This paper discusses the effects of European Union (EU) funds on gross domestic product growth by analysing the causal impact of regional absorption speed. The analysis is conducted using a regression discontinuity design approach with heterogeneous treatment on NUTS-2 regions during the period 2000–16. We show that faster absorption of EU funds in the Objective 1 regions, especially the Mediterranean ones, is associated with worse economic outcomes from the Objective 1 treatment. However, this pattern is not observed in the non-treated regions. Regarding policy implications, this study suggests that incentives to increase absorption speeds should be removed in Objective 1 regions.
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Benoît Dicharry (2022) studied this question.
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