The European Union's Cohesion Policy: Effectiveness and Efficiency

This paper aims at analyzing the effectiveness and efficiency of the European Union’s Cohesion Policy under the first objective, convergence. The research covers the period of 2003-2009 and includes 223 regions of the European Union. I find evidence to support the fact that there is indeed convergence amongst these regions, both absolute and conditional, and that the Structural Funds given under the first objective increase economic growth significantly. In terms of efficiency, I find no evidence to support the theory that either moral hazard or substitution effects take place, thereby reducing the efficiency of the these funds, but I do find that corruption does decrease economic growth.