The FCI: reform simulations

In this work we explore different scenarios for the reform of the Fondo de Compensación Interterritorial (FCI), which is a conditional grant from the state to the relatively poorer Spanish autonomous communities. To undertake the analysis we define the main elements of that vertical grant (amount, territorial scope and distribution’ criteria) and evaluate the results corresponding to each scenario taking the year 2007 as baseline. The motivation for the reform is related to the current revision of the regional financing system and the reduction of the EU funds for the period 2007-2013. Consequently, to redefine and promote the FCI as an instrument of regional policy, related to the objectives of development and convergence, is a convenient alternative.