Advertisement

The Cohesion Policy on the EU’s Eastern and Southern Periphery: Misallocated Funds?

  • Gergő Medve-Bálint
Article

Abstract

The cohesion policy of the European Union has become its primary instrument promoting development in the peripheral member states. The enduring consequences of the 2007–2008 crisis and the economic governance agenda requiring fiscal discipline from the member states have raised the policy’s significance further. However, similar economic inequalities characterize the EU nowadays as several decades ago. The cohesion policy is by no means alone responsible for this, but the reasons for its ambiguous performance deserve further scrutiny. Empirical studies explain variation in fund performance with domestic institutional quality and absorption capacity, but the member states’ fund spending strategies have not been addressed so far. This is puzzling because they are important determinants of the economic effects of EU funds. The paper fills this gap by investigating the spending strategies of the Southern and the Eastern members in two recent programming cycles (2007–2013 and 2014–2020). Assessed on five expenditure categories, the paper reveals that physical infrastructure investments enjoyed priority over long-term growth-generating R&D and human capital projects and that the allocation of EU funds did not reflect domestic development needs.

Keywords

EU cohesion policy Spending strategy Fund allocation Southern Europe Eastern Europe 

Notes

Acknowledgements

The author’s research was supported by the MTA Post-Doctorate Research Program of the Hungarian Academy of Sciences.

References

  1. Allen D. Cohesion and the structural funds. In: Wallace H, Wallace W, Pollack M, editors. Policy-making in the European Union, Oxford: Oxford University Press; 2005. p. 213–42.Google Scholar
  2. Bache I, Jones R. Has EU regional policy empowered the regions? A study of Spain and the United Kingdom. Reg Fed Stud. 2000;10(3):1–20.CrossRefGoogle Scholar
  3. Bachtler J, Mc Master I. EU cohesion policy and the role of the regions: investigating the influence of structural funds in the new member states. Environ Plan C: Gov Policy. 2007;26(2):398–427.CrossRefGoogle Scholar
  4. Bachtler J, Mendez C, Oraže H. From conditionality to Europeanization in Central and Eastern Europe: administrative performance and capacity in cohesion policy. Eur Plan Stud. 2014;22(4):735–57.CrossRefGoogle Scholar
  5. Bähr C. How does sub-national autonomy affect the effectiveness of structural funds? Kyklos. 2008;61(1):3–18.CrossRefGoogle Scholar
  6. Banister D, Berechman Y. Transport investment and the promotion of economic growth. J Transp Geogr. 2001;9(3):209–18.CrossRefGoogle Scholar
  7. Barro RJ. Human capital and growth. Am Econ Rev. 2001;91(2):12–7.CrossRefGoogle Scholar
  8. Baun M, Marek D. Regional policy and decentralization in the Czech Republic. Reg Fed Stud. 2006;16(4):409–28.CrossRefGoogle Scholar
  9. Becker SO, Egger PH, von Ehrlich M. Going NUTS: the effect of EU structural funds on regional performance. J Public Econ. 2010;94(9–10):578–90.CrossRefGoogle Scholar
  10. Begg I. Cohesion or confusion: a policy searching for objectives. J Eur Integr. 2010;32(1):77–96.CrossRefGoogle Scholar
  11. Bilbao-Osorio B, Rodríguez-Pose A. From R&D to innovation and economic growth in the EU. Growth Chang. 2004;35(4):434–55.CrossRefGoogle Scholar
  12. Bloom S, Petrova V. National subversion of supranational goals: ‘pork-barrel’ politics and EU regional aid. Europe-Asia Stud. 2013;65(8):1599–620.CrossRefGoogle Scholar
  13. Boldrin M, Canova F. Regional policies and EU enlargement. In: Funck B, Pizzati L, editors. European Integration, Regional Policy and Growth. The World Bank. Washington D.C.: 2003. pp. 33–94.Google Scholar
  14. Börzel, TA. States and regions in the European Union: institutional adaptation in Germany and Spain. Cambridge: Cambridge University Press; 2002.Google Scholar
  15. Bourne AK. The impact of European integration on regional power. JCMS: J Common Mark Stud. 2003;41(4):597–620.Google Scholar
  16. Bouvet F, Dall’erba S. European regional structural funds: how large is the influence of politics on the allocation process? JCMS: J Common Mark Stud. 2010;48(3):501–28.Google Scholar
  17. Bruszt L. Multi-level governance—the eastern versions emerging patterns of regional developmental governance in the new member states. Reg Fed Stud. 2008;18(5):607–28.CrossRefGoogle Scholar
  18. Bruszt L, McDermott GA. Introduction: the governance of transnational regulatory integration and development. In: Bruszt L, McDermott GA, editors. Leveling the playing field: transnational regulatory integration and development. Oxford: Oxford University Press; 2014.Google Scholar
  19. Bruszt L, Vukov V. Transnationalizing states in Europe’s peripheries: European integration and the evolution of economic state capacities in the southern and eastern peripheries of Europe. J Comp Econ Stud. 2015;10:69–92.Google Scholar
  20. Cappelen A, Castellacci F, Fagerberg J, Verspagen B. The impact of EU regional support on growth and convergence in the European Union. JCMS: J Common Mark Stud. 2003;41(4):621–44.Google Scholar
  21. Charron N. Explaining the allocation of regional structural funds: the conditional effect of governance and self-rule. Eur Union Polit. 2016;17(4):638–59.CrossRefGoogle Scholar
  22. Cosci S, Mirra L. A spatial analysis of growth and convergence in Italian provinces: the role of road infrastructure. Reg Stud. 2018;52(4):516–27.CrossRefGoogle Scholar
  23. Dellmuth LM. The cash divide: the allocation of European Union regional grants. J Eur Public Policy. 2011;18(7):1016–33.CrossRefGoogle Scholar
  24. Dellmuth LM, Stoffel MF. Distributive politics and intergovernmental transfers: the local allocation of European Union structural funds. Eur Union Polit. 2012;13(3):413–33.CrossRefGoogle Scholar
  25. Ederveen S, de Groot HLF, Nahuis R. Fertile soil for structural funds?A panel data analysis of the conditional effectiveness of European cohesion policy. Kyklos. 2006;59(1):17–42.CrossRefGoogle Scholar
  26. European Commission. Cohesion Policy 2007–2013. National Strategic Reference Frameworks. Luxembourg: Office for Official Publications of the European Communities. 2007. http://ec.europa.eu/regional_policy/sources/atlas2007/fiche/nsrf.pdf. Accessed 29 Mar 2018.
  27. Fagerberg J, Verspagen B. Heading for divergence? Regional growth in Europe reconsidered. JCMS: J Common Mark Stud. 1996;34(3):431–48.Google Scholar
  28. Ferry M, McMaster I. Cohesion policy and the evolution of regional policy in Central and Eastern Europe. Europe-Asia Studies. 2013;65(8):1502–28.CrossRefGoogle Scholar
  29. Frisina L. Understanding regional development: absorption, institutions and socio-economic growth in the regions of the European Union. Frankfurt am Main: Peter Lang; 2008.Google Scholar
  30. Grabbe H. How does Europeanization affect CEE governance? Conditionality, diffusion and diversity. J Eur Public Policy. 2001;8(6):1013–31.CrossRefGoogle Scholar
  31. Griffith R, Redding S, Van Reenen J. Mapping the two faces of R&D: productivity growth in a panel of OECD industries. Rev Econ Stat. 2004;86(4):883–95.CrossRefGoogle Scholar
  32. Hooghe L. Cohesion policy and European integration: building multi-level governance: Oxford University Press; 1996.Google Scholar
  33. Hughes J, Sasse G, Gordon C. Conditionality and compliance in the EU’s eastward enlargement: regional policy and the reform of sub-national government. JCMS: J Common Market Stud. 2004a;42(3):523–51.Google Scholar
  34. Hughes J, Sasse G, Gordon C. Europeanization and regionalization in the EU’s enlargement to central and Eastern Europe: Palgrave Macmillan; 2004b.Google Scholar
  35. Jacoby W. Managing globalization by managing central and Eastern Europe: the EU’s backyard as threat and opportunity. J Eur Public Policy. 2010;17(3):416–32.CrossRefGoogle Scholar
  36. Jacoby W. The EU factor in fat times and in lean: did the EU amplify the boom and soften the bust? J Common Mark Stud. 2014;52:52–70.Google Scholar
  37. Kemmerling A, Bodenstein T. Partisan politics in regional redistribution do parties affect the distribution of EU structural funds across regions? Eur Union Polit. 2006;7(3):373–92.CrossRefGoogle Scholar
  38. Kyriacou AP, Roca-Sagalés O. The impact of EU structural funds on regional disparities within member states. Environ Plan C: Gov Policy. 2012;30(2):267–81.CrossRefGoogle Scholar
  39. Lakshmanan TR. The broader economic consequences of transport infrastructure investments. J Transp Geogr. 2011;19(1):1–12.CrossRefGoogle Scholar
  40. Le Gallo J, Dall’erba S, Guillain R. The local versus global dilemma of the effects of structural funds. Growth Chang. 2011;42(4):466–90.CrossRefGoogle Scholar
  41. Leonardi R. Cohesion policy in the European Union: the building of Europe. New York: Palgrave Macmillan; 2005.CrossRefGoogle Scholar
  42. Lucas RE. On the mechanics of economic development. J Monet Econ. 1988;22(1):3–42.CrossRefGoogle Scholar
  43. Medve-Bálint G. Funds for the wealthy and the politically loyal? How EU funds may contribute to increasing regional disparities in East Central Europe. In: Bachtler J, Hardy S, Berkowitz P, Muravska T, editors. EU cohesion policy: reassessing performance and direction, regions and cities, London; New York: Routledge: 2017. pp. 220–240.Google Scholar
  44. Mohl P, Hagen T. Do EU structural funds promote regional growth? New evidence from various panel data approaches. Reg Sci Urban Econ. 2010;40(5):353–65.CrossRefGoogle Scholar
  45. Nelson RR, Phelps ES. Investment in humans, technological diffusion, and economic growth. Am Econ Rev. 1966;56(1/2):69–75.Google Scholar
  46. Paraskevopoulos CJ, Leonardi R. Introduction: adaptational pressures and social learning in European regional policy—cohesion (Greece, Ireland and Portugal) vs. CEE (Hungary, Poland) countries. Reg Fed Stud. 2004;14(3):315–54.CrossRefGoogle Scholar
  47. Richardson HW. Growth pole spillovers: the dynamics of backwash and spread. Reg Stud. 1976;10(1):1–9.CrossRefGoogle Scholar
  48. Rodriguez-Pose A, Garcilazo E. Quality of government and the returns of investment: examining the impact of cohesion expenditure in European regions. OECD Regional Development Working Papers. OECD Publishing; 2013.Google Scholar
  49. Romer PM. Increasing returns and long-run growth. J Polit Econ. 1986;94:1002–37.CrossRefGoogle Scholar
  50. Scherpereel JA. EU cohesion policy and the Europeanization of Central and East European regions. Reg Fed Stud. 2010;20(1):45–62.CrossRefGoogle Scholar
  51. Sloboda BW, Yao VW. Interstate spillovers of private capital and public spending. Ann Reg Sci. 2008;42(3):505–18.CrossRefGoogle Scholar
  52. Spendzharova AB, Vachudova M. Catching up? Consolidating liberal democracy in Bulgaria and Romania after EU accession. West Eur Polit. 2012;35(1):39–58.CrossRefGoogle Scholar
  53. Straub S. Infrastructure and growth in developing countries: recent advances and research challenges. Policy Research Working Paper Series 4460. World Bank Development Research Department; 2008.Google Scholar
  54. SWECO. Final report - ERDF and CF regional expenditure. Stockholm: SWECO International AB. Report prepared for the European Commission. 2008. http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/expost2006/expenditure_final.pdf. Accessed 29 Mar 2018.
  55. Terracciano B, Graziano PR. EU cohesion policy implementation and administrative capacities: insights from Italian regions. Reg Fed Stud. 2016;26(3):293–320.CrossRefGoogle Scholar
  56. Tosun J. Absorption of regional funds: a comparative analysis. JCMS: J Common Mark Stud. 2014;52(2):371–87.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Centre for Social SciencesHungarian Academy of SciencesBudapestHungary

Personalised recommendations