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

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. Copyright (c) 2010 The Author(s). Journal compilation (c) 2010 Blackwell Publishing Ltd.

The cash divide: the allocation of European Union regional grants

“…By examining the structural funds as an instance of national intergovernmental grants, they show that regional parties on the left pressurize central governments and the Commission more effectively for higher funding than regional parties on the right since higher levels of public investment correspond to the preferences of their core constituencies. This finding is corroborated by Bouvet and Dall'erba (2010) as well as by Bodenstein and Kemmerling (2008), who, in addition, find that the dispersion of the regional party system and district marginality influence the size of regional transfers. All of these studies provide evidence that a relatively Eurosceptic public within a region increases the predicted amount of structural funds this region receives.…”

“…To capture the argument that the structural funds are used to compensate the losers of European integration (Bouvet and Dall'erba 2010;Kemmerling and Bodenstein 2006), I derive a measure of diffuse support for the EU from the Eurobarometer 52.0 from 1999. 5 The question wording is: 'Generally speaking, do you think that (country's) membership of the EU is a good thing, a bad thing, neither good nor bad?…”

“…Furthermore, I include three variables to account for the argument that central governments trade structural funds for votes (Bouvet and Dall'erba 2010;Kemmerling and Bodenstein 2006). First, to measure the electoral support for central governments, I use the distance between the political centre of gravity in regions and the political centre of gravity of national incumbent parties, based on vote shares.…”

“…Thomson 2008;Wonka 2007), I find that the Commission is able to shield its decisions from domestic political considerations. Second, I suggest that the analytical focus of studies on structural funds allocation should be extended to include the Commission, rather than simply focusing on the effects of domestic partisan politics on the size of regional transfer payments (Bodenstein and Kemmerling 2008;Bouvet and Dall'erba 2010;Kemmerling and Bodenstein 2006). Third, by showing that the power nexus between the Commission and regional actors can effectively constrain central governments' attempts to trade regional development grants for votes, this article adds new insights to the literature on distributional politics, which provides evidence that incumbents may distort an impartial allocation of regional development grants (e.g.…”

Can Regional Transfers Buy Public Support? Evidence from EU Structural Policy

“…The distribution of funds within countries is furthermore partly managed by national authorities, which can neither be assumed to be biased by the support of the citizens for the EU in their decisions. The exogeneity of funds allocation with respect to the attitude of the citizens towards the EU is moreover documented by Bouvet and Dall'erba (2010), who study the determinants of the structural funds allocation. According to this work, EU scepticism is not found to significantly affect the national allocation of funds.…”