martin, 1991; Sala-i-Martin, 1996; see, for a survey, Eckey and Türk, 2006). However, whether the potential success with regard to convergence results from the Cohesion Policy is an open question. Investigating the impact of the policy on economic growth and convergence is a wide research topic in applied econometric research. Nevertheless, the empirical evidence has provided mixed, if not contradictory, results. While some authors do find evidence of...
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