VOX  CEPR Policy Portal

EU cohesion policy aims to narrow gaps in economic development through large regional support funds. This column presents new research on the impact of such funds on firms’ performance, focusing on the experience of Latvia, one of the largest recipients relative to its size. The findings indicate that larger and more productive firms are more likely to receive support funds, but it is not clear if their productivity improves as a result. Access to such funds must be facilitated to allow smaller and less productive firms, which have a great need for investment and a larger room for productivity catch-up, to be included in the pool of potential recipients.