Where does the EU cohesion policy produce its benefits? A model analysis of the international spillovers generated by the policy

Abstract

In this paper, we investigate the macroeconomic effects of the 2007–2013 cohesion policy investments in the EU. First, we present a detailed overview of the EU budget and the contributions of the Member States for the specific policy under scrutiny. Then, we use a dynamic spatial general equilibrium model to assess the overall impact of the policy both in the short and the long run. Finally, we focus on the spatial spillovers generated by the policy programmes and highlight a number of policy-relevant findings with regard to the debate over the financing of the policy and the divide between its net contributors and net beneficiaries. Our main findings suggest that cohesion policy programmes have had a positive and significant impact on the economies of EU Member States and regions, particularly in the poorest regions of the EU. Spatial spillovers imply that the programmes implemented in the main beneficiaries of the policy also benefit its main contributors. For some of these Member States, spillovers constitute the main source of benefits from cohesion policy.