Quotation Fattorini, Loredana, Ghodsi, Mahdi, Rungi, Armando. 2019. Cohesion Policy Meets Heterogeneous Firms. Journal of Common Market Studies.




In this study we empirically tested the effect of the EU cohesion policy using a unique dataset of 273,500 European manufacturing firms, combining regional policy data at the UN Nomenclature of Territorial Units for Statistics‐2 level with total factor productivity (TFP) at firm‐level. In a framework of heterogeneous firms and regions’ different absorptive capacity, we show that financing by the European regional development fund aimed at direct investments in R&D is associated with the improvement of firms' productivity in a region, while funding designed to support overall business is not. The positive association with research, technology and development spending is stronger in the first quartile of the TFP distributions, for the firms that are the least efficient in a region. This appears to be in line with the priority of the policy, which aims at improving firms' competitiveness, especially that of small and medium enterprises. We finally argue that considering the heterogeneous distribution of firms' inefficiencies in a region is crucial to designing a better cohesion policy and to avoid a misallocation of resources it is better than looking at regional aggregates.


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Publication's profile

Status of publication Published
Affiliation External
Type of publication Journal article
Journal Journal of Common Market Studies
Citation Index SSCI
WU-Journal-Rating new FIN-A, VW-B, WH-B
Language English
Title Cohesion Policy Meets Heterogeneous Firms
Year 2019
Reviewed? Y
URL https://api.wiley.com/onlinelibrary/tdm/v1/articles/10.1111%2Fjcms.12989
DOI http://dx.doi.org/10.1111/jcms.12989
Open Access N


Ghodsi, Mahdi (Details)
Fattorini, Loredana (IMT School for Advanced Studies Lucca, Italy)
Rungi, Armando (IMT School for Advanced Studies Lucca, Italy)
Department of Economics (Kubin) (Details)
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