EU Regional Policy Effectiveness and the Role …
33
is reported in Fig. 1. Matching this data with evidence on the Cohesion Policy expenditure on 19 axes
2 over the Programming Period 2000–2006,
3 the goal of the analysis
was (i) to classify EU regions according to their territorial capital and (ii) associate
this endowment with the allocation of funds across different axes of expenditure.
Empirical results (Fratesi and Perucca 2016) highlight that regions with different endowments of territorial capital allocate their funds in a different way. Core
metropolitan areas, characterized by the highest levels of territorial capital, allocate,
on average, 26.9% of their funds to the support of Small and Medium Enterprises
(SMEs) and the craft sector, i.e., to investments aimed at increasing the competitiveness of their firms. At the same time, these regions are those allocating more
resources in actions on human capital, from the labor market to social inclusion. On
the other hand, regions characterized by the lowest endowments of territorial capital
are also those devoting more resources to investments in basic infrastructure such as
transport, energy and environmental infrastructure.
Summing up, less developed regions tend to invest relatively more in basic infrastructural assets, i.e., in those resources that are still lacking in the region. Richer
areas, already endowed with infrastructures, tend to pay more attention to social and
economic issues. Even if different typologies of regions tend to allocate their funds
differently across axes of expenditure, it is not possible to say whether this choice is
the most efficient. In other words, we do not know whether the allocation strategy is
associated with a higher impact on investments. This issue is the focus of the second
step of the analysis, discussed in the following sections.
4 Territorial Capital and the Effectiveness of Cohesion
Policy Funds
The assumption on the association between territorial capital and Cohesion Policy
is that specific territorial characteristics foster the effectiveness of the EU regional
policy. The empirical verification of this assumption requires, in the first place, the
definition of what is meant by the term effectiveness. In our approach, the outcome
of Cohesion Policy is defined in terms of increased GDP growth: the higher the
statistical impact on economic growth in the years after the policy implementation,
the higher the effects of Cohesion Policy.
4 This choice is based on the fact that EU
2 An axis of expenditure is the thematic field in which the policy intervenes. Tourism, ICT, transport,
energy and environment, female labor participation are all examples of aces of expenditure. See
Fratesi and Perucca (2016) for the full list.
3 The Multiannual Financial Frameworks set the annual budgets for seven-year periods. A Programming Period is, as a consequence, a seven-year period characterized by a given budget and rules for
Cohesion Policy.
4 This relationship has to be controlled for all the other factors, apart from Cohesion Policy investments, that may affect GDP growth. See Fratesi and Perucca (2014) for a detailed description of
the methods and of how this issue was addressed in the empirical analysis.
33
is reported in Fig. 1. Matching this data with evidence on the Cohesion Policy expenditure on 19 axes
2 over the Programming Period 2000–2006,
3 the goal of the analysis
was (i) to classify EU regions according to their territorial capital and (ii) associate
this endowment with the allocation of funds across different axes of expenditure.
Empirical results (Fratesi and Perucca 2016) highlight that regions with different endowments of territorial capital allocate their funds in a different way. Core
metropolitan areas, characterized by the highest levels of territorial capital, allocate,
on average, 26.9% of their funds to the support of Small and Medium Enterprises
(SMEs) and the craft sector, i.e., to investments aimed at increasing the competitiveness of their firms. At the same time, these regions are those allocating more
resources in actions on human capital, from the labor market to social inclusion. On
the other hand, regions characterized by the lowest endowments of territorial capital
are also those devoting more resources to investments in basic infrastructure such as
transport, energy and environmental infrastructure.
Summing up, less developed regions tend to invest relatively more in basic infrastructural assets, i.e., in those resources that are still lacking in the region. Richer
areas, already endowed with infrastructures, tend to pay more attention to social and
economic issues. Even if different typologies of regions tend to allocate their funds
differently across axes of expenditure, it is not possible to say whether this choice is
the most efficient. In other words, we do not know whether the allocation strategy is
associated with a higher impact on investments. This issue is the focus of the second
step of the analysis, discussed in the following sections.
4 Territorial Capital and the Effectiveness of Cohesion
Policy Funds
The assumption on the association between territorial capital and Cohesion Policy
is that specific territorial characteristics foster the effectiveness of the EU regional
policy. The empirical verification of this assumption requires, in the first place, the
definition of what is meant by the term effectiveness. In our approach, the outcome
of Cohesion Policy is defined in terms of increased GDP growth: the higher the
statistical impact on economic growth in the years after the policy implementation,
the higher the effects of Cohesion Policy.
4 This choice is based on the fact that EU
2 An axis of expenditure is the thematic field in which the policy intervenes. Tourism, ICT, transport,
energy and environment, female labor participation are all examples of aces of expenditure. See
Fratesi and Perucca (2016) for the full list.
3 The Multiannual Financial Frameworks set the annual budgets for seven-year periods. A Programming Period is, as a consequence, a seven-year period characterized by a given budget and rules for
Cohesion Policy.
4 This relationship has to be controlled for all the other factors, apart from Cohesion Policy investments, that may affect GDP growth. See Fratesi and Perucca (2014) for a detailed description of
the methods and of how this issue was addressed in the empirical analysis.