European Union regional policy and development in Spain: capital widening and productivity stagnation over 1989–2010

Abstract

[Abstract]: Total Factor Productivity in Spain over 1989-2010 has followed a decreasing trend. This paper seeks to answer to what degree the investments in transport infrastructure supported by the European Union Regional and Cohesion Policy (EUINFP) prevented TFP over this period from falling further. We estimate an augmented Mankiw-Romer-Weil model for the 17 Spanish regions over the period 1989-2010 and find positive marginal contributions on the TFP growth rate for EUINFP, RD, and the interdependencies between EUINFP and private capital. These factors partially offset the dismal TFP performance of Spain over this period.