Productivity Convergence for the Capable? Endogenous Capabilities, the Great Recession, and the Effectiveness of EU Cohesion Policy

Abstract One of the European Union’s main objectives is to reduce territorial disparities by promoting productivity growth in less-developed regions, dedicating one third of its budget to Cohesion Policy investments. This study assesses the effectiveness of these investments in fostering EU-wide convergence, using panel data about 264 NUTS-2 regions between 2000 and 2019. Our findings reveal that the Great Recession reshaped the effectiveness of EU Cohesion Policy, making it more effective in supporting convergence of regions with weaker capacities to self-sustain their productivity growth. However, the socio-institutional capacity to effectively leverage Structural Funds remains largely concentrated in more developed regions. J.E.L. codes: R11; O41; O47; O52.