https://orcid.org/0000-0001-5554-2841
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ABSTRACT
This paper analyses the effect of the macroeconomic efficiency of Cohesion Policy on within-country economic cohesion as reflected by various measures of sigma convergence by applying macroeconomic HERMIN models for the Czech, Polish and Slovak regions. The results reveal that from 2021 to 2027, Cohesion Policy will have a relatively small impact on within-country convergence. More importantly, Cohesion Policy seems to be doomed to fail in terms of reducing within-country disparities in the long run; that is, the structural differences among regional economies effectively prevent European Union support from narrowing the development gap between regions.
ACKNOWLEDGEMENTS
The authors are grateful for the valuable comments and suggestions made by two anonymous referees, and would like to acknowledge and thank John Bradley for his valuable comments throughout the writing process.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the authors.
Notes
1. A total of €198.6 billion out of €330.6 billion over the 2021–27 period is earmarked for less developed regions (European Commission, Citation2018).
2. In line with the treaty establishing the European Community, CP should not, of course, be limited to the reduction of income disparities, but should also involve unleashing regions’ untapped potentials.
3. Rodríguez-Pose (Citation2018) shows that territorial inequality along with a persistent lack of opportunities and the incapacity or unwillingness to relocate are the main drivers behind territorially based populism.
4. Sigma convergence is defined as a reduction in the dispersion of the levels of gross domestic product (GDP) per capita across regional economies within a country.
5. For a critical review of applying the growth regression approach to modelling policy impacts, see Rodrik (Citation2005).
6. The detailed methodology used to calculate CP funding projections can be obtained from the authors upon request.
7. The same set of sigma convergence measures applied in Monfort (Citation2008) were applied in the present paper. The regional disparities were computed for Poland, Slovakia and the Czech Republic in terms of GDP per capita. The regions were weighted by their population. The Theil index and MLD satisfy all properties of inequality measures, that is: the mean or income-scaled independence; principle of population; symmetry or anonymity; the Pigou–Dalton transfer principle; and decomposability. The other measures in question comply with the first four properties.
8. These are the exogenous parameters that show the percentage change in output and productivity in the manufacturing and market services sectors due to supply-side effects induced by public investments. For more details, see Appendix A1 in the supplemental data online.
9. To illustrate this, one can picture a region in which the first airport is opened. Provided that the region offers advantageous possibilities for running a business, it is conceivable that the airport would have a positive effect on the economy because it considerably improves accessibility. Any additional airport would, however, tend to produce less spectacular economic effects by contributing to the greater comfort of residents rather than better economic performance. When maintenance costs are taken into account, any additional airport infrastructure might even harm the regional economy.
10. Relatively low variation of the ratios of human capital to GDP and R&D stocks to GDP across the regions coupled with relatively low spillover elasticities of those two expenditure categories reduce their role in determining the efficiency of CP as measured by the cumulative multipliers. Both ratios for each region in the three countries analysed are available from the authors upon request.
11. In the HERMIN models, this is reflected by the Hicks neutral technical progress. The parameters are available from the authors upon request.
12. The role of labour productivity is clearly seen when comparing the regions of Mazowieckie and Wielkopolskie with Śląskie. Even though the latter is characterized by the low saturation of infrastructure and a high share of market services, it shows, however, lower productivity in market services compared with that of Mazowieckie and Wielkopolskie, and, in turn, lower values of the cumulative multipliers.
13. In Poland: Mazowieckie, Dolnośląskie, Śląskie and Wielkopolskie. In Slovakia: Bratislavsky kraj. In the Czech Republic: Prague.
14. This neoclassical convergence mechanism might be strengthened by public intervention (e.g., CP). Specifically, improved transport infrastructure facilitates the movement of capital among regions and, in turn, increases output growth in less developed regions (European Commission, Citation2014). Consequently, in line with the neoclassical rationale, public investment undertaken in lagging regions should be more efficient than that in more advanced territories.