Evaluation of public expenditure on economic growth of the Peripheral Slovenia with Input-Output model

Abstract

Slovenia is witnessing a problem of divergence in economic performance of its regions despite the high importance of the balanced regional development on the policy agenda. After the EU accession the problem of regional disparities is addressed through a wide set of financial mechanisms that affect the regional development; i.e. certain elements of CAP, Structural and Cohesion funds and Community initiatives. The paper is evaluating impacts of public expenditure from these sources on the economic performance of the region Peripheral Slovenia by constructing a regional Input-Output model in the present (2004–06) and the following (2007–13) financial perspective. Results show that the analysed funds can stimulate a notable economic growth of the Peripheral Slovenia especially in the following financial perspective. However; comparisons of the output growth at the national level reveal likely lagging of the region. This means that the anticipated increase of regional development disparities in Slovenia would continue in the future.