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Keywords: government quality; cohesion; economic growth; public investment; regions; EU Abstract We quantify the general equilibrium effects on economic growth of improving the quality of institutions at the regional level in the context of the implementation of the European Cohesion Policy for the European Union and the UK. The direct impact of changes in the quality of government is integrated in a general equilibrium model to analyse the system-wide economic effects resulting from additional endogenous mechanisms and feedback effects. The results reveal a significant direct effect as well as considerable system-wide benefits from improved government quality on economic growth. A small 5 per cent increase in government quality across European Union regions increases the impact of Cohesion investment by up to 7 per cent in the short run and 3 per cent in the long run. The exact magnitude of the gains depends on various local factors, including the initial endowments of public capital, the level of government quality, and the degree of persistence over time. Article Note: Disclaimer: The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission. CAPTION(S): Table S1: Description of Variables. Table S2: Descriptive Statistics. Table S3: The 123 Cohesion policy expenditure categories. Figure S1: Distribution of the estimated persistence parameter. Byline: Javier Barbero, Martin Christensen, Andrea Conte, Patrizio Lecca, Andrés Rodríguez-Pose, Simone Salotti

Keywords: smart specialization; EU policy; regions; Europe Abstract The introduction of smart specialization (S3) as a fundamental pillar of the 2014 reform of the EU cohesion policy is a significant strategic shift in European development intervention. S3 strategies aimed at mobilizing the economic potential of each country and region of the EU by allowing a more place-based and bottom-up approach to development. However, despite the salience that S3 has acquired in a short period of time, there has been no European-wide evaluation of the extent to which S3 strategies truly reflect the economic characteristics and potential of the territories where they are being implemented. This article examines the characteristics of S3 strategies across Europe - by focusing on their development axes, economic or scientific domains and policy priorities - to assess whether this is the case. The results show that S3 strategies display a proliferation of objectives, a problem that particularly affects areas with weaker quality of government. Moreover, strategies are generally loosely connected with the intrinsic conditions of each region and mostly mimic what neighbouring areas are doing. The lack of more concise and focused S3 strategies is likely to undermine the effectiveness of what is, otherwise, a very interesting and worthwhile policy experiment. Byline: Marco Di Cataldo, Vassilis Monastiriotis, Andrés Rodríguez-Pose

Keywords: COVID-19; Europe; institutions; pandemic; regions ***** No abstract is available for this article. ***** CAPTION(S): Supporting information. Byline: Andrés Rodríguez-Pose, Chiara Burlina

Decentralisation has frequently been sold as a means to increase well-being and development. Yet, questions remain as to whether decentralisation improves economic performance. This is possibly because decentralisation processes have often led to 'unfunded mandates', that is, a mismatch between the powers transferred to subnational tiers of government and the resources allocated to them. In this article, we analyse how unfunded mandates shape regional economic growth across 518 regions in 30 Organisation for Economic Co-operation and Development countries over the period 1997–2018. There is a negative, statistically significant, and robust impact of unfunded mandates on economic growth. This effect is higher in more politically and less fiscally decentralised regions and in regions with a higher level of wealth. Unfunded mandates thus represent a serious drag on the potential positive economic effect of political decentralisation. Hence, for those benefits to materialise, better not more decentralisation – ensuring that finance follows function – should be pursued. [ABSTRACT FROM AUTHOR]