EU Regional Policy and the Neighbour's Curse: Analyzing the Income Convergence Effects of ESIF Funding in the Presence of Spatial Spillovers

The European structural and investment funds (ESIF) constitute the prime instrument of EU regional policy. We study the ESIF's effectiveness in terms of fostering intra‐EU income convergence through investment support to lagging regions. Our empirical results for the period 1997–2007 indicate that the ESIF's contribution to income growth is insignificant or even negative for several peripheral EU regions. We argue that the negative link between...