Viviana Celli, Riccardo Crescenzi, Guido De Blasio, Mara Giua (p)

Alicia De Quinto Notario

Public debates have often contrasted the value added of European Union (EU) policies with the downside of administrative rigidities and stringent requirements for beneficiaries. Is the “EU-way of doing development policies” an asset or a liability for EU Member States? Is there a measurable premium given by the EU to its policies in particular where institutions are weaker? The EU Cohesion Policy offers a unique laboratory for the assessment of the EU value added in development policies. In this paper we compare regional development projects managed under the EU rules with projects with very similar characteristics switched to national rules for reasons exogenous to their own performance.
The analysis is based on the case of Italy and looks at the implementation of infrastructural projects ‘on the ground’, in order to capture the EU ‘value added’ in terms of output delivered.
By leveraging a unique dataset at the project level (OpenCoesione) and focusing on a Less Developed Region (Puglia), we compare the implementation of infrastructural projects which are similar in everything except for being financed in the EU framework or not. In particular, we use a number of projects that in 2014 were switched from the EU to the national framework. We use a recent evaluation technique proposed by Imai et al. (2021), which consists of a non-parametric generalization of the DiD estimator expressly developed for time-series cross-sectional data.
Our results suggest that projects exiting the EU programs experience slower financial progresses than their counterparts remained in the EU programs. Infrastructural projects implemented under EU rules perform better than their ‘national statistical twins’ and this is particularly true for projects administered at the regional level and in areas where local institutions are weaker.
These results offer evidence on the value added of the European Union not only in the implementation of development policies but also as a means to break the vitious circle between low institutional quality and lack of economic development. These results have significant implication beyond Cohesion Policy with reference for example to the programmes funded under Next Generation EU.

Eva Výrostová (p)

Mara Giua

Several studies on the effectiveness of EU Cohesion policy focus on the micro-level. In our prior research, we have investigated the impact of Cohesion policy expenditure at the beneficiary level, focusing on individual companies, and estimated the effect of EU Cohesion policy grants on firms' performance in Slovakia within the 2007-2013 programming period. The impact was measured by profit, value added, debt dynamics, asset growth, and other performance indicators. In this paper, we complement the microeconomic results for Slovakia by analysis of the regional level, following the approach of Bachtler and McMaster (2008), Mohl and Hagen (2010), Pellegrini et al. (2013), Lovrinovic and Nakic (2016), Becker and Egger and von Ehrlich (2017). To evaluate the effectiveness of the Cohesion policy, we use econometric models of classical and spatial econometrics to describe Slovak regional development vis-à-vis EU Cohesion policy goals, to be achieved through specific policies implemented by the Slovak government throughout the period. The paper presents partial results of project VEGA under grant no. 1/0837/21.

Francesco Molica (p), Anabela Marques Santos (p), Andrea Conte

Eva Výrostová

The paper explores the pros and cons of adopting within cohesion policy a full performance-based financing approach, akin to the Recovery and Resilience Facility (European Recovery Instrument or NGEU). The establishment of the Recovery and Resilience Facility has marked a turning point in that it harbours a full performance-based dimension making for the first time the disbursement of EU funds contingent upon the achievement of outputs/results (defined as targets). The option of mainstreaming this approach to other EU funds in the future, notably to EU cohesion policy funds, is likely to be taken into consideration in the future. The paper seeks to understand what challenges may arise in shifting cohesion policy from a "real cost-based" model to a payment-by-result one. In the current system, disbursements are still based on actual costs incurred (although simplified cost options and financing not linked to costs have introduced elements of performance in the payment system). Adopting a full performance-based model within cohesion policy would thus represent a step forward with the achievement of pre-defined targets being the only criterion for authorizing payments. In this sense, the paper investigates the ability of cohesion policy programmes (more specifically of ERDF programmes) to set out and achieve targets under the current evaluation and monitoring system. Such analysis is very relevant in that the current monitoring and evaluation system of cohesion policy mimics a performance based mechanism similar Recovery and Resilience Facility without the payment dimension. Our investigation focuses in particular on the stability and accuracy of targets and underlying indicators throughout the programming period. Our results point to a significant frequency of adjustments to both indicators and targets across all years of the period. The reasons may be different ranging from evolving circumstances/needs requiring re-programming to inaccurate estimates by involved authorities. This raises questions on the introduction of a smooth and reliable payment by results model within cohesion policy. High and frequent changes to both the indicators and targets can undermine the rationale for adopting a performance-based approach. Mainstreaming such approach to cohesion policy would require specific mechanisms and a degree of flexibility to allow for an efficient and unbiased functioning.

Fabio Mazzola (p), Debora Gambina

Francesco Molica

The purpose of European Cohesion Policy is the achievement of sustained (long-run) growth. However, very often EU Funds are diverted towards short-run objectives when unforeseen events occur, such as economic crises or natural disasters. This work evaluates empirically the relative impacts on real per capita GDP growth for (NUTS-2) Italian regions which can be attributed to reprogramming Regional Operational Programmes (ROPs). We adopt both an aggregate and a sectoral approach. The re-programming of ERDF-ROPs during the considered time span (2007-13 and 2014-20) was mainly based on the redirection of the allocated amounts to face short-run downturns. In detail, the most significant events were the two regional economic crises, arose from the global Great Recession and the Covid-19 pandemic, some earthquakes and other natural calamities. The assessment is carried out through the computation of the impulse response functions estimated by the Jordà local projections method. The estimation results show a statistically significant and robust negative effect of re-programming starting three years after the planned shock. Our empirical evaluation contributes to the debate on the effectiveness of the European Regional Policy assessing the specific issue of funds’ diversion, detecting a warning when they are employed in a different use with respect to their typical goals. The leading result is about the not neglectable effects of re-programming for conjunctural needs especially regarding their influence on policy outcomes.

Alicia De Quinto Notario (p), Anabela Marques Santos, Marie Lalanne

Fabio Mazzola

The European Social Fund (ESF) is the European Union’s (EU) main financial instrument to support employment, and it is part of the EU Cohesion Policy funds. Under the programme period 2014-2020, more than €140 billion were allocated to support job creation, education and training, and social inclusion. As part of the Cohesion policy, the ESF (re-labelled ESF + for 2021-2027) also aims to correct social imbalances between countries and regions.
During the programme period 2014-2020, the actions financed by the ESF were essentially concentrated in three Thematic Objectives (TO): (i) TO8 - promoting employment and supporting labour mobility; (ii) TO9 - promoting social inclusion and combating poverty and; (iii) TO10 - investing in education, skills and lifelong learning.
Studies have pointed out an increase of social inequalities in the EU over the last years (see e.g. OECD, 2017; EPRS, 2019), as well as heterogeneous effects of Cohesion Policy in EU regions (see e.g. Fratesi, and Wishlade, 2017; Di Caro and Fratesi, 2022). This paper aims to contribute to the debate about the effectiveness of EU funds targeted to social dimensions. We start our analysis by estimating a regional concentration index at NUTS 2 level for the investments financed by ESF 2014-2020 and related to TO8, TO9 and TO10. Secondly, we construct novel socioeconomic indicators to characterise regions before and after the 2014-2020 programme, encompassing a set of indicators related to the targets of the different TOs under analysis. As a last step, we analyse the relationship between the ESF investment per capita by TOs and the changes in terms of the region’s socioeconomic profile, captured by the indicator estimated.
For this purpose, we rely on data from the Cohesion Open Data Platform to obtain information on regional investments by TOs financed by ESF 2014-2020, as well as from the cross-sectional European Statistics on Income and Living Conditions (EU-SILC) and the European Labour Force Survey (EU-LFS) to extract socio-economic variables for European territories.

References:
OECD (2017). Understanding the Socio-Economic Divide in Europe.
EPRS (2019). Regional inequalities in the EU, European Parliamentary Research Service (EPRS), European Union, 2019.
Fratesi, U. & Wishlade, F.G. (2017). “The impact of European Cohesion Policy in different contexts”, Regional Studies, 51:6, 817-821, DOI: 10.1080/00343404.2017.1326673
Di Caro, P. and Fratesi, U. (2022). “One policy, different effects: Estimating the region-specific impacts of EU cohesion policy”, Journal of Regional Science, 62(1):307-330.