Cohesion Policy Meets Heterogeneous Firms
By: Fattorini, Loredana.
Contributor(s): Ghodsi, Mahdi | Rungi, Armando.
Material type:
BookSeries: wiiw Working Papers: 142Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 2018Description: 27 S., 8 Tables and 4 Figures, 30cm.Subject(s): firm performance | total factor productivity | cross-country analysis | convergence | regional policyCountries covered: European Unionwiiw Research Areas: International Trade, Competitiveness and FDI | Regional DevelopmentClassification: D22 | D24 | E23 | F15 | L25 Online resources: Click here to access online Summary: In this paper, we empirically test the effects of the EU’s ‘cohesion policy’ on the performance of 273,500 European manufacturing firms after combining regional policy data at NUTS 2 level with firm-level data. In a framework of heterogeneous firms and different absorptive capacity of regions, we show that the financing of ‘cohesion policy’ by the European Regional Development Fund (ERDF) aimed at direct investments in R&D correlates with an improvement of firms’ productivity in a region. Conversely, funding aimed at overall Business Support correlates with negative productivity growth rates. In both cases, we registered an asymmetric impact along the firms’ productivity distribution, where a stronger impact can be detected in the first quartile, i.e. less efficient firms in a region. We finally argue that considering the heterogeneity of firms allows a better assessment of the impact of ‘cohesion policy’ measures.
| Item type | Current library | Call number | Status | Date due | Barcode | |
|---|---|---|---|---|---|---|
| Paper | WIIW Library | 5.700/142 (Browse shelf(Opens below)) | Available | 1000010004451 |
In this paper, we empirically test the effects of the EU’s ‘cohesion policy’ on the performance of 273,500 European manufacturing firms after combining regional policy data at NUTS 2 level with firm-level data. In a framework of heterogeneous firms and different absorptive capacity of regions, we show that the financing of ‘cohesion policy’ by the European Regional Development Fund (ERDF) aimed at direct investments in R&D correlates with an improvement of firms’ productivity in a region. Conversely, funding aimed at overall Business Support correlates with negative productivity growth rates. In both cases, we registered an asymmetric impact along the firms’ productivity distribution, where a stronger impact can be detected in the first quartile, i.e. less efficient firms in a region. We finally argue that considering the heterogeneity of firms allows a better assessment of the impact of ‘cohesion policy’ measures.
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