Is the EU Structural Fund Creating Economic Growth? : A Policy Analysis of the European Regional Development Fund - ERDF

Abstract: The European Union uses a considered amount of the member states´ resources in the structural and cohesion funds to equalise income differences in the union and to induce growth to get economic cohesion between regions. An interesting and disputed question is if the funds are used in an effective way and if they reach their goals of economic growth. This is studied in the paper by a literature review and a following policy analysis which compare EU cohesion policy and academic knowledge. This question is addressed by performing a literature review of 16 articles about economic growth and its determinants in the European Union, and by comparing results from these studies with priorities of the main structural and cohesion fund’s policy, the investment priorities of European Regional Development Fund (ERDF). The paper concludes that seven out of 11 investment priorities correspond or fairly well correspond, to results from academic research of European growth. The study highlights the importance of the 11th investment priority, which is regional governments´ quality and its impact on the structural and cohesion funds´ growth efficiency. The paper also concludes that a well-adopted policy change would be to increase the status and importance of the 11th investment priority of the ERDF and the overall EU cohesion policy.