Testing Growth Effects of European Union Structural Funds According to Size of Government: A Dynamic Approach

Abstract

The aim of this study is to examine the relationship between European Union structural funds and economic growth rates of receiver countries. An econometric model is constituted and data are obtained in panel data form. The relationship is tested with system-Generalized Method of Moments (GMM), a dynamic panel method for 27 European Union countries between the period of 2000 and 2011. Data are divided into two samples according to size of government and model is reestimated. Assuming capital accumulation and structural funds as endogenous, it is concluded that structural funds have no statistically significant effect on economic growth regardless of the sample choice.

Keywords

• Structural funds,dynamic panel method,size of government.

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