Regional absorption capacity of EU funds

Abstract

Absorption of the financial resources allocated from the EU funds is a very important aspect of the European integration process, while there is a lack of empirical researches on the determinants of a country/region's abilities to efficiently absorb the money. This study investigates the influence of the chosen territorial economic preconditions important for successful absorption of EU funds over the last two Cohesion Policy programming periods, on the sample of convergence and developed NUTS 2 regions of the EU. The analysis is based on 86 regions that have GDP per capita less than 75% of the EU average (convergence regions) and 186 regions that have GDP per capita above 75% of the EU average (developed regions). By using panel data analysis, it is confirmed that the absorption of EU funds is conditionally affected by regional economic characteristics. The results of the study contribute to empirical researches on the determinants of regional absorption capacity in the EU and can be important in discussions surrounding Cohesion Policy planning and programming.

Beyond the EU Structural Funds’ Absorption Rate: How Do Regions Really Perform?

“…Overall, the process of adequately capturing absorption behavior over time emerges as a key preliminary step for adopting a systemic and dynamic approach towards evaluating the real connection between LMA administrative capacity, EU monitoring, and SFs' absorption. Until now, only few articles have attempted to study the dynamic relations between administrative capacity and CP implementation, at national (Incaltarau et al 2020) or regional levels (Milio 2007;Kersan-Škabić and Tijanić 2017). In addition, recent evidence highlights that, although low capacity is an important factor of absorption problems, it may be an insufficient explanation; in fact, political instability (i.e., alternating parties) could worsen the absorption performance (Aiello et al 2019), mainly due to changes in local priorities and staff in the management and control systems (Hagemann 2019).…”

The Western Balkans and the EU budget: the effects of enlargement

“…The first factor is WBC absorption capacity. Numerous studies (for a recent review, see Incaltarau et al 2019) have shown that the ability of EU member states to successfully utilize EU funds is limited by their administrative capacity, which refers to institutional infrastructures and human resources required to implement EU policies (Milio 2007;Tosun 2014;Bachtler et al 2014;Kersan Škabić and Tijanić 2017). It is further constrained by governance quality at central and regional levels, including political stability and the lack of corruption (Rothstein et al 2013;Rodríguez-Pose and Garcilazo 2015;Surubaru 2017;Hagemann 2019), and by macroeconomic and financial absorption capacity, since the use of EU funds requires national/regional co-financing and sufficient project readiness (Šumpíková et al 2004;Mrak and Horvat 2009;Zaman and Georgescu 2009).…”

Untitled

“…The high and rising share of public investment financed through EU infrastructure funds is helping to build a modern economy. Since this investment is vital to modern development, Poland needs to address frequent criticism from Brussels about its limited absorption of funds (Kersan-Škabić, 2017). Some changes that could increase absorption include changes in Poland's institutional and regulatory framework involved in the absorption process.…”