Electoral effects of investment subsidies in national and European elections

Abstract

ABSTRACT Extensive research has focused on political movements against regional integration and globalisation to understand the causes and consequences of their political success in developed democracies. However, studies on the effectiveness of large-scale institutional efforts to hinder this political development have been limited. My paper investigates the electoral effects of one of the largest investment subsidy programs in the world, the European regional investment policy. Even though it distributes billions of Euros each year to foster economic and social cohesion, it is unclear whether these fiscal transfers produce any tangible electoral effects. I argue that, in this case, supranational institutions have been successful in taking credit, making heavily targeted regions infertile grounds for the electoral success of eurosceptic parties. Leveraging the NUTS-level election dataset (EU-NED) and regression discontinuity models, this paper is the first to investigate the causal link between investment subsidies for less developed regions and electoral support for eurosceptic parties in national and European elections. The analysis shows that high fiscal transfers to less developed regions cause lower levels of Eurosceptic voting.