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Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit

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  • Marco Di Cataldo
Abstract
Leaving the European Union will entail for UK regions losing access to the EU Cohesion Policy. Have EU funds been effective in the country, and what may be the consequences of an interruption of EU financial support to the UK’s poorer regions? This paper studies the impact of ‘Objective 1’ funding – the highest form of EU aid – in Cornwall and South Yorkshire, two of the UK’s most subsidised regions. We employ synthetic control, matching and difference-in-differences methodologies in order to assess the labour market and economic performance of the two regions. The results indicate that Cornwall and South Yorkshire performed better than counterfactual comparisons throughout the period in which they were classified as Objective 1. Unlike Cornwall, South Yorkshire lost Objective 1 eligibility in 2006 and this massively reduced its share of EU funds. Our findings indicate that, after 2006, South Yorkshire was unable to sustain the gains obtained in previous years. This suggests that while Structural Funds may be effectively improving socio-economic conditions of poorer regions, the performance of subsidised areas could be deeply affected by a reduction (or worse, an interruption) of EU aid.

Suggested Citation

  • Marco Di Cataldo, 2016. "Gaining and losing EU Objective 1 funds: Regional development in Britain and the prospect of Brexit," LEQS – LSE 'Europe in Question' Discussion Paper Series 120, European Institute, LSE.
    • Handle: RePEc:eiq:eileqs:120
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    File URL: http://www.lse.ac.uk/europeanInstitute/LEQS/LEQSPaper120.pdf
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    References listed on IDEAS

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    Cited by:

    1. Michael Leyshon & Matthew Rogers, 2020. "Designing for Inclusivity: Platforms of Protest and Participation," Urban Planning, Cogitatio Press, vol. 5(4), pages 33-44.
    2. Mindaugas Butkus & Alma Mačiulytė-Šniukienė & Kristina Matuzevičiutė & Diana Cibulskienė, 2020. "Does Financial Support from ERDF and CF Contribute to Convergence in the EU? Empirical Evidence at NUTS 3 Level," Prague Economic Papers, Prague University of Economics and Business, vol. 2020(3), pages 315-329.
    3. Mindaugas Butkus & Alma Mačiulytė-Šniukienė & Kristina Matuzevičiutė & Diana Cibulskienė, . "Does Financial Support from the ERDF and CF Contribute to Convergence in the EU? Empirical Evidence at NUTS 3 Level," Prague Economic Papers, University of Economics, Prague, vol. 0.
    4. Mindaugas Butkus & Alma Mačiulytė-Šniukienė & Kristina Matuzevičiūtė & Diana Cibulskienė, . "Does Financial Support from ERDF and CF Contribute to Convergence in the EU? Empirical Evidence at NUTS 3 Level," Prague Economic Papers, University of Economics, Prague, vol. 0, pages 1-43.

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    More about this item

    Keywords

    EU Cohesion Policy; Objective 1; Brexit; synthetic control method; UK;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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