4. Macroeconomic Effects of the European Cohesion Policy in the Spanish Economy

Since its joining of the today’s European Union (EU), on 1 January 1986, the Spanish economy has experienced a strong impulse based on several factors (Polo and Sancho, 1993). Among these factors, we can cite the liberalisation, both internal and external, that entry to the club implied the massive reception of structural aid, participation in the co-ordination of macroeconomic policy, at the beginning, and the adoption of the euro and the stability and growth pact, later on. Among the factors cited above are the structural and cohesion aid that Spain has received, in a preferential manner, at least in absolute terms, since its incorporation and even more-so, since the structural funds were reformed in 1987. The aim of this chapter is to assess the impact of such funds on the Spanish economy. We analyse both the 1989–2006 period and the current 2007–2013 budgetary period. Our evaluation is based on the observed evolution (and a projection up to a given year) of per-capita real income and relative income per-capita between Spain and the average of the EU15, from which we extract the effects that we can supposedly attribute to the EU aids. These effects are obtained using the HERMIN macroeconometric model of the Spanish economy. Proceeding in this way, we can produce a counter-factual scenario that we can then compare with the observed (and projected) evolution. This counter-factual method will always be limited since, had the EU structural and cohesion aid not been received, other developments and alternative policies that are impossible to imagine now would have taken place. Therefore, the effects attributed to the EU programmes cannot be understood as benefits, whenever they are positive, as the Spanish economy would not have been able to compensate, to a greater or lesser degree, with other alternative policies in the absence of the former. In Sect. 2, we discuss the methodology used. Section 3 briefly describes European regional policy, offering a quantification of the structural and cohesion aid that Spain has received or will receive during the period 1989–2006 and the programmed aid for the period 2007–2013. In Sect. 4, we offer an ex-post evaluation for the period 1989–2006, while Sect. 5 presents an ex-ante evaluation for the period 2007–2013. Finally, Sect. 6 provides some concluding remarks.