How institutions shape the economic returns to investment in European regions? (dataset and codes)
Description
This dataset accompanies the paper "How institutions shape the economic returns to investment in European regions?". It contains the data and Stata code used to replicate the analysis presented in the paper. Read the Readme file for detailed instructions. Abstract: Most studies of institutional quality and regional growth assume uniform effects across territories. This masks crucial heterogeneity with direct policy implications. We use a latent class framework applied to 230 EU regions over 2009-2017 to identify institution-driven regional parameter groups, and to examine both average effects and catching-up effects associated with changes in the institutional environment. We demonstrate that institutional quality generates highly variable returns to investment in physical capital and innovation. Nordic and central European regions show highest returns to physical capital and R&D investment, whilst less developed regions benefit most from education spending. Crucially, we find that improving government quality not only raises average returns but also promotes territorial cohesion. By contrast, regional autonomy shows limited impact on returns. Our findings challenge the one-size-fits-all approach to cohesion policy and indicate that cohesion policy should explicitly promote institutional improvements in addition to capital deployment.
Files
Steps to reproduce
General Instructions for replication - Set Stata Working Directory: Stata working directory must be set to the replication folder. - Run the .do files: To replicate the entire analysis and generate the results, execute the Stata scripts. The script loads the datasets and performs the calculations, econometric estimations, and export of results, figures and data as discussed in the paper. In the .do files there are several comments along the code for clarifying or helping the reader. - Output: Most results will be exported as Microsoft Excel (.xlsx), Comma Separated Values (.CSV). Some additional tests can be checked in the Stata log files exported as .txt or directly in the Stata windows. Figure are exported as Portable Network Graphics (.png) and encapsulated PostScript (.eps). For detailed instructions see the Readme file.