Boulevard of broken dreams. The end of EU funding (1997: Abruzzi, Italy)

Abstract

EU regional policies aim to push regions into self-sustaining growth. Successful interventions would imply a higher growth rate, not only during the treatment (when the region benefits from the transfers), but also after the expiry of the program (when the financing terminates). We investigate to what extent this happened in the case of Italy's Abruzzi region, which entered into the Objective 1 (Convergence) program in 1989 and exited it in 1996 (without a transitional regime). More specifically we focus upon the post expiry period by implementing a synthetic control approach. Our results indicate that exiting the program had a negative effect on regional per-capita GDP growth. This result is confirmation of the widespread evidence that during their implementation EU regional policies help boost the economic performance of the treated regions. However, additional evidence suggests that the permanent effect of the treatment is negligible: the policies fail to transfer the treated regions to a permanently higher GDP growth path.JEL Classifications: R11, O47.

Local Labour Market Heterogeneity in Italy: Estimates and Simulations Using Responses to Labour Demand Shocks

“…Most of the recent evaluations of place-based policies estimated zero impact on employment, both in the case of country specific schemes (Accetturo and de Blasio, 2012;Andini and de Blasio, 2016) and in the case of European structural funds (Ciani and de Blasio, 2015; see also the results for Italy in Becker et al, 2013). In other cases, where the estimated impact of transfers on employment is positive, it is temporary, and therefore only endless transfers might raise the economic conditions of a given area (Barone et al, 2016). An increase in local public employment is also unlikely to be sufficient, as there is evidence that it crowds-out private jobs (Auricchio et al, 2016).…”

Local secessions, homophily, and growth. A model with some evidence from the regions of Abruzzo and Molise (Italy, 1963)

“…The synthetic control has been pioneered by Abadie and Gardeazabal (2003), 16 and it has also been used for the analysis of regional developments in Italy (see, for instance, Barone and Mocetti, 2014;Pinotti, 2015;Barone, David, and de Blasio, 2016). The method can be easily sketched.…”

“…We use as covariates in the synthetic control procedure (the Xs) the most relevant predictors of subsequent regional economic growth. Similarly to previous literature (see Barone and Mocetti, 2014;Barone, David, and de Blasio, 2016), we include: the initial level of GDP per-capita, past GDP per-capita growth rate, the investment-to-GDP ratio, the share of highly educated as a proxy for human capital, population density, net imports-to-GDP ratio, and the sectorial composition of value added (agriculture, industry, market service). We also use a measure of the local minimum wage, which might have affected the regional distribution of economic activity during our estimation window (see de Blasio and Poy, 2017).…”

The impact of EU Objective 1 funds on regional development: Evidence from the U.K. and the prospect of Brexit

“…Whether a region is affected by reductions in the flow of funds deriving from the loss of Objective 1 status is a question that has been investigated by Barone et al. (), finding that the growth rate of Abruzzo (Italy) has significantly reduced in the period following the change in Objective 1 eligibility.…”

“…The few works evaluating the impact of EU Cohesion Policy with counterfactual techniques have documented the potential for Objective 1 transfers to foster growth, spur investments, and generate jobs (Becker, Egger, & von Ehrlich, , ; Giua, ; Pellegrini, Terribile, Tarola, Muccigrosso, & Busillo, ). Only very recently has scholarly research begun to examine the post‐policy impacts of Objective 1 funds (Barone, David, & de Blasio, ). However, no study has ever investigated the effects of these policies by considering their full cycle, i.e., from the moment in which a region is awarded the Objective 1 status to the period following the loss of Objective 1 funds.…”