European Regional Structural Funds: How Large is the Influence of Politics on the Allocation Process?

TLDR

The allocation of EU Structural Funds is driven by intense bargaining among national governments and across political governance layers. The study examines which economic and political variables determine EU Structural Fund allocations and uniquely measures the impact of additional regional or national funds across cohesion objectives. The authors analyze 1989–1999 data with a Tobit model that accounts for the two‑stage allocation process and limited dependent variables. Economic criteria alone do not determine allocations; political context and inter‑governmental relations also shape the process, and the study uniquely measures the impact of additional regional or national funds.

Abstract

Abstract The allocation of Structural Funds, the most important component of the European Union (EU) cohesion policy, is subject to intense bargaining between national governments and across layers of political governance. Using Structural Funds data for each cohesion objective over 1989–99, we examine which variables, economic and political, determine the actual funds allocation. We test our hypotheses with a Tobit model that accounts for the two‐stage allocation process and our limited dependent variables. Our results indicate that economic criteria are not the only determinants of funds allocation. Indeed, we find that the political situation within a country and a region and the relations between various layers of governance influence the allocation process. This article is also the only study to measure the impact of additional funds provided by the region or the country itself, and to differentiate the analysis by cohesion objective.