Structural funds and regional convergence: some sectoral estimates for italy

In this chapter, we assess the European Structural Funds’ effects on the economies of the 20 Italian administrative regions for the period 1989–2006. The principal novelties of this chapter are that the empirical analysis separately considers the effects on four sectors (agriculture, energy and manufacturing, construction, and services), and we employ a non-parametric FDH-VP to calculate Malmquist productivity indexes. This allows us to distinguish the Funds’ effects on factor accumulation from those on total productivity changes. Our evidence implies that the Funds had a weak, but significant, impact on total factor productivity change but virtually no effect on capital accumulation or employment. Different types of Structural Funds are found to have widely different influences, with the European Social Fund, arguably, having the strongest impact.