What is the return on investing European Regional Development and Cohesion Funds? Difference-in-differences Estimator Approach
What is the return on investing European Regional Development and Cohesion Funds? Difference-in-differences Estimator Approach

Summary/Abstract: One of the ultimate goals of investing EU structural funds is to strengthen economic and social cohesion. Aiming to formulate and/or adjust funds allocation policy, it is crucial to find out whether previous investments had a positive return, i.e. the goal to diminish disparities has been achieved. This paper aims to supplement the empirical evidence of previous contributions in a few ways: (i) the analysis is based on NUTS 3 level data and different expenditure categories of various EU structural funds; (ii) the impact evaluation strategy relies on difference-in-differences estimator; and (iii) the effect is estimated on the dynamics of regional GDP disparities rather than on regional GDP growth. The research results revealed that all investments combined did not contribute to the reduction of regional disparities. The analysis of separate fund shows ambiguous results. The analysis of single expenditure category suggests that investment in productive environment and basic infrastructure had positive return and investing in human resources did not have significant effect.

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