Future of European funds in a regional economy: Andalusia 2014–2020

Abstract

Since the adhesion of Spain to the European Union, Andalusia has been catalogued as an Objective 1 region because its GDP was inferior to 75% of the community average. In this way, funds have contributed to the generation of regional GDP and reduced unemployment during these years, causing that levels exceed 75% with respect to average GDP per capita in the European Union. So, Andalusia will not be considered as one of the Objective 1 priority areas for European Regional Policy. With the changes in the region and the threat of an expected withdrawal of funds, this article proposes an analysis to explain the meaning of this withdrawal of European Funds in Andalusia in the period 2014–2020. With this aim, we develop a Dynamic Applied General Equilibrium Model that will assess the effects of the loss of this funding on the main regional economic indicators and under different simulation scenarios. The model will analyse the effect of economic policy actions on the economy, satisfying the requirements of welfare and technological feasibility when given some restrictions on available resources.

Keywords:

• social accounting matrix
• dynamic applied general equilibrium models
• regional economy
• European regional policy
• impact analysis

JEL Classification:

• E17
• C68

Notes

¹ The results obtained in the simulations made for a number of macromagnitudes, which are magnitudes based on the scenarios previously mentioned and where an annual constant growth rate of 0.8% has been established according to economic forecasts afforded by The Economist (2012) – Economist Intelligence Unit.