The long and winding road to find the impact of EU funds on regional growth: IV and spatial analyses

We contribute to the analysis of the impact of European Union funds on European regional development. We find that the European funds have a significantly positive effect on regional economic growth in the European Union. This result is obtained both with ordinary least squares (OLS), and with two-stage least squares (2SLS) using the presence of environmentally protected areas as an instrument. Furthermore, we find that interregional spillovers are important: a significant part of the favourable effect seems to take place in nearby regions rather than in the recipient region.