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Regional integration and cohesion: Lessons from Spain and Ireland in the EU
Abstract
The academic literature on regional integration suggests that the impact of integration is unevenly spread among countries and regions. There is, therefore, a case for some redistributive mechanism, and this is what the EU Structural Funds tries to do. This article considers the role of the EU Structural Funds in Spain and Ireland, of which both countries were major beneficiaries, in facilitating the regional economic adjustment and reducing regional disparities. The article suggests that there were positive redistributive effects, as well as growth effects, but concludes that national, institutional and political configurations determine the distinctive outcome in the two cases. Finally, it considers the wider lessons for regional integration in ASEAN, a regional community of countries with diversity in the levels of regional development.
... Contrasting results derive from the choice of spatial and temporal considerations, variables used, and impact estimation methodologies. Farrell (2004) identifies a positive impact of structural funds on regional economic growth in Ireland and Spain. The results are supported by Lolos (2009), who analyzes the case of Greece. ...
... Our study's alignment with the literature, such as Farrell (2004) and Lolos (2009), confirming positive economic impacts, also highlights a need to deepen the understanding of how these economic benefits translate into tangible social progress. While economic development is a positive outcome, its success should also be measured by its ability to alleviate poverty and improve income equality. ...
... Regarding the impact on economic growth and social outcomes, this study confirms a positive correlation between the EU's cohesion policy and economic growth in CEE countries, aligning with the existing literature, such as Farrell (2004) and Lolos (2009). However, when it comes to the policy's impact on social outcomes, particularly in reducing poverty and income disparity, the findings reveal a more complex scenario. ...
This study challenges the traditional reliance on GDP as the sole indicator of the success of the EU’s cohesion policy, aligning with the evolving academic discourse that calls for a broader spectrum of metrics incorporating social factors. The research aims to assess the impact of cohesion on economic performance and social progress at the regional level in Central and Eastern European countries, using regression analysis on panel data. Inspired by the call to move beyond GDP-focused assessments, this research re-evaluates cohesion policy within an expanded framework that prioritizes economic and social dimensions. Specifically, it addresses the escalating concerns of income disparity and poverty in Central and Eastern European nations. Utilizing panel data regression models, this study scrutinizes data from 2007 to 2018, covering two recent programming periods, to offer a comprehensive, multifaceted analysis of the impact of cohesion policy. It underscores the policy’s dual role in spurring economic growth and fostering social progress, particularly in mitigating income inequality and reducing poverty. The findings reveal that cohesion policies positively affect both economic performance and social progress, with notable impacts on narrowing the income gap and alleviating poverty in these regions. However, the economic benefits for poverty reduction materialize over a prolonged period, reflecting the gradual nature of policy impact and the time needed for investments to materialize. The study emphasizes the need for a long-term strategic vision in implementing cohesion policies. This includes enhanced data collection, a deeper focus on the social ramifications of policies, streamlined policy processes, capacity building, institutional strengthening, and prioritizing equitable opportunities to bridge income gaps effectively. This comprehensive approach aims to maximize the dual benefits of cohesion policies, promoting balanced economic and social progress across Central and Eastern Europe.
... To date, there is no clear definition of 'regional integration'. Farrell (2004) argued that uneven development, such as that of the European Union, is a hallmark of regional integration. Generally, integrated regions facilitate the flow of goods within regions by reducing trade barriers. ...
... Regional integration at a deep level brings many benefits. Under the influence of coordinated economic policies, common regional markets can be created, to generate positive gains (Farrell, 2004); in large regional markets, the market expansion effect attracts foreign direct investment to member countries (Li et al., 2016), and an increased FDI will lead to the accumulation of capital to finance research and development for manufacturing enterprises. In addition to the impact on investment, the market size effect also influences the geography of economic activity (Acemoglu & Linn, 2004;Sato et al., 2012) and affects economies of scale. ...
... Exposure to new potential markets can lead to technology spillover, innovation, and competition. In the integration process, technology can help firms become more competitive by integrating new processes and methods (Farrell, 2004). Technological externalities exist in international trade and can be achieved by exporting or imitating imported intermediate products (Basant & Fikkert, 1996). ...
Does participation in the ASEAN-China regional value chain (RVC) affect China’s manufacturing enterprises’ global value chain (GVC) positions in the context of the establishment of the ASEAN-China Free Trade Area (ACFTA)? In this paper, we discuss the theoretical mechanisms and impacts of RVC participation on GVC positions and use an input-output model to decompose the gross exports of China by different sources and destinations. The model measures China’s manufacturing industries’ total, upstream and downstream participation within the ASEAN-China regional value chain. Using panel data from the OECD for 2005 to 2015, the empirical results show that (1) the participation of China’s manufacturing industries in the RVC is conducive to improvement in their GVC positions, (2) moving to more upstream can indeed promote the GVC positions of enterprises, and (3) in contrast to labour-intensive and capital-intensive manufacturing, knowledge-intensive manufacturing in upstream activities of the RVC contributes the most to GVC positions. It is suggested that China should develop knowledge-oriented industries and move to more upstream of the ASEAN-China RVC to raise manufacturing industries’ positions in the GVC.
... Some authors (Dess and Davis, 1984;Hall, 1980;Hambrick, 1983;Kim and Lim, 1988) found that many of the most profitable firms had achieved either the lowest costs or the most differentiated position within their industry, which supported Porter's position. However, others have checked that Porter's generic strategies do not represent ways to achieve a higher performance level (Dawes and Sharp, 1996;Parker and Helms, 1992) and that hybrid strategies are the ones entailing an improved performance (Gopalakrishna and Subramanian, 2001;Spanos, Zaralis and Lioukas;2004;White, 1986). Additionally, the studies carried out have usually focused on one sector (Helms, Dibrell and Wright, 1997;Kim, Nam and Stimpert, 2004;Proff, 2000;Wright et al., 1991). ...
... In 1986, per capita income in the country was just under 70 % of the European average. Moreover, Spain was a true magnet for foreign direct investment (FDI) in the years immediately following its accession to the EU, and its national economy grew considerably, in part supported by the influx of foreign direct investment and the high consumer spending level (Farrell, 2004). In those days, the low relative costs of labour in Spain compared to those in other more developed countries attracted a large volume of foreign investment, which made it easier for the firms that had entered this market to develop a competitive costs strategy. ...
... In recent years, Spain has experienced economic growth at a rate that has permitted real convergence with the other European Union member states. By 2003, the national per capita income had reached 83 % of the EU average (Farrell, 2004). Therefore, Spain stands out as one of the countries in the EU that grows the most. ...
... Cluster 3: Virovitičko-podravska županija (10,79), Krapinsko-zagorska županija (12,79), Koprivničko-križevačka županija (12,93), Požeško-slavonska županija (14,57), Međimurska županija (17,19), Bjelovarsko-bilogorska županija (19,63), Vukovarsko-srijemska županija (21,00). ...
... Cluster 3: Virovitičko-podravska županija (10,79), Krapinsko-zagorska županija (12,79), Koprivničko-križevačka županija (12,93), Požeško-slavonska županija (14,57), Međimurska županija (17,19), Bjelovarsko-bilogorska županija (19,63), Vukovarsko-srijemska županija (21,00). ...
... Podrobnije o analizi utjecaja sredstava strukturnih fondova EU na regije kohezijskih zemalja vidjeti npr. uFarrel (2004). ...
This paper questions the choice of the optimal variable of the statistical regionalization of Croatia on the NUTS II level. The choice criteria are the following: Eurostat population number, maximum financial effects gained from structural fund access in the long term and the criteria of homogeneity of specific regions as the basis for consistent, long term regional development policy. The authors examine the eight alternatives of statistical regionalization and demonstrate the implications for Croatia, from the fi nancial and development viewpoint. The tested alternatives were the statistical regionalization with two, three and four NUTS II regions and all of the advantages and disadvantages for each of the examined variables. In continuation, the authors question the link between the regional policy approach (bottom-up and top-down) and the suitability of the specific choice of statistical regions for regional policy management in Croatia.
... 1992'de Uyum politikaları çerçevesinde fonlar dağıtılmaya devam edilmiştir. Günümüzde üye ve aday ülkeleri kapsayan uyum politikaları, bölgesel gelişmişlikle ilgili alanları kapsayacak şekilde genişletilmiş, altyapı ve istihdamı desteklemek üzere çeşitli proje programlarına ağırlık verilmiştir (Farrell, 2004). 1980'lerin sonlarından itibaren Avrupa topluluklarına verilen maddi desteklerin boyutunun arttığı gözlemlenmişetir. ...
... Buna göre sadece ülkelerin kendi eğitim sistemleri değil, AB hedef stratejileri yönünde yapısal fonların da mesleki eğitim amacıyla kullanılması ve sosyal kalkınmanın tüm Avrupa'ya yayılması öngörülmüştür (MEB, 2011). 2002 yılı Kasım ayından bu yana Konsey, mesleki eğitim ve öğretimde geliştirilen işbirliği ve yaşam boyu öğrenmeye kadar uzanan, özellikle de sosyal uyum ve rekabetçilik için insan sermayesi, yaşam boyu rehberlik, yaygın ve informal eğitimin belirlenmesi ve kabul edilmesi için ilkeler, mesleki eğitim ve öğretimde kalite güvencesi ve yeterlilikler ve becerilerin şeffaflığının sağlanması için tek bir Europass çerçevesi konularına ilişkin olarak bir dizi somut sonuç üzerinde politik anlaşmaya varmıştır (Konsey Raporu, 2003;2004 Tablo 1'de cevaplayıcıların kursa katılma amaçları, kursu tercih sebepleri, kursun amacı yönündeki görüş ve eğitimi diğer eğitimlerden ayıran en önemli sebeple ilgili görüşleri gösterilmiştir. Buna göre, cevaplayıcıların büyük bir kısmının (%72) kursa katılma amacı meslek sahibi olma şeklinde görülmektedir. ...
ÖZET Turizm, Avrupa Birliği'nin sürdürülebilir kalkınma, ekonomik büyüme, istihdam, ekonomik ve sosyal uyum gibi temel bazı hedeflerin başarılması için önemli bir potansiyel sektör olarak görülmektedir. Çevre, kültür, eğitim ve kırsal gelişim konularında turizm sektörüne yönelik birçok çalışma Avrupa Birliği tarafından maddi olarak desteklenmektedir. Bu bağlamda, mesleki eğitimlerle dezavantajlı grupların istihdamına yönelik projeler önemli bir alanı kaplamaktadır. Çalışma, örnek olay incelemesi olarak İskenderun Ticaret ve Sanayi Odası yürütücülüğünde AB destekli "Turizm Sektöründe Kadın İstihdamını Geliştirme Projesini" ele almaktadır. Çalışmada AB hibe projelerinin turizm sektöründeki yeri ve önemi incelenirken, bölgesel fayda ve yararlanıcılar açısından projenin yaratacağı katkı da değerlendirilmiştir. Bu bağlamda proje çağrısına başvuran 165 kişiye anket uygulaması yapılmıştır. Elde edilen sonuçlarla, katılımcıların turizm sektörüne ve sektördeki istihdam özelliklerine yönelik algılamaları, AB desteğine bakış açıları ve proje uygulamaları hakkındaki görüşler ortaya çıkarılmaya çalışılmıştır. ABSTRACT Tourism is seen as an important sector for achieving some main goals like sustainable development, economic growth, employment, economic and social adaptation for EU. Many studies about tourism sector are supported with funds by Europen Union on environment, cultur, education and rural development issues. In this context, vocational education and employment projects encapsulate an important area. The study, as a case, deals with "the Project of Enhancing Women Employment in Tourism Sector", managing by İskenderun Chamber of Trade and Industy and supported by EU. In the study, not only the importance of EU Funding Projects in tourism was examined, but regional advantage and beneficiaries' opportunities was evaluated as well. For this purpose, 165 questionnare form, completed by applicants to the Project announcements, was analysed. Through the analyse results, it was tried to find out perception of beneficiaries about tourism sector and employment opportunies in tourism sector, their perspectives on EU funds and applications of Project.
... Both they have regional and social dimensions. For example, the government's programme for higher labor mobility, or programme for retraining workers for new conditions in restructured industry (Farrell, 2004). ...
... Common market creates the conditions for free movement of production factors (Farrell, 2004). Labour and capital flows to the regions offering the best location for investment. ...
The cohesion policy of the European Union provides a framework for financing a wide range of projects and investments with the aim of encouraging economic growth in EU member states and their regions. The three main objectives of the EU's cohesion policy in the period 2007–2013 are: Convergence, Regional Competitiveness and Employment, and European Territorial Cooperation. Cohesion policy can become an effective tool of economic convergence if it is accompanied by a set of financial and non-financial elements such as labor market situation, investment opportunities, etc, which are the results of national policies. Article includes brief analysis of Lithuanian economic environment compared to other member states. The main objective of the article – the development of EU cohesion policy. The aim of the article – to explore the peculiarities of the EU economic and social cohesion. The research methods used in the work – the analysis of literature and statistical data.
... In the second category of studies, the analyses are oriented towards the particular case of selected countries. A series of studies, beginning with Farrell (2004), consider the role of the EU Structural funds in Spain and Ireland, and discover positive redistributive effects, as well as growth effects. Another study is that of Sosvilla-Rivero and Herce (2008) who show that EU packages have significantly contributed to the economic growth of Spanish regions. ...
... The origins of the EU structural funds are to be found in the Treaty of Rome, but the main group of funds in the structural funds category, the European Regional Development Fund (ERDF), was established in the mid-1970s as an "embryonic regional policy with a limited budget" (Farrell, 2004), largely at the request of Britain because of its concern at having to contribute so much to the Common Agricultural Policy 12 . The second fund as importance in the structural funds category was the European Social Fund (ESF) which had existed ever since 1969. ...
After the financial crisis burst out, a large number of
European countries, especially the new members,
focused on the EU funds absorption in order to restore
their economic growth. The EU funds are considered an
attractive tool for financing investment opportunities, in
particular in times of crisis, when the private
investments decrease. Nevertheless, little was done to
empirically document their role in supporting economic
growth on short-term, at macroeconomic level.
Therefore, we perform a data panel analysis for the EU
countries and we apply a system GMM estimator, in
order to see to what extent the EU funds absorption rate
impacts upon the short-term economic growth rate in
the EU member states. We find that the absorption rate,
either for the cohesion funds for growth and
employment, or for the rural development funds, has no
effect on the short-term economic growth rate. In
addition, for both categories of funds, the impact of the
absorption rate in the case of the net beneficiaries
group is negative. However, these results lack in
robustness as they are not confirmed for the new
member states group.
... Both they have regional and social dimensions. For example, the government's programme for higher labor mobility, or programme for retraining workers for new conditions in restructured industry (Farrell, 2004). ...
... Costs and benefits may be very unequally distributed among countries depending on country ability to materialise the benefits. Common market creates the conditions for free movement of production factors (Farrell, 2004). Labour and capital flows to the regions offering the best location for investment. ...
The wide disparity in income level is a problem from social point of view, but it is also a problem from the political perspective. Government needs to ensure that all parts of the countries benefit from increased economic prosperity and employment. Article 158 of the Treaty makes it clear that cohesion requires the reduction of disparities between the levels of development of various Union regions. It must ensure that the European funding that have been allocated contributes effectively to the European policies objectives. Establishment of the common market did not itself offer a solution to economic problems faced by member States. The concept of cohesion may be regarded as designed to allow all regions to compete in the internal market. The Union funds should seek to promote equality between levels of development and employment. It is important to evaluate the financial instruments of European policies contributing to economic and social cohesion of member states. The need for redistribution changes as integration reaches higher stages. The customs union, common market and economic and monetary unit create conditions for using different policies and instruments in order to relocate resources within regions. In this paper the effect of European Union cohesion policy on economy growth is discussed. More specific attention has been paid to the following sets of measures: redistribution schemes and ways of development, the use of European Union policies in levels of integration and cohesion. The object of the research is the aspects of implementation of financial instruments aiming social and economic cohesion in Lithuania. The research methods used in the work – the analysis of literature and statistical data.
... In the socioeconomic dimension, resources (e.g., the infrastructure, technology, and capital) normally vary spatially within an urban agglomeration (Cao et al., 2018), requiring regional integration for advantage complementary (Farrell, 2004). A similar phenomenon can be observed in ES budget distributions in this study. ...
Regional integration can contribute to co-occurring benefits of different parts of an urban agglomeration by managing these parts as a whole. However, current regional integration mainly focuses on the socioeconomic rather than the ecological dimension. To interpret regional ecological integration, we firstly selected six typical ecosystem services (ESs) to represent ecological benefits that potentially need to be improved by ecological integration for further analysis. Then we used ES budgets, bundles, and flows to investigate the potential, basic analysis unit, and occurring manners of ecological integration, respectively. Our results show that supply-demand mismatches were observed in all the ES types. Meanwhile, coexisting ES surpluses and deficits on the town scale were found in supporting biodiversity, soil retention, water yield, green space recreation, and crop yield, which indicates that their supply-demand mismatches can be mitigated with ecological integration. Furthermore, all the towns were classified into five spatial clusters with distinct ES budget bundles, which acted as the basic analysis unit of ecological integration. ES flows with three flow characteristic types were observed between different clusters, and all the clusters had ES provider-beneficiary relationships with each other. Based on the ES approach, we provided an ecological perspective for understanding regional integration, which has the potential to promote regional ecological sustainability.
... The first issue has already been dealt with by the literature (Farrell, 2004) with a confirmation that the focus of the Structural Funds in the Spanish case on infrastructures instead of human capital investment (comparing its case with Ireland) did little to help in the areas of regional integration and unemployment, which we have already pointed out as two main structural problems of the country. ...
This paper uses a new approach to the concept of green budgeting within the context of green economy to analyse the different factors influencing the lack of consistency on environmental policies in Spain. It appears that structural issues have prevented Spain from becoming a real green economy, and thus from taking the right measures that could lead it into a sustainable growth path. This case study is presented as example of failure to integrate environmental issues in policy-making, with political factors being one of the main variables under analysis. A quantitative analysis on the approach to public environmental budget management during the period prior to the recent economic crisis is conducted at national and regional levels. Some of the findings are consistent with other European countries but some distinctive structural issues are also identified.
... Втората група изследвания са ориентирани към конкретни случаи в избрани държави. Серия анализи, започващи с Farrell (2004), разглежда ролята на структурните фондове на ЕС в Испания и Ирландия, и открива положителни преразпределителни ефекти и ефекти на растежа. Sosvilla-Rivero and Herce (2008) показват, че финансовата помощ на ЕС значително е допринесла за икономическия растеж на испанските региони. ...
The goal of this paper is to analyze the influence of the European Union funds absorption rate on the short-term economic growth rate of the countries from Central and Eastern Europe over the 2008-2015 period. The object of the study are the European funds in Central and Eastern Europe. The subject of the research is the impact of the European funds on short-run economic growth in Central and Eastern Europe. The thesis of the research is that the European Union funds generate results slowly, in the long term, and cannot be used as a tool for a fast (in the short-run) economic recovery. The better management of the European funds is a necessary but not sufficient condition for the achievement of economic and social cohesion. The objective and the use of the European funds are other determinants of cohesion, therefore it is advisable that all new member states clearly state their European funding priorities. The goal of the study has been achieved by ordinary least squares panel data regression for the 2008- 2015 period. The research results do not imply any significant impact of the European Union funds absorption rate on the growth rate of real GDP in the new member states compared to the previous year. Recommendations have been made on how to increase the positive effect of the European funds on the economies of the new member states.
... Abu jie turi regioninius ir socialinius aspektus. Pavyzdžiui, vyriausybės programa didesniam darbo jėgos judrumui ar atsiradus naujoms sąlygoms restruktūrizuojamoje pramonėje darbuotojų perkvalifikavimo programa (Farrell, 2004). ...
One of the European Union (EU) economic objective is to achieve economic and social cohesion. It is therefore important to analyze the European Union's policies, including structural, impact on cohesion. Establishment of the common market did not itself offer a solution to economic problems faced by member States. The concept of cohesion may be regarded as designed to allow all regions to compete in the internal market. The Union funds should seek to promote equality between levels of development and employment. Economic and social cohesion is very important to strengthen political and economic development of the European Union Member States. European Union cohesion policy provides the possibility to finance various activities in order to promote economic growth in the EU Member States and their regions. The three main objectives of the current EU cohesion are convergence, regional competitiveness and employment and European territorial cooperation. Cohesion policy can be an effective tool to achieve economic convergence, if it is accompanied by a number of financial and non-financial elements such as the labor market situation, investment opportunities, and so on, which are the result of national policy. The article includes an analysis of Lithuania's economic environment compared with other Member States. The article study the subject - financial instruments aimed at social and economic cohesion, and its implementation aspects. This article aims - to explore the features of EU economic and social cohesion in the aspect of structural policy. The research methods used at work - literature and statistical data analysis. DOI: http://dx.doi.org/10.5755/j01.em.17.4.2999
... The system favoured by the European Union is the most advanced form of regional integration 15 . "The EU cohesion policy is aimed at reducing regional inequalities and promoting the development of the lagging regions" 16 . ...
The aim of the book is to investigate, on the more strictly legal side,
the nature of the "regulatory approach" characterizing the private law the EU system. The EU legal system — thanks to its multilevel dimension — is marked by the use of new ways for governing its integration, as complementary or alternative answers to legislative harmonization realized with public law. Torts, contracts and/or qualification/new definition of individual legal status appear only as a small part of many
possible tools harnessed to the pursuit of allocative efficiency and distributive justice in the European Union building.
... The efficiency and the justice are two reasons for the implementation of such policy. Both of them contain the regional and social aspects, for instance, the governmental program for higher workforce mobility or the staff retraining program in the case of restructuring of the industry (Farrell, 2004). ...
Economic and social cohesion is one of the economic objectives of the European Union (EU). Therefore it is important to analyse the influence of the European Union policies on the cohesion. The common market itself is not able to solve the economic and social problems that are relevant for the EU countries. The EU structural funds should encourage the employment and development of the region. The cohesion policy provides the possibility to finance various activities in order to promote economic growth in the European Union Member States. The convergence, regional competitiveness, employment and European territorial cooperation are the three main objectives of the current EU development aims. The cohesion policy can be helpful instrument for achieving economic convergence. The EU investments are meant to support the innovations as well as education and training in urban and rural areas, create sustainable high-quality jobs in order to reduce the unemployment and pursue low-carbon economy. In summary, the funds should lead to economic growth. This article presents the analysis of the relationship between the structural support and economic indicators of the EU. The research methods used in the article include the analysis of literature and statistical data, and correlation analysis. The analysis showed that correlation between main economic indicators and the funds is not significant and it may show the insufficient use of the support. © 2015, Kauno Technologijos Universitetas. All rights reserved.
... Głównym czynnikiem mającym zwiększyć zarówno potencjał rozwoju, jak i spójność, były inwestycje w kapitał ludzki (Shankar, Shah, 2009). Przeciwną strategię przyjęła Hiszpania, gdzie relacja nakładów na infrastrukturę w stosunku do kapitału ludzkiego była znacznie wyższa niż w Irlandii (Farrell, 2004). Bardzo istotną cechą polityki regionalnej w wyspiarskim państwie był także warunek minimalizacji negatywnych efektów interwencji publicznych. ...
... The efficiency and the equity are two reasons of the implementation of such policy. Both of them contain the regional and social aspects, for instance, a governmental program for greater labour mobility or a retraining program under the new conditions of industry restructuring (Farrell 2004). ...
The economic and social cohesion is one of the economic objectives of the European Union. It is, therefore, important to analyse the impact of policies of the European Union on cohesion. The establishment of the common market still did not offer a solution for economic problems faced by the Member States. The economic and social cohesion is very important to strengthen the political and economic development of the Member States. This article includes the analysis of Lithuanian economic environment compared with the other Member States and the impact of EU structural funds on economic growth of the country. The detailed analysis of the correlation between funding and economic and social indicators of Lithuania showed that there is the significant direct relationship between the funding and the direct foreign investments per inhabitant. The significant correlation between EU support and other economic and social indicators was not found. Nevertheless the EU funding is undoubtedly useful and necessary to promote the economic growth. The efficiency of the use of EU funds is the largest problem and the task achieving the maximum benefit for the economics of Lithuania.
With global low-carbon development, green innovation has becoming a key factor for countries to obtain and maintain core competitive advantages. However, the division of scientific research resources often fails to meet the requirements of economic development. Therefore, regional integration cooperation has become an inevitable choice for innovation and development. However, the effect of the impact, direction, and interaction of regional integration policies on green innovation decision-making remains uncertain. To study the synergistic development mechanism between the two, this study constructs a two-layer network model that includes the decision and influence layers and uses a graph neural network model to map the relationship between the two-layer networks. With the help of opinion dynamics model and public goods game model, we draw the following conclusions. (1) Limited communication between regions can encourage all parties to adopt active green innovation strategies. However, excessive communication can lead to disunity of opinions among all parties, which may not be conducive to green innovation and result in an increase in free-rider behavior. (2) Regional integration development can effectively prompt all parties to choose active green innovation strategies. (3) Increasing the breadth of regional integration cooperation is more effective in promoting the active participation of all parties in green innovation, compared to increasing the depth of regional integration cooperation. This study provides theoretical support for decision-making in regional integration and green innovation development.
Since 1992, the European Union has been reallocating resources among its members through, among others, so-called cohesion funds. However, there is a growing perception among economists and politicians that the scope and magnitude of those transfers is inadequate. In this paper we compare the degree of fiscal transfers in the EU to those in the U.S. and estimate the changes needed to make the EU more like the U.S. Data on American inter-state fiscal transfers show that, on average, the most affluent states consistently make significantly larger payments to the federal government than they receive from it and that the opposite is true for the less affluent states. Our research shows that, unlike in the U.S., fiscal transfers in the EU are not closely related to a member state’s standard of living. We also find that, compared to the U.S., the least affluent nations in the EU receive disproportionally small net payments from the common budget. An American-style fiscal union would require more affluent EU members to make net contributions many times over their actual net payments.
Attention to the harmonised economic growth by promoting regional economic convergence was paid in the 1960s, at the commencement of European economic integration. It served as a basis for initiation of programs intended to reduce disparities among regions. For the current programming period (2014-2020) over 350 billion euro was allocated to promote cohesion (more than 340 billion for 2007-2013 and about 213 billion for 2000-2006) and a considerable part of that funding went specially to promote regional convergence; therefore, the analysis of regional convergence in the EU countries is essential due to both economic and financial reasons. Regional policy can be considered successful if regional disparities are found to be decreasing; however, research on convergence/divergence issue has not provided any unambiguous conclusions. We aim to enrich this field of analysis by incorporating cultural dimension while analysing the factors influencing regional convergence. In order to identify a causal link between culture and economic outcomes, we define culture as the customary beliefs and values that ethnic, religious and social groups transmit almost unchanged from generation to generation. Our research hypothesis is that regional policy impact on regional convergence differs between groups of countries characterised by historically diverse cultural experience. Using panel data approach like FD and covering the two last programming periods along with a set of variables to control country-specific economic environment, we investigate whether the success of Cohesion policy has depended on cultural differences in the north, south, west and central-east groups of European countries.
Regional disparities present an ever present development challenge in most countries, especially those with large geographic areas under their jurisdiction. A neglect of these inequities may create the potential for disunity and, in extreme cases, for disintegration. In view of this, most countries actively pursue policies with a view to helping lagging regions catch up with faster growing regions. These policies have at best a mixed record of success. It is therefore useful to discern what type of policies work and why? In this context learning from the experience of the European Union (EU) may be particularly instructive as, over the years, it has provided significant support to assist poorer regions achieve convergence with the richer regions. This paper reviews the impact of EU policies for regional development to draw lessons of interest to other countries pursuing similar goals. The paper concludes that policies that serve to create an internal common market by creating a level playing field that enables poorer regions to integrate with the broader national and global economies have the best potential to advance regional income convergence. In this context, removal of barriers to trade and factor mobility and providing enhanced access to information and technology to the lagging regions should be main policy priorities for regional development.
The concept of pro-poor growth focuses on the interrelation between economic growth, inequality, and poverty. According to an absolute definition, growth is pro-poor if the absolute income gain of the poor is larger than those on average. In contrast, a relative definition requires that the growth rate of income is higher among the poor than the nonpoor. The pro-poor literature has often considered the concept of pro-poor growth within a country by using household data in one country, or a large cross section of countries and time periods. This paper measures pro-poor growth across countries. We show how the concept of pro-poor growth in income per capita can be applied easily to a set of economies in the course of growth. This approach enables us to highlight the link to income convergence studies. The empirical investigations consider the experience of five Balkan countries during the period 1989-2005. The results show that many episodes of growth are not pro-poor because poverty and inequality worsen between Balkan countries. Although economic reforms seem to have a positive effect on well-being in Balkan countries, the overall effect on growth has been small for most countries.
Most of the Structural Actions are designed as an incentive to increase public investment in less-developed areas. However, we suspect that the efficiency of the policy is related to the level of fiscal autonomy of the subsidized government. In this paper we construct a paned data model in order to estimate the role of fiscal federalism on the effectiveness of the EU Structural Actions in enhancing public investment. We use data from the seventeen Spanish regions for the period 1993-2007. The estimation is run upon three alternative strategies: firstly we break the sample according to the level of fiscal autonomy of the units; secondly, we insert an interaction term capturing the join effect of both variables, fiscal decentralization and EU Structural Actions; finally, we estimate a simultaneous equation model in which public investment and the EU transfers are decided simultaneously. Results unambiguously support the hypothesis that the effectiveness of the Structural Funds decreases with larger decentralization. Our results suggest also that this could be due to the fact that regions find it more difficult to be eligible for additional EUSF as they gain fiscal autonomy. The general conclusions include the recommendation that the future design of the European Cohesion policy should take into account the heterogeneity of Fiscal Federalism across the Member States in order to the get the most out of it.
This paper analyses a number of European regions that in the last decade, through a considerable change in their economic base, experienced a remarkable growth path and a significant increase in their competitiveness. The analysis was carried out with the aim of recognizing the main determinants (or factors) of territorial development behind each regional renewal process and capturing (in a necessarily stylized manner) a number of common trajectories of regional competitiveness. Interestingly, all regional ‘success stories’ are strongly dependent on the presence of a tri-polar regional innovation system ‘gluing’ firms, institutions and academia.
After ten years the negotiations on the largest free trade agreement to date, the Free Trade Area of the Americas, which is
to include 34 countries, have still not resulted in an agreement. What can the countries involved learn, both positive and
negative, from the experiences of the EU with regional policy?
This paper considers how capital tax competition affects transfer and development policies in the presence of regional income disparity. In each country, development policies determine the number of rich (poor) regions that (do not) engage in production activities, while transfer policies redistribute income between rich and poor regions. The mix of transfer and development policies is inefficient under tax competition: conditional on the equilibrium tax rate, too much revenue is spent on development policies and too little on transfer policies. This analysis of the expenditure mix implies that development policies are used as a means of regional redistribution even if transfer policies are efficient instruments for this purpose. Moreover, it is shown that the overall level of public expenditure may be too high because of the possibility of over-development.
In this paper we take a critical look at current European regional policies. First, we document the motivation for such policies, that is, the large income disparities across the regions of the EU15. Large disparities are certainly present. Second, we illustrate the various instruments adopted and discuss their underpinnings in established economic theories. Next, we look at available data, searching for three kinds of evidence: (1) if disparities are either growing or decreasing, we conclude they are neither; (2) which are the major factors explaining such disparities and, in particular, if they are the factors predicted by the economic models adopted by the Commission to justify current policies, we conclude this is most certainly not the case; (3) if there are clear signs that EU policies, as opposed to other social and economic factors, are actually reducing such disparities, we cannot find any clear sign of such desired impact. Our conclusion is that regional and structural policies serve mostly a redistributional purpose, motivated by the nature of the political equilibria upon which the European Union is built. They have little relationship with fostering economic growth. This casts a serious doubt on their social value and, furthermore, strongly questions extending such policies to future members of the European Union. A successful EU enlargement, in our view, calls for an immediate and drastic revision of regional economic policies.
— Michele Boldrin and Fabio Canova
The traditional empirical approaches to the analysis of economic growth,cross‐section and panel data regressions are substantially uninformative withrespect to the issue of convergence. Whether national or regional economies appear to converge in terms of per capita income or productivity levels (the so‐called β‐convergence) critically depends on the way in which the empirical model is specified. Traditional specifications witness a disproportionate presence of proxies for forces leading towards divergence among the conditioning variables. It is therefore hardly surprising that these analyses find a positive and statistically significant value for the estimate of the speed of convergence.
A more constructive use of cross‐section and panel data regressions is in the analysis of the determinants of growth. The present paper therefore builds on recent work on the role of different growth determinants (Cheshire and Carbonaro 1996) and analyses the growth performance of 122 Functional Urban Regions (FURs)over the period 1978–1994. This model explicitly recognizes growth as amultivariate process. In this new formulation it incorporates a spatialized adaptation of Romer's endogenous growth model (Romer 1990), developing the work of Magrini (Magrini 1997). Magrini's model originated from the view that technological knowledge has a very important tacit component that has been neglected in formal theories of endogenous growth. This tacit component, being the non‐written personal heritage of individuals or groups, is naturally concentrated in space. As a result, technological change is profoundly influenced by the interaction between firms and their local environments.
The present paper reports the results of the estimation of a fully specified model of regional growth in per capita income. Particular attention is played to the role of research and development (R&D) activities, and to the influence of factors such as Universities that shape the local environments and have important policy implications.
These results are then applied to quantifying the scope for policy to influence the growth process. Several simulations are presented deriving alternative growth outcomes across European regions that would have been obtained if those variables over which policy might have control—including the contribution of human capital—had had alternative values reflecting the realistic scope of policy makers' influence. The implications for convergence/divergence in regional per capita income levels are then analyzed using a Markov chain approach (Quah 1993 and 1996; Magrini 1999).
The European Union has established itself as a leading text that provides readers from all disciplines with a sound understanding of the economics and policies of the EU. Its wealth of information, detail and analysis has ensured that previous editions have been read by a generation of students, researchers and policy makers. It covers all major EU policy areas as well as theories of economic integration, the theory of economic and monetary union (EMU), the measurement of the economic effects of European integration and the legal dimension in EU integration. It also includes an explanation and analysis of all recent developments affecting the EU such as enlargement, the ratification of the Nice Treaty and the Convention for the Future of Europe. This edition has been thoroughly revised and updated and includes new resources to help students and teachers, including summaries, review questions, suggestions for essay titles and further reading lists.
The Maastricht Treaty, signed in December 1991, set a timetable for the European Community's economic and monetary union (EMU) and clearly defined the institutional policy changes necessary for its achievement. Subsequent developments have demonstrated, however, the importance of many key issues in the transition to EMU that were largely neglected at the time. This volume reports the proceedings of a joint CEPR conference with the Banco de Portugal, held in January 1992. In these papers, leading international experts address the instability of the transition to EMU, the long-run implications of monetary union and the single market for growth and convergence in Europe. They also consider the prospects for inflation and fiscal convergence, regional policy and the integration of financial markets and fiscal systems. Attention focuses on adjustment mechanisms with differentiated shocks, region-specific business cycles and excessive industrial concentration and the cases for a two-speed EMU and fiscal federalism.
Spain and the EU takes the country's accession to the European Community in 1986 as its starting point and traces the changes in the national and regional economy, the shifts in national economic policy, and the fundamental restructuring of a public sector only recently enlarged as a result of the country's transition to democracy. The book identifies the challenges that continue to confront the Spanish polity under monetary integration in the pursuit of convergence towards the EU model, while retaining national cohesion. Aimed at an academic and general audience, the issues raised in this book have broader lessons for the management of integration at the national and sub-national level, particularly for new member states.
In this paper we take a critical look at current European regional policies. First, we document the motivation for such policies, that is, the large income disparities across the regions of the EU15. Large disparities are certainly present. Second, we illustrate the various instruments adopted and discuss their underpinnings in established economic theories. Next, we look at available data, searching for three kinds of evidence: (1) if disparities are either growing or decreasing, we conclude they are neither; (2) which are the major factors explaining such disparities and, in particular, if they are the factors predicted by the economic models adopted by the Commission to justify current policies, we conclude this is most certainly not the case; (3) if there are clear signs that EU policies, as opposed to other social and economic factors, are actually reducing such disparities, we cannot find any clear sign of such desired impact. Our conclusion is that regional and structural policies serve mostly a redistributional purpose, motivated by the nature of the political equilibria upon which the European Union is built. They have little relationship with fostering economic growth. This casts a serious doubt on their social value and, furthermore, strongly questions extending such policies to future members of the European Union. A successful EU enlargement, in our view, calls for an immediate and drastic revision of regional economic policies.
This paper considers the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development. Three models are considered and compared to evidence: a model emphasizing physical capital accumulation and technological change, a model emphasizing human capital accumulation through schooling, and a model emphasizing specialized human capital accumulation through learning-by-doing.
This paper develops a simple model that shows how a country can endogenously become differentiated into an industrialized "core" and an agricultural "periphery. " In order to realize scale economies while minimizing transport costs, manufacturing firms tend to locate in the region with larger demand, but the location of demand itself depends on the distribution of manufacturing. Emergence of a core-periphery pattern depends on transportation costs, economies of scale, and the share of manufacturing in national income. The study of economic geography-of the location of factors of production in space-occupies a relatively small part of standard economic analysis. International trade theory, in particular, conventionally treats nations as dimensionless points (and frequently assumes zero transportation costs between countries as well). Admittedly, models descended from von Thunen (1826) play an important role in urban studies, while Hotelling-type models of locational competition get a reasonable degree of attention in industrial organization. On the whole, however, it seems fair to say that the study of economic geography plays at best a marginal role in economic theory. On the face of it, this neglect is surprising. The facts of economic geography are surely among the most striking features of real-world economies, at least to laymen. For example, one of the most remarkable things about the United States is that in a generally sparsely populated country, much of whose land is fertile, the bulk of the population resides in a few clusters of metropolitan areas; a quarter of the inhabitants are crowded into a not especially inviting section of the East Coast. It has often been noted that nighttime satellite
Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is not a conventional good or a public good; it is a nonrival, partially excludable good. Because of the noconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that a large population is not sufficient to generate growth. Copyright 1990 by University of Chicago Press.
In a world with two similar, developed economies, economic integration can cause a permanent increase in the worldwide rate
of growth. Starting from a position of isolation, closer integration can be achieved by increasing trade in goods or by increasing
flows of ideas. We consider two models with different specifications of the research and development sector that is the source
of growth. Either form of integration can increase the long-run rate of growth if it encourages the worldwide exploitation
of increasing returns to scale in the research and development sector.
There is currently considerable interest in and debate over the impact of increasing European economic and monetary integration
(EMU) on the regions of the EU. Opinion is sharply divided over whether EMU is leading to regional economic convergence or
regional economic divergence. This paper examines the theoretical arguments and empirical evidence for these opposing views,
and presents some additional analysis of patterns of regional productivity trends and employment growth over the period 1975–98.
The picture that emerges is a complex one: whilst worker productivity shows only very weak convergence across the EU regions
(a process which halted altogether after the mid-1980s), regional employment growth has been sharply divergent. Although there
is little support for the claim that EMU will lead to regional convergence, these findings suggest that until much more detailed
investigation of the specific impacts on particular types of region is undertaken, the regional implications of EMU will remain
a contentious issue.
This paper analyses economic integration between two economies; one central, with a large local market, and the other peripheral, with a small local market. Each economy has an imperfectly competitive manufacturing sector. Trade liberalization creates a strong incentive for the imperfectly competitive industry to concentrate in the central region, near the large market. This may cause the direction of net trade to be the opposite of that predicted by factor endowments. This effect may be offset by a lower wage in the periphery than in the centre; we find that in the early stages of integration relative wages in the centre and periphery diverge, with convergence occurring only in the later stages.
Delocation and European intergration
Is structural spending justified
How is European integration changing the location of industry? And what part are national and EU aids to industry playing in this process? We show that states and regions are becoming more specialized within the EU, but this process is very slow. While there is no evidence of polarization occurring at the national level, some regions are losing out. National state aids to industry appear to have little effect for either good or ill, since their effectiveness at attracting economic activity and employment is limited. European Structural Funds expenditure, by contrast, does have an effect on the location of industry, notably by attracting industries that are intensive in research and development. However, this effect has mostly been acting counter to states’ comparative advantage – R&D-intensive industries have been encouraged by these aids to locate in countries and regions that have low endowments of skilled labour. Only in Ireland, where Structural Funds reinforced rather than offset comparative advantage, have poor regions been enabled systematically to catch up with the EU average.
— Karen Helene Midelfart-Knarvik and Henry G. Overman
Ireland has been the strongest performing economy in the OECD over the last 15 years. This paper evaluates the contribution of the Structural Funds and the Single European Market to this performance. Estimates of the direct effects of these EU initiatives on Irish national income appear small relative to the phenomenon to be explained; indirect effects arising from interactions with other concurrent developments in the economy could also be significant however. We discuss several channels through which such indirect effects could have emerged.
EU structural funds in Ireland: A mid-term evaluation of the CSF 1994-1999
- P Honohan
Honohan, P. (1997). EU structural funds in Ireland: A mid-term evaluation of the CSF 1994–1999. Policy Research Series No. 31. Dublin: ESRI.
States in the global economy: Bringing domestic institutions back in The European Union. Economics and policies
- L Weiss
Weiss, L. (2003). States in the global economy: Bringing domestic institutions back in. Cambridge: Cambridge University Press. Selected Reference El-Agraa, A. (2001). The European Union. Economics and policies. Harlow: Pearson.
Spain in the EU. The road to economic convergence Los Fondos Estructurales Europeos y el Desarollo Regional: Balance de una Dé Desde la Perspectiva Españ
- M Farrell
Farrell, M. (2001). Spain in the EU. The road to economic convergence. London: Palgrave. Ferná Martí, P. (1997). Los Fondos Estructurales Europeos y el Desarollo Regional: Balance de una Dé Desde la Perspectiva Españ. Informació Comercial Españ, 766. Madrid: Ministerio de Economí y Hacienda.
Ireland and Europe. The economic dimension. Dublin Institute of European Affairs Economic integration and endogenous growth
- O Donnell
O'Donnell, R. (2002). Ireland and Europe. The economic dimension. Dublin Institute of European Affairs. Rivera-Batiz, L. A., & Romer, P. M. (1991). Economic integration and endogenous growth. Quarterly Journal of Economics, 106, 531–555.
European Union enlargement. Effects on the Spanish economy Delocation and European Integration—Is structural spending justified? Economic Policy
- C Martí
- J A Herce
- S Sosvilla-Rivero
- F J Velasquez
Martí, C., Herce, J. A., Sosvilla-Rivero, S., & Velasquez, F. J. (2002). European Union enlargement. Effects on the Spanish economy. La Caixa Economic Series, 27, Madrid. Midelfart-Knarvik, K., & Overman, H. (2002). Delocation and European Integration—Is structural spending justified? Economic Policy, 35, 322–359.
Models of economic integration and localised growth Adjustment and growth in the European Monetary Union
- G Bertola
Bertola, G. (1993). Models of economic integration and localised growth. In F. Torres & F. Giavazzi (Eds.), Adjustment and growth in the European Monetary Union. Cambridge: Cambridge University Press.
The single market review: Aggregate and regional impact-The case of Greece
- Esri
- Spain
- Portugal Ireland
- London
Cohesion and the structural funds
- D Allen