Odysseas Katsaitis, Ph.D., Economics, The American
Aghia Paraskevi, 153 42,
D. Doulos, Ph.D., Ecomomics, The American College of Greece, 6 Gravias St, Aghia Paraskevi, 153 42, Greece.
katsa@acg.edu The objective of Structural Funds is to stimulate convergence among receiving countries. It is evident, however, that some countries have not managed to converge at the pace expected despite the EU funding. Some of them have also faced deteriorating productivity, persistently higher inflation and consequently large current account deficits. The effects of structural funds on economic growth of the receiving European countries have been investigated during the last two decades and the results are mixed. A number of papers have also confirmed the important role that institutional quality plays on this relationship.
In this paper, using panel data for the EU-15 countries, we are examining to what extend structural funds have managed to raise productivity growth and the effect – if any - of the quality of institutions on this relationship. We expect that the existence of extensive corruption hinders the positive impact of structural funds on factor productivity and improved competitiveness.
JEL classification number C10, O52