The Effect of Structural Fund Spending on the Spanish Regions: An Assessment of the 1994-99 Objective 1 CSF

This Paper analyses the growth and employment effects of the 1994-99 Community Support Framework (CSF) for the Objective 1 Spanish regions, using a simple supply-side model estimated with a panel of regional data. The results suggest that the impact of the Structural Funds in Spain has been quite sizeable, adding around a percentage point to annual output growth in the average Objective 1 region, and 0.4 points to employment growth. Over the period 1994-2000, the Framework has resulted in the creation of over 300,000 new jobs and has eliminated 20% of the initial gap in income per capita between the assisted regions and the rest of the country.