The effects of European funds on a regional economy: an applied general equilibrium analysis

Abstract

In this work we conduct an impact analysis of European Structural Funds to assess their effect on output, prices and consumers’ income on the European region of Andalusia, in the south of Spain. For this purpose we present an Applied General Equilibrium Model for Andalusia (AGEM_A) and proceed to compare the reception of regional funds scenario to a hypothetical situation where this financial support has been removed. The AGEM_A has been numerically implemented by supplementing the statistical information provided by the Social Accounting Matrices for Andalusia corresponding to 1990, 1995 and 1999, with data included in the three Community Support Frameworks approved by the European Commission.

Acknowledgements

Both authors wish to thank the support from the andalusian research project SEJ2004-246 and also for the research project XT2004-0039 from Generalitat de Catalunya. The second author thanks SEC2003-05112 from Spain's Ministry of Science and Technology and Fundación Centro de Estudios Andaluces (centrA). We are grateful to F. Sancho, A. Manresa and the participants of the Workshop ‘The State of the Art in Urban and Regional Modelling’ celebrated in Seville, 21–23th October 2004, for helpful suggestions. Stated opinions are those of the authors and do not therefore reflect the viewpoint of the supporting institutions.