The Share of Growth-Enhancing Expenditure in EU Regional Spending

Measured by the share in the total EU budget, EU regional policy is the second most important policy area. One of ist central objectives is the promotion of long-run growth. Evidence from recent academic research indeed suggests that the level and the composition of public spending indeed affects long-run growth beyond any short-run demand-side Keynesian effects, but also shows that the growth effects of different public spending categories significantly differ. However, evaluating these growth effects in a rigorous manner is complex and simplistic approaches may be misleading. In the context of EU Regional Policy, another difficulty in this context is the fact that a plethora of different types of projects in different areas is funded. Instead of quantifying the growth effects of EU Regional Policy, the objective of this study is merely to approximate the share of growth-enhancing spending in total spending on EU Regional Polic based on key insights from the academic literature.

Misch, Florian, Friedrich Heinemann, Sarah Borgloh, Christoph Schröder and Mustafa Yeter (2012), The Share of Growth-Enhancing Expenditure in EU Regional Spending, Bundesministerium der Finanzen (BMF), Berlin