The Jou nal o Economic Asymme ies 30 (2024) e00382
A ailable online 27 Augus 2024
1703-4949/© 2024 The Au ho s. Published by Else ie B.V. This is an open access a icle unde he CC BY license
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Asymme ic e ec s o EU cohesion policy on EU egional g ow h:
The ole o mac oeconomic unce ain y
Mehme Pina
a
,
b
,
*
, Bu han Can Ka ahasan
c
a
Depa amen o de An´
alisis Econ´
omico y Economía Polí ica, Uni e sidad de Se illa, A da. Ram´
on y Cajal, 1, 41018, Se illa, Spain
b
Depa men o Economics, Is anbul Bilgi Uni e si y, Is anbul, Tu key
c
MEF Uni e si y, Depa men o Economics, Maslak Ayaza˘
ga Cd. No:4, 34396 Sa ıye , Is anbul, Tu key
ARTICLE INFO
Keywo ds:
EU unds
S uc u al unds
Cohesion policy
Regional g ow h
Unce ain y
ABSTRACT
Cohesion policy and he EU unds ha e been key elemen s o e i o ial in eg a ion in Eu ope.
E idence shows ha EU unds suppo he g ow h pe o mance o egions. Howe e , less has been
discussed abou he po en ial impac o mac oeconomic unce ain y on he e ec i eness o EU
unds. Ou analyses con i m ha EU unds a e impo an in unde s anding egional economic
g ow h di e ences. Howe e , he ex en o mac oeconomic unce ain y dec eases he e ec i e-
ness o he EU unds. Ou esul s a e obus in including local con ols, non-linea i y o he EU
unds’e ec , di e en EU und ca ego ies, and egional he e ogenei y in he EU.
1. In oduc ion
The Cohesion Policy is he main in es men policy o he Eu opean Union (EU), and one- hi d o he EU budge , oughly 392 billion
Eu os, is planned o be dis ibu ed unde he umb ella o his policy ac oss di e en egions be ween 2021 and 2027 (Eu opean
Commission, 2023). While he Cohesion Policy add esses a di e en se o de elopmen goals, mos o he unds a e dis ibu ed o
inc ease he economic and social in eg a ion o he EU egions and educe social and economic dispa i ies ac oss i s egions.
The p ima y objec i e o he Cohesion Policy is o ha monize he economic and social li e ac oss he EU egions. While he Cohesion
Policy co e s all o he EU egions, p io i y is di ec ed o hose egions wi h a pe capi a income below 75% o he EU a e age.
1
Du ing
he di e en phases o enla gemen , egional he e ogenei y accele a ed, and he policy inc easingly has become a key ins i u ional ool
o sp eading he bene i s o in eg a ion. In o he wo ds, he Cohesion Policy is an ins umen aiming o balanced de elopmen ac oss
he EU egions. While he co e objec i e o p o iding a mo e equal egional de elopmen s ands s ill, his o ical de elopmen s show he
changing na u e o he ools and objec i es. Some o he co e aims o he Cohesion policy nowadays a e o os e compe i i eness,
employmen , economic g ow h, and sus ainable de elopmen (B unazzo, 2016). Howe e , om he ea ly ounda ion yea s o oday,
he e ha e been pe iodic changes in he p io i ies and implica ions o he policy.
Begg (2010) con i ms ha e en hough egional de elopmen is he cohesion policy’s p ima y objec i e, his o ical e olu ion b ings
addi ional objec i es. The e o e, acing he main de elopmen s o he policy is essen ial. The need o conside he egional dimension
in policymaking is an ine i able ou come o he enla gemen p ocess. Be o e he UK and I eland’s accession o he EU, mos o he
* Co esponding au ho . Depa amen o de An´
alisis Econ´
omico y Economía Polí ica, Uni e sidad de Se illa, A da. Ram´
on y Cajal, 1, 41018,
Se illa, Spain.
E-mail add esses: [email p o ec ed] (M. Pina ), [email p o ec ed] (B.C. Ka ahasan).
1
See h ps://eu -lex.eu opa.eu/legal-con en /EN/TXT/?u i=CELEX%3A32021D1130 o a lis o egions ha a e eligible o ecei e unding
unde he 2021–2027 ound o he Cohesion Policy (accessed on 17 July 2024).
Con en s lis s a ailable a ScienceDi ec
The Jou nal o Economic Asymme ies
jou nal homepage: www.else ie .com/loca e/jeca
h ps://doi.o g/10.1016/j.jeca.2024.e00382
Recei ed 29 May 2024; Recei ed in e ised o m 29 July 2024; Accep ed 21 Augus 2024
The Jou nal o Economic Asymme ies 30 (2024) e00382
2
conce ns abou egional policies we e di ec ed o he gap be ween I aly and he es o he union. La e on, he mo e om he Eu opean
Social Fund owa ds he Eu opean Regional De elopmen Fund cons i u es an impo an s ep owa ds he implemen a ion o a mo e
holis ic policy se o mi iga e he ad e se e ec s o egional dispa i ies (see Begg (2010) and Bach le and Mendez (2020, pp. 121–139)
o mo e de ails).
Eisle (2008)unde lines he h ee main objec i es ha a e shaped h ough he enla gemen p ocess: (i) be o e he 1980s, he co e
objec i e was compensa ion; (ii) a e 1988, he alloca ion objec i e became mo e cen al; (iii) a e he 1990s, mo e weigh is gi en o
he p oduc i i y app oach. These de elopmen s show he changing na u e o he app oach implemen ed wi hin he Cohesion Policy. I
has o be no ed ha his o ically, p io i ies o unds and policy change ha e also changed. Fo ins ance, du ing he ea ly 1980s, p i-
o i ies we e on co ec ing he egional dispa i ies due o ag icul u al dominance, indus ial change and s uc u al employmen . Du ing
he 1990s, mo e discussions we e di ec ed a decen aliza ion, ollowed by simpli ica ion p ocedu es in he ea ly 2000s. These de-
elopmen s a e mos ly ollowed by conce ns abou he asymme ic g ow h o popula ion and income wi h he enla gemen p ocesses
as he popula ion g ow h exceeds he income accele a ion du ing he his o ical enla gemen s. A e he 2000s, mo e policy discussion
is di e ed o g ow h and job c ea ion. Ine i ably, sec o al p io i ies become mo e cen al o unde s anding he asymme ic economic
p og ess ac oss he EU egions.
An ex ensi e numbe o a icles ha e examined he economic implica ions o he EU’s Cohesion policy. Mos o he exis ing
li e a u e ound posi i e e ec s o s uc u al unds on economic g ow h (see e.g., Becke e al., 2010; Biedka e al., 2022;Di Ca aldo &
Monas i io is, 2020;Pelleg ini e al., 2013) and Cohesion unds help EU egions o con e ge in s anda d o li ing (e.g., Calega i e al.,
2023;Ca a eli e al., 2008;Ku an &Yigi , 2007;Maynou e al., 2016). F om a wide pe spec i e, Cano a (2024) unde lines ha he
posi i e aspec s o s uc u al unds unde he Cohesion Policy a e mos ly isible ac oss he EU e i o ies in he medium and long un.
Howe e , a limi ed numbe o s udies demons a ed ha he e ec o he unds was no signi ican in p omo ing economic g ow h (e.g.,
Psycha is e al., 2020).
Recen li e a u e also iden i ied ha he e ec i eness (ine ec i eness) o he Cohesion policy unds depends on he egion and
coun y condi ions. I has also been ound ha he unds we e mo e e ec i e in ins i u ionally s ong egions (Ba be o e al., 2023;
Rod íguez-Pose &Ga cilazo, 2015) and he magni ude o unds alloca ed o he egions also played a ole in he e ec i eness o he
unds (see e.g., Becke e al., 2012; Ce qua &Pelleg ini, 2018;Fiaschi e al., 2018). Ou pape aims o con ibu e o his s eam o
li e a u e by p o iding an addi ional explana ion o why EU s uc u al unds may no be e ec i e in p omo ing economic g ow h in
some coun ies by conside ing he mac oeconomic unce ain ies in he EU coun ies. We highligh ha among a ious challenges o
he EU, egional economic di e ences and he po en ial con e gence s uggle a e i al dimensions o mo i a e he impo ance o he
Cohesion policy (see e.g., L´
opez-Bazo e al. (1999), Ca e ell i e al. (2008), A bia e al. (2008), Rauhu and Hume (2020) o de ails).
2
Mac oeconomic unce ain y is ound o ha e implica ions o a ious mac oeconomic indica o s such as agg ega e ou pu , in-
es men , consump ion, in la ion, and unemploymen , among many o he s (Bloom, 2009). Fi s ly, mac oeconomic unce ain y leads
o lowe economic ac i i y and highe unemploymen le els. Schaal (2017) demons a es ha he unce ain y du ing he 2007–2009
inancial c ises accoun ed o abou 40% o he o al inc ease in unemploymen in he Uni ed S a es. On he o he hand, Choi and
Loungani (2015) show ha while agg ega e unce ain y shocks ha e a sho - un e ec on an inc ease in unemploymen a es, bu
sec o al unce ain y shocks ha e a long- e m impac on unemploymen in he Uni ed S a es. Fu he mo e, exis ing s udies showed ha
unce ain y has an asymme ic e ec on unemploymen a es and he e ec s o unce ain y on unemploymen we e ound o a y
ac oss US s a es (Ahmed e al., 2022), du ing ecession and boom pe iods (Caggiano e al., 2017) and o e ime (Eksi &Tas, 2022).
Secondly, unce ain y has implica ions o economic g ow h and in la ion. Neanidis and Sa a (2013) show ha highe in la ion
unce ain y diminishes g ow h a es du ing high in la ion pe iods. Chowdhu y e al. (2018) also demons a e ha in la ion unce ain y
ha ms ou pu g ow h in he Uni ed Kingdom and he Uni ed S a es. Chowdhu y (2024) inds ha unce ain y signi ican ly a ec s
ou pu g ow h and in la ion in de eloping coun ies. Be ge e al. (2017) show inc eased global unce ain y hampe s economic g ow h
and na ional in la ion a es. Bianchi e al. (2023) empi ically show ha bo h demand and supply unce ain y lowe s economic ac i i y,
and supply-side unce ain y inc eases in la ion and lowe s in es men ac i i ies. Fu he mo e, due o inc eased isks associa ed wi h
he unce ain y, he exis ing li e a u e ound ha mac oeconomic unce ain y leads o lowe p i a e in es men (Aizenman &Ma ion,
1993;Demi , 2009;Asamoah e al., 2016;Meinen &Roehe, 2017;Adil &Roy, 2024), household consump ion (Coibion e al., 2024;
Ghi elli e al., 2021;Nam e al., 2021)), o eign di ec in es men (e.g., Canh e al., 2020;Choi e al., 2021;Choi e al., 2023;Nguyen &
Lee, 2021), c edi ma ke ac i i y (Alessand i &Bo e o, 2020;Gozgo e al., 2019) and s ock ma ke e u ns (Ba abyal &Killins, 2021;
Nusai &Al-Khasawneh, 2022). Based on he exis ing li e a u e, ou main a gumen is ha EU s uc u al unds a e less e ec i e in
coun ies wi h highe mac oeconomic unce ain y due o dec eased economic ac i i y and inc eased isk. While he exis ing li e a u e
examined he implica ions o unce ain y on mac oeconomic indica o s (e.g., ou pu , in es men , consump ion, in la ion, unem-
ploymen , o eign di ec in es men , s ock ma ke e u ns, e c.) and examined he e ec i eness o he Cohesion policy, he e is no
in es iga ion o he e ec i eness o he EU Cohesion policy in he p esence o economic unce ain y and his pape aims o close his
gap.
The emainde o he pape is as ollows. The nex sec ion p o ides a li e a u e e iew o he e ec i eness o he Cohesion policy o
economic g ow h and con e gence and he ole o unce ain y in economic ou comes. Sec ion 3p o ides he da a and empi ical
me hodology. Sec ion 4p o ides he empi ical indings, and sec ion 5concludes and discusses policy ecommenda ions.
2
F om a non-EU pe spec i e, in e es ed eade s can e e o Du an (2019) o an EU candida e coun y (Tu key) and o Holmes e al. (2014) o an
ad anced non-EU coun y (US).
M. Pina and B.C. Ka ahasan
The Jou nal o Economic Asymme ies 30 (2024) e00382
3
2. Li e a u e e iew
Mos o he exis ing li e a u e demons a ed ha he Cohesion policy p omo es egional economic g ow h (see e.g., Becke e al.,
2010;Biedka e al., 2022;Di Ca aldo &Monas i io is, 2020;Pelleg ini e al., 2013;Fiaschi e al., 2018;Di Ca aldo &Monas i io is,
2020, among o he s); howe e , he e ec i eness o he EU cohesion policy in p omo ing egional economic g ow h a ies based on
di e en egional cha ac e is ics. On he one hand, a s eam o li e a u e ound ha Cohesion policy is mo e e ec i e in egions wi h
lowe income pe capi a (Mohl &Hagen, 2010;Pelleg ini e al., 2013;Di Ca aldo &Monas i io is, 2020;Biedka e al., 2022). On he
o he hand, ano he s eam o li e a u e showed ha Cohesion policy is mo e e ec i e in socio-economically ad anced egions
(C escenzi &Giua, 2016) and a eas wi h s onge e i o ial capi al (F a esi &Pe ucca, 2019;Bach ¨
ogle e al., 2020) and ins i u ional
quali y (Ba be o e al., 2023;Rod íguez-Pose &Ga cilazo, 2015;Scheu e &Haase, 2018).
3
In he mean ime, he condi ionali y o he
EU und e ec i eness also ecei es ising in e es among schola s. Vida (2021) shows ha ins i u ional quali y has a s ong and
posi i e impac on he e ec i eness o he EU unds o p omo e economic g ow h and de elopmen . F om a di e en ein, Dicha y
(2023) examines he abso p ion capaci y o he EU egions and sugges s ha as abso p ion o he EU unds educes he e ec i eness o
he Cohesion Policy. In line wi h de elopmen s in he li e a u e, we examine he ole o coun y-le el mac oeconomic unce ain y in
he e ec i eness o he EU cohesion policy, as coun y-le el unce ain y leads o dec eased i m-le el and agg ega e economic ac-
i i ies, which could hampe he e ec i eness o he Cohesion policy unds.
The exis ing li e a u e highligh ed he ole o unce ain y in explaining agg ega e economic ac i i y. Fo ins ance, Nguyen (2020)
demons a es ha economic unce ain y inc eases he p obabili y and du a ion o economic ecession in 10 Eu opean Union coun ies
a e examining qua e ly da a be ween he second qua e o 1987 and he i s qua e o 2021. Analyzing he 2011–2020 pe iod,
Wen e al. (2022) showed ha unce ain y has led o a sus ained decline in economic ac i i y in Pakis an. Adil and Roy (2024)
demons a ed ha economic unce ain y educed India’s domes ic in es men . Nam e al. (2021) demons a ed ha inancial and
mac oeconomic unce ain y educed he consump ion g ow h o U.S. households in he 1986–2019 pe iod. Economic unce ain y was
also ound o hampe he s ock ma ke e u ns in Canada and G7 coun ies (Ba abyal &Killins, 2021;Nusai &Al-Khasawneh, 2022).
Fu he mo e, unce ain y led o educed capi al lows and in es men in coun ies. Ogbonna e al. (2022) demons a ed ha he
inc eased unce ain y led o dec eased o eign di ec in es men (FDI) lows o A ican coun ies. Nguyen and Lee (2021) also ound
ha coun ies wi h high le els o unce ain y ecei ed lowe FDI lows using a sample o 116 coun ies in he 1996–2017 pe iod.
Simila ly, Choi e al. (2023) examined he ole o unce ain y o capi al lows o 143 ecipien coun ies om 51 coun ies, and hey
ound ha an inc eased unce ain y led o a majo and pe sis en dec ease in bank c edi and po olio deb and equi y in lows.
Simila ly, unce ain y also had nega i e implica ions a he i m le el. Nguyen e al. (2022) examined he impac o unce ain y on
de aul isk in 26 eme ging ma ke s in he pe iod 1991–2019 pe iod, and hey demons a ed ha he unce ain y inc eased i ms’
de aul isk. Iqbal e al. (2020) demons a e ha economic unce ain y educed he pe o mance o US-lis ed non- inancial i ms.
Simila ly, Ahsan e al. (2023) also ound ha policy unce ain y educed he i m pe o mance based on he da ase o 702
non- inancial Eu opean i ms. The low pe o mance o he i ms may be due o a ious ac o s. Fi ms could lowe hei in es men
le els du ing unce ain imes due o lowe economic ac i i y and may be cons ained due o low c edi a ailabili y. Fo ins ance, using
panel da a om 139 coun ies co e ing he 1996–2017 pe iod, Gozgo e al. (2019) showed ha highe unce ain y lowe s domes ic
c edi s. Simila ly, Alessand i and Bo e o (2020) analyzed mo e han wo million co po a e loan applica ions o I alian banks and
ound ha inc eased unce ain y lowe s he chances o ob aining loans and inc eases he wai ing ime o be disbu sed. In o he wo ds,
co po a e c edi supply declines du ing unce ain y, which lowe s business ac i i ies. Along he same lines, Zhang e al. (2023)
analyzed 19,778 i ms om 82 coun ies du ing he 2019–2022 pe iod and ound ha he inc eased unce ain y lowe ed i m-le el
in es men s.
While he EU cohesion und e ec i eness li e a u e analyzed he impo ance o di e en cha ac e is ics o he egions (e.g.,
ins i u ional quali y, magni ude o he unds, human capi al, e c.) o he e ec i eness o EU unds, he ole o he mac oeconomic
unce ain y o he e ec i eness o he EU unds was no examined. O e all, unce ain y hampe s agg ega e mac oeconomic ac i i ies
and p i a e in es men and e u ns o p i a e in es men . The e o e, his pape aims o examine whe he he e u ns o he EU’s main
in es men a e a ec ed by mac oeconomic unce ain y. In he nex sec ion, we will p o ide he de ails o he da a and empi ical
s a egy.
3. Da a and empi ical speci ica ion
Ou dependen a iable is he egional g ow h o pe capi a G oss Domes ic P oduc Da a (GDP). We collec he NUTS-2 le el pe
capi a GDP da a om he Camb idge Econome ics’Eu opean egional da abase, which is accessible ia he Annual Regional Da abase
o he Eu opean Commission’s Di ec o a e Gene al o Regional and U ban Policy (Annual Regional Da abase, 2022). As highligh ed in
he p e ious sec ion, ou main a iables o in e es a e he egional dis ibu ion o he EU unds and coun y-base di e ences in
unce ain y. Fi s , EU unds’NUTS-2 le el dis ibu ion is ob ained om he His o ic EU paymen s da abase o he Eu opean Com-
mission (DG Regional Policy), which co e s he 1988–2018 pe iod (His o ic EU, 2022a). The da abase con ains se en di e en
3
Socio-economic de elopmen le els o he egions a e measu ed wi h he social il e index, which measu es he s uc u al socio-economic
condi ions o he de elopmen o a well- unc ioning egion (see Rod íguez-Pose (1999) and C escenzi and Giua (2016) o he de ails o he so-
cial il e index). Te i o ial capi al encompasses a ious componen s such as human, c ea i e, cul u al, and ins i u ional capi al le els, among many
o he elemen s (see Table 1 o Mo e a (2020) o he lis o ac o s used o measu ing e i o ial capi al).
M. Pina and B.C. Ka ahasan
The Jou nal o Economic Asymme ies 30 (2024) e00382
4
domains: Cohesion Fund (CF), Eu opean Ag icul u al Fund o Ru al De elopmen (EAFRD), Eu opean Ma i ime and Fishe ies Fund
(EMFF), Eu opean Regional De elopmen Fund (ERDF), Eu opean Social Fund (ESF), Fund o Eu opean aid o he mos dep i ed
(FEAD) and You h employmen ini ia i e (YEI).
4
Ou baseline models use he o al unds alloca ed o each egion.
5
Fig. 1 p o ides he
spa ial dis ibu ion o he EU unds o selec ed yea s o ou sample. I is clea ha he co e EU egions ecei e he lowes amoun o EU
unds. In line wi h he cen al heme o he Cohesion Policy, pe iphe al egions o he coun ies ha became membe s o he EU in
di e en enla gemen p ocesses ecei e he highes p opo ion o he EU unds. Du ing he 1990s, mos o he unds a e dis ibu ed o
he sou he n egions o he Medi e anean coun ies. A e he Cen al and Eas e n Eu ope (CEE) enla gemen p ocess, we also
obse ed ha egions o he CEE coun ies s a ed o ecei e high amoun s o unding om he EU.
Second, o accoun o he unce ain y, we use he Wo ld Unce ain y Index (WUI) (Ahi e al., 2022). No e ha ou measu e o
unce ain y is a ailable a he coun y le el o he 1952–2022 pe iod.
6
The e o e, we ma ch he NUTS-2 le el da a wi h he
coun y-based unce ain y indica o . This unce ain y index elies on a single sou ce wi h speci ic economic and poli ical co e age,
hus inc easing he accu acy and consis ency o he index compu a ion and allowing c oss-coun y compa ison. The index is ob ained
by coun ing he numbe o unce ain y- ela ed wo ds in he qua e ly coun y epo s o he Economis In elligence Uni (EIU), which
was hen scaled by he o al numbe o wo ds in each espec i e epo . O e all, a highe alue in he index sugges s ha he e has been
a highe numbe o unce ain y- ela ed wo ds in he epo , sugges ing a highe le el o unce ain y in his coun y. Since i s i s
in oduc ion, he index has been widely used o e alua e he ole o unce ain y in explaining di e en socioeconomic concep s by he
li e a u e (see e.g., Choi e al., 2023;Gozgo , 2022;Gozgo e al., 2019;Nguyen e al., 2022;Nguyen &Lee, 2021;Ogbonna e al.,
2022;Wu e al., 2022;Zhang e al., 2023).
Ano he unce ain y index ha has been used ex ensi ely by he exis ing li e a u e is economic policy unce ain y (see Bake e al.
(2016) o he cons uc ion o he index and Al-Thaqeb and Algha abali (2019) o a li e a u e e iew on he use o economic policy
unce ain y). WUI di e s om economic policy unce ain y (EPU) in h ee ways (see Ahi e al. (2022) o a de ailed discussion). While
EPU elies on a la ge se o newspape s o cons uc an unce ain y index, WUI only elies on he EIU epo s, which allow
Fig. 1. Geog aphical e olu ion o he EU unds.
Fig. 2. His o ical e olu ion o he unce ain y index o he EU coun ies.
Sou ce: Au ho s’own calcula ions based on Ahi e al. (2022).
4
See he obus ness sub-sec ion 4.3 o al e na i e analyses whe e we only use indi idual unds (e.g. ERDF and ESF).
5
No e ha we use he modeled annual expendi u es o con ol o he EU unds ecei ed by he egions. This has been ecommended and dis-
cussed in he me hodology o he da a se . De ails can be seen ia h ps://cohesionda a.ec.eu opa.eu/O he /His o ic-EU-paymen s- egionalised-and-
modelled/ c55-7ys (las accessed on he 12.12.2022).
6
Among di e en e sions o he WUI, we use he h ee qua e mo ing a e age o he WUI.
M. Pina and B.C. Ka ahasan
The Jou nal o Economic Asymme ies 30 (2024) e00382
5
compa abili y ac oss coun ies. Secondly, while he equency o he WUI is qua e ly, he EPU index p o ides mon hly unce ain y
indices. Since ou analyses ely on yea ly da a, he equency o he da a se does no impose any limi a ions. Finally, EPU only p o ides
an unce ain y index o 22 coun ies; WUI o e s unce ain y indices o 143 coun ies. In pa icula , based on he applica ion a ea o
his pape , EPU only o e s an unce ain y index o 7 EU coun ies (i.e., F ance, Ge many, G eece, I eland, I aly, Spain and Sweden),
bu WUI p o ides in o ma ion abou he unce ain y o 23 EU coun ies wi h he excep ions o Cyp us, Es onia, Luxembou g and Mal a.
The e o e, ou analyses ely on he WUI due o a la ge EU coun y co e age.
In Fig. 2, we ske ch he his o ical e olu ion o he unce ain y index o he EU coun ies. O e all, he e is a endency o ising
unce ain y o he whole se o coun ies. No ably, unce ain y is no me ely a de elopmen al phenomenon. While some ela i ely less
de eloped EU coun ies (e.g., Bulga ia and Romania) wi nessed a sha p inc ease in unce ain y, o he de eloped coun ies, such as he
UK and Ge many, also expe ienced a apid inc ease in unce ain y du ing he las decades. Meanwhile, no he n coun ies like Finland
and Sweden wi ness ela i ely less change in hei unce ain y le els. These desc ip i e indings con i m he unce ain y he e ogenei y
ac oss he EU membe s a es.
Finally, we also collec da a on a se o con ol a iables o econome ic analyses. Ou con ol a iables a e employmen a e,
capi al pe labo , pe capi a g oss alue added in indus ial p oduc ion, popula ion densi y, and sha e o employmen wi h e ia y
educa ion. Da a o con ol a iables a e also collec ed a he NUTS-2 le el (ARDECO , 2022). Ou o e all da a o ms an unbalanced
panel o he pe iod o 1990–2018. Desc ip i e s a is ics o all a iables a e p o ided in Table 1.
Ou main objec i e is o assess he impac o EU unds and economic unce ain y on he dis ibu ion o pe capi a GDP g ow h ac oss
he EU egions. Mo eo e , we a e also in e es ed in he po en ial in e play be ween EU unds and economic unce ain y. We a gue ha
economic unce ain y can dec ease he e ec i eness o EU unds. To accoun o hese issues, we employ he ollowing augmen ed
panel ixed e ec model:
Δln (y)i, =βΔln (y)i, −1+δZ +θ1lnEUi, +θ2(lnEUi, )2+γZ ln EUi, +φXi, +
π
+
τ
i+
ε
i (1)
whe e iand ep esen egion and ime, espec i ely; yis he pe capi a GDP; Zis he unce ain y index; EU is he pe capi a EU unds; X
is a se o con ol a iables as in oduced in he p e ious sub-sec ion;
π
and
τ
ia e he ime and c oss-sec ion ixed e ec s ha con ol
o he na ional business cycles’e ec s and ime-in a ian egional he e ogenei ies, espec i ely. We also inco po a e he squa e o he
EU o cap u e he po en ial non-linea e ec s o he EU unds. The main idea o inco po a ing he non-linea i y s ems om he po-
en ial asymme ic in luence o he unds o he ecei ing coun ies. In o he wo ds, we a e conce ned abou he dec easing e u ns o
Cohesion Policy unds and include a non-linea e m in ou empi ical s a egy (see Becke e al., 2012;Ce qua &Pelleg ini, 2018;Di
Ca aldo &Monas i io is, 2020 o de ails). Mo eo e , o es he main hypo hesis o he pape , we also include an in e ac ion e m
(Z EUi, ).Finally,
ε
i is he iden ically and independen ly dis ibu ed esiduals.
Wi h he excep ion o he unce ain y index, all a iables a e collec ed a he NUTS-2 le el. As highligh ed in he p e ious sub-
sec ion, we me ge he coun y-based unce ain y index wi h he NUTS-2 le el egional da a se in ou analyses. Also, no e ha we
clus e he s anda d e o s a he NUTS-2 le el o all o he analyses ca ied ou in he pape . In ou empi ical se up, we i s es ima e
uncondi ional models by dis ega ding he o he po en ial ac o s (X) ha can likely in luence egional di e ences in pe capi a GDP.
Nex , we augmen ou unde s anding and es ima e condi ional models by conside ing hese addi ional ac o s. Finally, we p o ide
esul s o he panel ixed e ec models wi h only egional ixed e ec s (one-way) and hen wi h egion and yea ixed e ec s ( wo-
way).
4. Empi ical esul s
4.1. Baseline esul s
To in es iga e he impac o EU unds and unce ain y on economic g ow h, we s a by es ima ing uncondi ional models. Ou i s
objec i e is o assess he sepa a e impac o EU unds and unce ain y on he egional dis ibu ion o economic g ow h ac oss he EU
egions. Second, we a e cen ally in e es ed in he po en ial in e play be ween EU unds and mac oeconomic unce ain y as we expec
ha i dec eases he e ec i eness o he EU unds. While doing his, we also inco po a e he non-linea e ec s o he EU unds. We also
supply esul s wi h one-way ixed e ec s (c oss-sec ion ixed e ec s) and wo-way ixed e ec s (c oss-sec ion and ime ixed e ec s).
Resul s a e gi en in Table 2.
Table 1
Desc ip i e s a is ics.
Obs. Mean S de . Min. Max.
Pc unds 5939 95.473 141.938 0.001 1241.831
G ow h a e o pe capi a GDP 5719 0.015 0.035 −0.221 0.488
Unce ain y Index 5939 0.055 0.035 0.000 0.188
Employmen Ra e 5834 0.438 0.074 0.272 0.749
Capi al pe wo ke (in ln) 5834 9.295 0.568 6.301 10.749
Indus ial alue added pe capi a (in ln) 5834 8.268 0.680 5.581 9.949
Popula ion densi y (in ln) 5158 5.009 1.176 1.128 8.919
Te ia y Educa ion 4203 0.245 0.090 0.051 0.622
M. Pina and B.C. Ka ahasan

The Jou nal o Economic Asymme ies 30 (2024) e00382
6
Table 2
Impac o he EU unds and mac oeconomic unce ain y on egional g ow h (Uncondi ional models).
(1) (2) (3) (4) (5) (6) (7) (8)
Pe capi a GDP ( -1) −0.0778
a
−0.0952
a
−0.0739
a
−0.0952
a
−0.0725
a
−0.0980
a
−0.0735
a
−0.0985
a
(0.0065) (0.0124) (0.0068) (0.0124) (0.0070) (0.0127) (0.0069) (0.0126)
PC EU unds 0.0017
a
0.0038
a
0.0016
a
0.0037
a
0.0023
a
0.0028
a
0.0031
a
0.0033
a
(0.0006) (0.0007) (0.0006) (0.0007) (0.0007) (0.0009) (0.0008) (0.0009)
PC EU unds_sq . −0.0589
a
0.0003
c
−0.0002 0.0003
c
(0.0123) (0.0002) (0.0002) (0.0002)
Unce ain y Index −0.0586
a
−0.0267
c
−0.0002 −0.0268
b
−0.0013 0.0089
(0.0122) (0.0136) (0.0002) (0.0136) (0.0298) (0.0286)
PC EU und
c
Unce ain y Index −0.0152
b
−0.0096
(0.0076) (0.0069)
Tes o join sign. (in e ac ion and PC EU unds) 8.34 6.83
[0.00] [0.00]
Tes o join sign. (in e ac ion and Unce ain y) 12.01 2.87
[0.00] [0.05]
Obse a ions 5719 5719 5719 5719 5719 5719 5719 5719
R-squa ed 0.0735 0.3207 0.0768 0.3212 0.0772 0.3221 0.0778 0.3223
Numbe o egions 220 220 220 220 220 220 220 220
Regional con ols No No No No No No No No
Yea FE No Yes No Yes No Yes No Yes
C oss-sec ion FE Yes Yes Yes Yes Yes Yes Yes Yes
No es: Clus e ed (NUTS-2) s anda d e o s in pa en heses.
a
p<0.01.
b
p<0.05.
c
p<0.1.
Table 3
Impac o he EU unds and mac oeconomic unce ain y on egional g ow h (Condi ional models).
(1) (2) (3) (4) (5) (6) (7) (8)
Pe capi a GDP ( -1) −0.2130
a
−0.2035
a
−0.2145
a
−0.2049
a
−0.2807
a
−0.2059
a
−0.2823
a
−0.2070
a
(0.0214) (0.0291) (0.0217) (0.0295) (0.0393) (0.0328) (0.0403) (0.0333)
PC EU unds 0.0109
a
0.0057
a
0.0120
a
0.0069
a
0.0154
a
0.0126
a
0.0164
a
0.0136
a
(0.0016) (0.0013) (0.0018) (0.0015) (0.0042) (0.0040) (0.0045) (0.0043)
PC EU unds_sq . −0.0016
a
−0.0007
a
−0.0016
a
−0.0007
a
−0.0025
a
−0.0017
a
−0.0025
a
−0.0017
a
(0.0002) (0.0002) (0.0002) (0.0002) (0.0005) (0.0005) (0.0005) (0.0005)
Unce ain y Index −0.0155 −0.0275
b
0.0604 0.0616
c
−0.0674
a
−0.0340
b
0.0055 0.0364
(0.0137) (0.0127) (0.0421) (0.0361) (0.0166) (0.0144) (0.0704) (0.0583)
Employmen a e 0.1816
a
0.1536
a
0.1790
a
0.1509
a
0.2469
a
0.1915
a
0.2451
a
0.1908
a
(0.0345) (0.0314) (0.0345) (0.0314) (0.0507) (0.0457) (0.0508) (0.0457)
Capi al pe wo ke (in ln) 0.0107
b
0.0131
a
0.0099
b
0.0122
a
0.0214
a
0.0124
b
0.0206
a
0.0114
c
(0.0042) (0.0044) (0.0042) (0.0045) (0.0058) (0.0057) (0.0058) (0.0059)
Indus ial alue added pe capi a (in ln) 0.1125
a
0.0815
a
0.1133
a
0.0825
a
0.1270
a
0.0865
a
0.1274
a
0.0870
a
(0.0108) (0.0109) (0.0109) (0.0110) (0.0162) (0.0134) (0.0164) (0.0135)
Popula ion densi y (in ln) −0.0198 −0.0597
a
−0.0206 −0.0607
a
−0.1102
b
−0.0706
b
−0.1129
b
−0.0729
b
(0.0251) (0.0216) (0.0251) (0.0216) (0.0441) (0.0342) (0.0448) (0.0347)
PC EU und
c
Unce ain y Index −0.0192
c
−0.0225
a
−0.0173 −0.0164
(0.0098) (0.0085) (0.0161) (0.0132)
Te ia y Educa ion 0.2087
a
0.1247
a
0.2079
a
0.1281
a
(0.0311) (0.0347) (0.0310) (0.0351)
Tes o join sign. (in e ac ion and PC EU unds) 24.06 10.81 6.69 4.97
[0.00] [0.00] [0.00] [0.01]
Tes o join sign. (in e ac ion and Unce ain y 2.79 6.01 8.89 3.57
[0.06] [0.00] [0.00] [0.03]
Obse a ions 4676 4676 4676 4676 3534 3534 3534 3534
R-squa ed 0.2476 0.4141 0.2484 0.4152 0.3205 0.4583 0.3211 0.4587
Numbe o egions 196 196 196 196 196 196 196 196
Regional con ols No No No No Yes Yes Yes Yes
Yea FE No Yes No Yes No Yes No Yes
C oss-sec ion FE Yes Yes Yes Yes Yes Yes Yes Yes
No es: Clus e ed (NUTS-2) s anda d e o s in pa en heses.
a
p<0.01.
b
p<0.05.
c
p<0.1.
M. Pina and B.C. Ka ahasan
The Jou nal o Economic Asymme ies 30 (2024) e00382
7
Columns (1) o (4) indica e ha ega dless o he ixed e ec s speci ica ion, hose egions ha ecei e mo e EU unds ealize highe
economic g ow h. This con i ms he p io li e a u e on he posi i e ole o he EU cohesion policy in s imula ing egional g ow h and
cohesion. On he o he hand, coun y-based unce ain y has a de imen al impac on egional economic g ow h (Columns (3) and (4)).
Regions belonging o coun ies wi h highe mac oeconomic unce ain y a e ealizing slowe economic g ow h, which limi s hei
ansi ion o he EU a e age. In line wi h he con e gence amewo k, lagged pe capi a GDP nega i ely impac s egional g ow h. We
also add he po en ial non-linea impac o he EU unds and ind a nega i e e ec , which con i ms he a gumen ha he e ec i eness
o he EU unds declines a e a ce ain h eshold le el (Columns (5) and (6)). Finally, we add an in e ac ion e m ha aims o assess he
change in he impac o EU unds based on he unce ain y index o he coun ies (Columns (7) and (8)). No e ha he in e ac ion e m
is nega i e, albei only signi ican o he one-way ixed e ec model. Howe e , EU unds and unce ain y index a e join ly signi ican
wi h he in e ac ion e m o bo h speci ica ions. The e o e, he nega i e impac o he in e ac ion e m alida es ha ising mac o-
economic unce ain y dec eases he e u ns o he EU unds usage.
Nex , we es ima e he condi ional models and p o ide he esul s in Table 3. These models include egional con ols, he non-
linea i y o he EU unds and he in e ac ion be ween EU unds and he unce ain y index. As human capi al da a can be ob ained
o a sho e ime in e al, we es ima e he condi ional models wi hou (Columns (1) o (4)) and wi h (Columns (5) o (8)) e ia y
educa ion a iable. Once again, we es ima e one-way and wo-way models i e a i ely o show he le el o sensi i i y o he po en ial
impac o na ionwide business cycles and he ime-in a ian egional he e ogenei ies. Rega dless o he speci ica ion, ou esul s show
ha EU unds posi i ely and signi ican ly in luence he egional economic g ow h o he EU egions. Once again, he lagged impac o
pe capi a GDP is in line wi h he p io indings and heo e ical expec a ions. Rema kably, he squa e o he EU unds is also signi ican
ye nega i ely signed, which suppo s he iew o dec easing und p oduc i i y a e a ce ain le el.
On he o he hand, he unce ain y index has a signi ican nega i e impac on egional g ow h only o he wo-way ixed e ec
condi ional models epo ed in columns (2), (5) and (6). Howe e , once we also include he in e ac ion e m (Columns (3), (4) and (7),
(8)), he unce ain y index becomes posi i e bu no signi ican a con en ional signi icance le els. Rema kably, he in e ac ion e m is
nega i e, ye only signi ican o he models epo ed in columns (3) and (4). S ill, join signi icance es esul s show ha EU unds and
he unce ain y index a e join ly signi ican wi h he in e ac ion e m o all o he augmen ed models. This con i ms ha he impac o
EU unds declines o egions belonging o coun ies wi h highe unce ain y. These indings om he condi ional models alida e ou
main a gumen ha ising mac oeconomic unce ain y dec eases he e ec i eness o he EU unds e en a e con olling o a hos o
o he ac o s ha can in luence egional g ow h ac oss he EU egions.
Table 4
Impac o he EU unds and mac oeconomic unce ain y on egional g ow h (Robus ness analyses o ERD Funds).
(1) (2) (3) (4) (5) (6) (7) (8)
Pe capi a GDP ( -1) −0.2211
a
−0.2504
a
−0.2223
a
−0.2515
a
−0.3535
a
−0.2715
a
−0.3558
a
−0.2722
a
(0.0146) (0.0203) (0.0148) (0.0204) (0.0231) (0.0222) (0.0233) (0.0223)
PC EU unds 0.0077
a
0.0049
a
0.0088
a
0.0058
a
0.0046
a
0.0055
a
0.0059
a
0.0060
a
(0.0012) (0.0010) (0.0014) (0.0011) (0.0017) (0.0015) (0.0019) (0.0016)
PC EU unds_sq . −0.0013
a
−0.0005
b
−0.0014
a
−0.0005
b
−0.0010
a
−0.0007
b
−0.0010
a
−0.0007
b
(0.0002) (0.0002) (0.0002) (0.0002) (0.0003) (0.0003) (0.0003) (0.0003)
Unce ain y Index −0.0042 −0.0326
b
0.0470 0.0112 −0.0555
a
−0.0394
a
0.0068 −0.0131
(0.0131) (0.0131) (0.0303) (0.0267) (0.0156) (0.0148) (0.0368) (0.0362)
Employmen a e 0.1897
a
0.1630
a
0.1871
a
0.1607
a
0.2373
a
0.1550
a
0.2336
a
0.1540
a
(0.0334) (0.0304) (0.0333) (0.0303) (0.0431) (0.0402) (0.0428) (0.0400)
Capi al pe wo ke (in ln) 0.0155
a
0.0216
a
0.0146
a
0.0209
a
0.0301
a
0.0238
a
0.0291
a
0.0232
a
(0.0041) (0.0042) (0.0042) (0.0043) (0.0054) (0.0055) (0.0055) (0.0058)
Indus ial alue added pe capi a (in ln) 0.1155
a
0.0896
a
0.1162
a
0.0904
a
0.1470
a
0.1015
a
0.1475
a
0.1018
a
(0.0094) (0.0095) (0.0094) (0.0095) (0.0123) (0.0112) (0.0123) (0.0112)
Popula ion densi y (in ln) −0.0168 −0.0780
a
−0.0176 −0.0790
a
−0.1488
a
−0.1133
a
−0.1539
a
−0.1154
a
(0.0261) (0.0234) (0.0261) (0.0234) (0.0466) (0.0353) (0.0472) (0.0359)
PC EU und
c
Unce ain y Index −0.0177
b
−0.0149
b
−0.0206
c
−0.0084
(0.0089) (0.0075) (0.0117) (0.0101)
Te ia y Educa ion 0.2735
a
0.1232
a
0.2730
a
0.1251
a
(0.0258) (0.0333) (0.0259) (0.0341)
Tes o join sign. (in e ac ion and PC EU unds) 19.97 12.91 4.96 7.3
[0.00] [0.00] [0.01] [0.00]
Tes o join sign. (in e ac ion and Unce ain y 2.11 5.68 7.02 4.18
[0.12] [0.00] [0.00] [0.01]
Obse a ions 4524 4524 4524 4524 3392 3392 3392 3392
R-squa ed 0.2491 0.4397 0.2501 0.4403 0.3683 0.4934 0.3696 0.4936
Numbe o egions 196 196 196 196 196 196 196 196
Regional con ols Yes Yes Yes Yes Yes Yes Yes Yes
Yea FE No Yes No Yes No Yes No Yes
C oss-sec ion FE Yes Yes Yes Yes Yes Yes Yes Yes
No es: Clus e ed (NUTS-2) s anda d e o s in pa en heses.
a
p<0.01.
b
p<0.05.
c
p<0.1.
M. Pina and B.C. Ka ahasan
The Jou nal o Economic Asymme ies 30 (2024) e00382
8
O e all, EU unds a e an impo an dimension o cohesion. Those egions ha ecei e highe EU unds a e ealizing high pe capi a
GDP g ow h e en a e con olling o o he ac o s ha can a ec egional economic g ow h. On he o he hand, we also ind ou ha
mac oeconomic unce ain y ma e s. Those egions belonging o coun ies wi h highe unce ain y a e ealizing lowe economic
g ow h. In e es ingly, once we inco po a e he in e ac ion e m, he di ec impac o he unce ain y anishes. S ill, ou esul s show
ha unce ain y has he po en ial o in luence egional g ow h as i dec eases he e ec i eness o he EU unds o he hos egions. This
ansla es in o he ac ha he mac oeconomic condi ions o coun ies in luence he e u ns o he EU unds ecei ed a he local le el.
Finally, ou indings o he con ol a iables a e in line wi h he p io indings. Employmen a e, capi al pe wo ke , pe capi a
indus ial alue-added and sha e o employmen wi h e ia y educa ion posi i ely a ec egional pe capi a GDP g ow h. On he
con a y, lagged pe capi a income and popula ion densi y nega i ely in luence egional economic g ow h.
The p io se o indings shows ha cohesion policy and egional unds can dec ease e i o ial dispa i ies by spu ing g ow h in
ela i ely less de eloped egions o he EU. Howe e , ou esul s also poin ou ha ising mac oeconomic unce ain y a he coun y
le el has local e lec ions as i dec eases he e u ns o he EU unds a he egional le el. In his sub-sec ion, we aim o p o ide
addi ional e idence ha hese esul s a e obus o o he dimensions. Fi s , we es ima e he condi ional models by conside ing wo
speci ic cohesion und ca ego ies o he cohesion policy. We eplica e he p io analyses o he ERD and ES unds sepa a ely. Second,
we g oup he EU egions based on he Objec i e 1 c i e ia o he Cohesion Policy and check whe he ou conce n holds ac oss di e en
se s o a eas belonging o di e en de elopmen le els.
Ou i s se o obus ness esul s a e p o ided in Tables 4 and 5. We ind ou ha ce ain EU unds (ERD and ES, espec i ely) boos
egional g ow h wi hin he EU e i o y. Once again, non-linea e ec s show ha he posi i e e ec o he ERD and ES unds u ns
nega i e a e a ce ain le el o he hos egions. Addi ionally, he impac o he pe capi a GDP and he o he egional con ols on
economic g ow h aligns wi h he p e ious indings. Fo he wo-way models wi h no in e ac ion e m, we obse e a s onge e ec o
he unce ain y index once we conside he ES unds in Table 5. Howe e , once we conside he po en ial in e play be ween mac-
oeconomic unce ain y and he EU unds, his e ec anishes o bo h ERD and ES unds (Tables 4 and 5). Mo eo e , simila o ea lie
indings, he in e ac ion e m is no signi ican o he wo-way models. Ye , he in e ac ion e m is nega i e and join ly signi ican wi h
he EU unds and unce ain y. These esul s alida e once again ha he posi i e impac o he ERD and ES unds declines wi h ising
coun y-wise mac oeconomic unce ain y.
A second check we ca y ou is ela ed o he changing na u e o EU unds and he in e play be ween unds and mac oeconomic
unce ain y once egional he e ogenei y is conside ed. We g oup he EU egions based on he objec i e c i e ia o he EU cohesion
Table 5
Impac o he EU unds and mac oeconomic unce ain y on egional g ow h (Robus ness analyses o ES Funds).
(1) (2) (3) (4) (5) (6) (7) (8)
Pe capi a GDP ( -1) −0.2670
a
−0.2417
a
−0.2728
a
−0.2425
a
−0.3426
a
−0.2516
a
−0.3460
a
−0.2527
a
(0.0222) (0.0238) (0.0228) (0.0239) (0.0275) (0.0236) (0.0279) (0.0238)
PC EU unds 0.0025 0.0041
a
0.0068
a
0.0049
a
0.0027 0.0040
a
0.0062
a
0.0051
a
(0.0019) (0.0015) (0.0022) (0.0018) (0.0019) (0.0015) (0.0023) (0.0018)
PC EU unds_sq . −0.0012
a
−0.0009
a
−0.0013
a
−0.0009
a
−0.0011
a
−0.0009
a
−0.0012
a
−0.0010
a
(0.0004) (0.0003) (0.0004) (0.0003) (0.0004) (0.0003) (0.0004) (0.0003)
Unce ain y Index 0.0021 −0.0411
a
0.1531
a
−0.0117 −0.0455
a
−0.0386
a
0.0769
b
−0.0006
(0.0144) (0.0138) (0.0420) (0.0381) (0.0144) (0.0142) (0.0393) (0.0380)
Employmen a e 0.1387
a
0.1008
a
0.1377
a
0.1009
a
0.2336
a
0.1412
a
0.2312
a
0.1417
a
(0.0408) (0.0351) (0.0403) (0.0351) (0.0434) (0.0384) (0.0428) (0.0383)
Capi al pe wo ke (in ln) 0.0144
a
0.0264
a
0.0128
a
0.0260
a
0.0307
a
0.0264
a
0.0290
a
0.0258
a
(0.0046) (0.0042) (0.0045) (0.0042) (0.0049) (0.0043) (0.0048) (0.0043)
Indus ial alue added pe capi a (in ln) 0.1449
a
0.0948
a
0.1462
a
0.0952
a
0.1438
a
0.0956
a
0.1449
a
0.0962
a
(0.0126) (0.0112) (0.0125) (0.0112) (0.0129) (0.0111) (0.0129) (0.0112)
Popula ion densi y (in ln) −0.0140 −0.0767
a
−0.0213 −0.0776
a
−0.1277
a
−0.0933
a
−0.1318
a
−0.0945
a
(0.0363) (0.0269) (0.0362) (0.0267) (0.0377) (0.0279) (0.0374) (0.0277)
PC EU und
b
Unce ain y Index −0.0545
a
−0.0105 −0.0440
a
−0.0136
(0.0139) (0.0122) (0.0134) (0.0122)
Te ia y Educa ion 0.2675
a
0.1101
a
0.2635
a
0.1110
a
(0.0278) (0.0300) (0.0278) (0.0301)
Tes o join sign. (in e ac ion and PC EU unds) 8.18 4.01 5.97 3.97
[0.00] [0.02] [0.00] [0.02]
Tes o join sign. (in e ac ion and Unce ain y 7.66 5.15 9.85 4.66
[0.00] [0.00] [0.00] [0.01]
Obse a ions 3318 3318 3318 3318 3281 3281 3281 3281
R-squa ed 0.3223 0.5286 0.3273 0.5288 0.3797 0.5314 0.3829 0.5317
Numbe o egions 196 196 196 196 196 196 196 196
Regional con ols Yes Yes Yes Yes Yes Yes Yes Yes
Yea FE No Yes No Yes No Yes No Yes
C oss-sec ion FE Yes Yes Yes Yes Yes Yes Yes Yes
No es: Clus e ed (NUTS-2) s anda d e o s in pa en heses.
**p <0.05.
a
p<0.01.
b
p<0.1.
M. Pina and B.C. Ka ahasan
The Jou nal o Economic Asymme ies 30 (2024) e00382
9
policy. Objec i e 1 g oup consis s o he egions wi h a pe capi a GDP below 75% o he a e age pe capi a GDP o he EU. We es ima e
he augmen ed models o hose egions assigned in he Objec i e 1 g oup in Table 6 and he non-Objec i e 1 g oup in Table 7. We ind
ou ha he posi i e impac o EU unds is in e es ingly weake o he Objec i e 1 egions. This highligh s he po en ial ha he e is
s ill mo e oom o imp o ing he sub-channels ha will expand he impac o he cohesion policy o he less de eloped EU egions.
Mo e cen ally, we ind ou ha he in e ac ion e m is nega i e and s ongly signi ican o he wo-way models. No e ha he
in e ac ion e ms a e nega i e bu no signi ican o he wo-way ixed e ec models o he non-Objec i e 1 egions. In any case, join
signi icance es esul s indica e ha in e ac ion e m and EU unds a e join ly signi ican . O e all hese esul s con i m ha mac o-
economic unce ain y dec eases he e ec i eness o he EU unds o EU egions ega dless o hei de elopmen le el.
5. Conclusion
The e ec o he cohesion policy on egional g ow h has been a long-las ing deba e o unde s anding he success o he EU
in eg a ion since he ea ly policy implemen a ions. While schola ly li e a u e has con lic ing esul s on he po en ial con ibu ion o
he cohesion policy o egional g ow h, he e is a policy consensus on he e iciency o he cohesion policy o boos e i o ial in e-
g a ion. Meanwhile, he e is g owing in e es among he science communi y in explo ing he po en ial mode a ing e ec s and con-
di ions o he sound wo king o he cohesion policy. In his s udy, we explo e an unin es iga ed a ea and examine whe he
mac oeconomic unce ain y a he coun y le el causes any e iciency loss in he applicabili y o he EU cohesion policy. O e all, we
ind ha ising mac oeconomic unce ain y di e s he long- e m g ow h ajec o ies o he egions and dec eases he e iciency o he
EU unds ecei ed by he hos egions. In o he wo ds, egions loca ed in coun ies wi h highe unce ain y bene i less om he EU
unds p o ided unde he cohesion policy amewo k. In e u n, hese egions all behind he o he s in e ms o egional g ow h and
de elopmen .
Ou pape has a ious policy implica ions. Fi s , coun y-le el unce ain y makes he EU unds less e ec i e. The e o e, policy-
make s esponsible o he alloca ion o unds could alloca e esou ces ac oss he egions based on he unce ain y le els o he
coun ies o ha e a mo e e ec i e alloca ion o unds o p omo e economic g ow h. In o he wo ds, some o he unds could be
condi ional on coun y-le el unce ain y o inc ease he e ec i eness o he unds. Second, coun ies wi h mo e egional dispa i y
p oblems should no neglec he o e all mac oeconomic condi ions. O he wise, po en ial nega i e ex e nali ies will limi he impac o
he EU cohesion policy a he local le el. The e o e, coun ies ha a e candida es o ecei e highe amoun s o EU unds mus
Table 6
Impac o he EU unds and mac oeconomic unce ain y on egional g ow h (Robus ness analyses o Objec i e 1 Regions).
(1) (2) (3) (4) (5) (6) (7) (8)
Pe capi a GDP ( -1) −0.2100
a
−0.1720
a
−0.2125
a
−0.1730
a
−0.2515
a
−0.1876
a
−0.2528
a
−0.1889
a
(0.0298) (0.0324) (0.0303) (0.0324) (0.0428) (0.0369) (0.0432) (0.0370)
PC EU unds 0.0112
b
0.0055 0.0139
a
0.0085
c
0.0122
b
0.0067 0.0136
b
0.0091
c
(0.0045) (0.0044) (0.0046) (0.0045) (0.0051) (0.0047) (0.0053) (0.0049)
PC EU unds_sq . −0.0018
a
−0.0003 −0.0016
a
−0.0003 −0.0022
a
−0.0006 −0.0021
a
−0.0005
(0.0005) (0.0006) (0.0005) (0.0006) (0.0005) (0.0006) (0.0005) (0.0006)
Unce ain y Index 0.0322 −0.0000 0.3893
a
0.2867
a
0.0319 0.0220 0.2359
c
0.2727
b
(0.0252) (0.0271) (0.1151) (0.1061) (0.0274) (0.0267) (0.1279) (0.1108)
Employmen a e 0.2239
a
0.1346
b
0.2230
a
0.1348
b
0.3479
a
0.2056
a
0.3456
a
0.2040
a
(0.0675) (0.0612) (0.0671) (0.0604) (0.0818) (0.0738) (0.0818) (0.0734)
Capi al pe wo ke (in ln) 0.0097
c
0.0105
c
0.0067 0.0078 0.0158
b
0.0087 0.0137
c
0.0063
(0.0049) (0.0056) (0.0049) (0.0057) (0.0076) (0.0076) (0.0078) (0.0077)
Indus ial alue added pe capi a (in ln) 0.1080
a
0.0738
a
0.1095
a
0.0756
a
0.1187
a
0.0867
a
0.1200
a
0.0885
a
(0.0146) (0.0133) (0.0148) (0.0133) (0.0213) (0.0180) (0.0216) (0.0181)
Popula ion densi y (in ln) −0.0648
c
−0.0092 −0.0635
c
−0.0085 −0.1257
b
−0.0620
c
−0.1196
b
−0.0534
(0.0367) (0.0363) (0.0368) (0.0365) (0.0542) (0.0371) (0.0547) (0.0363)
PC EU und
c
Unce ain y Index −0.0713
a
−0.0577
a
−0.0404 −0.0502
b
(0.0227) (0.0204) (0.0254) (0.0214)
Te ia y Educa ion 0.1880
a
0.1554
b
0.1845
a
0.1503
b
(0.0468) (0.0694) (0.0469) (0.0691)
Tes o join sign. (in e ac ion and PC EU unds) 7.6 4.75 3.56 3.45
[0.00] [0.01] [0.03] [0.04]
Tes o join sign. (in e ac ion and Unce ain y 6.03 4.03 2.2 3.05
[0.00] [0.02] [0.12] [0.05]
Obse a ions 1467 1467 1467 1467 1185 1185 1185 1185
R-squa ed 0.2523 0.4350 0.2577 0.4383 0.3275 0.4658 0.3295 0.4687
Numbe o egions 86 86 86 86 77 77 77 77
Regional con ols Yes Yes Yes Yes Yes Yes Yes Yes
Yea FE No Yes No Yes No Yes No Yes
C oss-sec ion FE Yes Yes Yes Yes Yes Yes Yes Yes
No es: Clus e ed (NUTS-2) s anda d e o s in pa en heses.
a
p<0.01.
b
p<0.05.
c
p<0.1.
M. Pina and B.C. Ka ahasan