Regional growth and absorption speed of EU funds: when time isn't money

This paper discusses the effects of European Union (EU) funds on gross domestic product growth by analysing the causal impact of regional absorption speed. The analysis is conducted using a regression discontinuity design approach with heterogeneous treatment on NUTS-2 regions during the period 2000-16. We show that faster absorption of EU funds in the Objective 1 regions, especially the Mediterranean ones, is associated with worse economic outcomes from the Objective 1 treatment. However, this pattern is not observed in the non-treated regions. Regarding policy implications, this study suggests that incentives to increase absorption speeds should be removed in Objective 1 regions.

Automated summary

This paper examines the impact of EU funds on gross domestic product growth by analyzing the causal relationship between regional absorption speed and economic outcomes. The study finds that faster absorption of EU funds in Objective 1 regions, particularly in the Mediterranean, is associated with worse economic outcomes. However, this pattern is not observed in non-treated regions. The study suggests removing incentives to increase absorption speeds in Objective 1 regions.