We examine the impact of structural and cohesion funds on regional disparities within EU countries over the period 1995–2006. We find that structural funds have reduced regional disparities over this period. Our empirical estimates also suggest that the effect of structural funds on regional disparities is potentially reversed above some level of transfer intensity (approximately 1.6% of country gross domestic product). This has implications for the desirable allocation of the funds across countries especially since, in the current programming period (2007–13), all the new member states of the Union except for Cyprus and Malta have a transfer intensity which exceeds this threshold.
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