Abstract

Innovation is now recognized as the cornerstone of the strategies of growth and reduction of regional imbalances. At the same time, literature underlines the importance of efficient institutions to achieve greater return from investment policies. This paper aims at investigating the link between the quality of Italian administrations and the return on investment made through the Structural and Cohesion Funds, focusing on research and innovation spending by the Italian regions. In order to measure the quality of institutions, autors have used the Institutional Quality Index (IQI), matching data on corruption and governance in Italian regions, and a set of efficiency indices designed to assess the ability of regional policymakers in European fund management. We carried out a two-way fixed effect panel regression analysis among the Italian regions for 2007-2013. The results show that a good level of investment of Structural Funds in R&I is positively correlated with regional growth, while both IQI and efficiency indices have to be considered as key factors, particularly in those regions of Southern Italy characterized by structural shortages.