A new working paper, focusing on the macroeconomic effects of the 2007–2013 cohesion policy investments in the EU, has been released.
- 11 October 2021
A question keeps coming back in the discussions on how the benefits and the costs of the policy are shared among the Member States: what are the returns to the net contributors from the policy interventions in the net beneficiaries?
Cohesion policy is likely to produce important spatial spillovers, with the programmes implemented in a given region having an impact in the rest of the EU.
For instance, the economic activity generated by the interventions in the net beneficiaries may lead to an increase in disposable income and, therefore, in imports, some of which could originate from the net contributors. Interventions also increase the competitiveness of the recipients, thereby affecting the spatial distribution of business and factors of production (capital and workers) throughout EU territories.
This type of mechanism can have a considerable impact on the costs–benefits balance of the policy and, as a result, the net contribution or benefits of the Member States cannot be properly assessed by simply looking at the amounts they pour into, and receive from, the community budget.
However, quantifying such indirect effects of the policy is not a simple task and only a few analytical instruments can actually provide credible estimates. In this paper, we use a spatial dynamic computable general equilibrium model called RHOMOLO to analyse the spillovers associated with the EU cohesion policy for the 2007–2013 programming period.
The paper particularly focus on the extent to which the benefits of the interventions implemented in the net beneficiaries spread out to the net contributors. The results of the modelling simulations suggest that, in the medium to long run, there are substantial benefits originating in the regions targeted by the policy, which spread to the rest of the EU. This makes the interventions beneficial even for the territories that contribute the most to the financing of the interventions themselves.