Boulevard of Broken Dreams. The End of the EU Funding (1997: Abruzzi, Italy)

28 Pages Posted: 10 Nov 2016

See all articles by Guglielmo Barone

Guglielmo Barone

University of Padova - Department of Economics and Management

Francesco David

Bank of Italy

Guido de Blasio

Bank of Italy

Date Written: July 21, 2016

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 a 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.

Keywords: EU cohesion policy, Regional growth, synthetic control method

JEL Classification: R11, O47

Suggested Citation

Barone, Guglielmo and David, Francesco and de Blasio, Guido, Boulevard of Broken Dreams. The End of the EU Funding (1997: Abruzzi, Italy) (July 21, 2016). Bank of Italy Temi di Discussione (Working Paper) No. 1071, Available at SSRN: https://ssrn.com/abstract=2867422 or http://dx.doi.org/10.2139/ssrn.2867422

Guglielmo Barone

University of Padova - Department of Economics and Management ( email )

Via del Santo 33
Padova, 35123
Italy

Francesco David

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Guido De Blasio (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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