The Implementation of eU-funds in Hungary. The effectiveness of an Issue of european Solidarity
| Autor | Carmen Parra Rodríguez |
| Páginas | 291-346 |
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Although European Union (EU) is considered to be one of the richest parts of the world, it simultaneously has large differences in prosperity levels both between and within its countries. To give an example, its wealthiest country, Luxembourg, is more than seven times richer than Romania and Bulgaria (Ciurea-Miu, 2010), which are the poorest and newest members of the EU. Therefore solidarity is one of the motor principles of the regional policy. Other main principles of cohesion1are focus on knowledge, human capital, research and innovation; sustainable development with boosting synergies between the economic, social and environmental dimensions; equality between men and women, and preventing any discrimination of gender, race or ethnic origin, religion or belief, disability, age or sexual orientation.
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Regional (or cohesion) policy of the EU targets Members States (MS) and regions, where the EU –according to the Articles 174-178 of the Lisbon Treaty2– promotes harmonious development and strengthens economic and social and territorial cohesion. The tool for this is the reduction of development disparities between the regions of the EU. The causes of these disparities/inequalities between regions are manifold:
• longstanding handicaps imposed by geographic remoteness,
• more recent social and economic change,
• the legacy of formerly centrally-planned economic systems,
• combinations of the above and other factors.
Inequalities lead to social deprivation, poor quality schools, higher unemployment or inadequate infrastructure. Regional policy is therefore the expression of the solidarity of the EU towards its less-developed MSs and regions.
Obviously, more and more economic, social and territorial disparities are observable in the European Union (Horváth, 1996; Horváth, 2010). In order to reach economic development in the regions, development policies have a significant role according to the different economic theories. Regarding these theories (and the different schools) the absence of automatic convergence is most provable, therefore to foster convergence in the less developed regions central interventions are required. Although in every case when there is an intervention in the economic structure (or system) the scale of the market forces could have a more serious role than that of the public funds. The development path of the regions is unique, the local features, resources, needs and interests have to be considered thoroughly.
All in all, the regional development policy should focus on all regions, but there is a trade-off in the less developed countries between fostering convergence on the level of regions and supporting the macroeconomic growth of the country.
Regarding the theories, transfer of funds has a positive effect on the economic growth of a country, but the mechanisms behind this phe-
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nomenon are different concerning the different theories (MNB, 2006). To have a clear picture about the necessity of the CP the connection between the interventions and the supportive theoretical background should be clarified.
Before the enlargement of the EU in 2004 there was a serious debate about the role and future of the regional policy. In the last 15 years there were different opinions about the effectiveness and efficiency of the interventions of the Structural Funds and the National Development Plans among the analysts (Lóránd, 2009). Two opposite opinions are observable: The first one is the Anglo-Saxon aspect, which argues that stability, liberalization and privatization are the most important; this could help to foster convergence in the less-developed areas. The other opinion is built on the theories of Gerard Roland’s evolutionist and institutionalist concepts which states that the public interventions and the assurance of the public goods (e.g. infrastructure, human resource) play an important role during convergence. The econometric models have not produced a definitive answer in this debate so far.
Currently, the national development planning activity of the European Union is compatible with the updated version of the Anglo-Saxon model. Furthermore, many of the reviews against the regional policy of the EU have been denied by the recent regional and growth economics researchers and analysts dealing with strategy formulation.
It seems that the regional policy of the EU has a significant role in supporting the lagging countries and regions for restructuring their economy and strengthening their competitiveness, which are crucial factors for them to be prepared for the common market and the monetary union. The active attitude demanded by the National Development Planning process does not mean the rejection of the Anglo-Saxon approach; rather the most important preconditions for the successful catch up of the less developed countries are liberalization, stability and privatization (Bradley, 2005). Thus the EU would like to reach a sound compromise, and undertake the responsibility of being compliant for both approaches.
In the followings we will examine the most important stages of the evolution of the Cohesion Policy.
The amount of funds aimed at fostering cohesion has been raised in line with the enlargement of the Union, since the end of the ‘80s the amount of money spent on reducing inequalities more than doubled, thus the regional policy became the second largest policy in the EU (Rodri-
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guez – Fratesi, 2002). Currently, one of the largest expenditure in the common budget is allocated for the Cohesion Policy (Table 1).
Table 1: EU budget expenditure in the different planning periods between 1989 and 2013 (in % of total expenditure)
| 1989-1993 | 1994-1999 | 2000-2006 | 2007-2013 | |
| 1. Agriculture | 58 | 48 | 46 | 42 |
| 2. Structural operations (regional policy) | 22 | 33 | 33 | 36 |
| 3. Home affairs | 4 | 6 | 6 | 10 |
| 4. Foreign affairs | 5 | 7 | 9 | 6 |
| 5. Administration | 9 | 5 | 5 | 6 |
| 6. Reserves | 2 | 1 | 1 | - |
Source: Kengyel Á. (2008): Az európai integrációs folyamat és a közös költségvetés dilemmái. Európai Tükör, 13/7-8, p. 35.
To observe the evolution of the Cohesion Policy the analysis of numerous documents is required. Here only the most important stages, thoughts and directions which are in connection with the future scenario are highlighted (introduced in the next part of the study) (Table 2). In addition, we emphasize the most stressed solution options from these documents.
According to the Sapir Report there should be a radical reform of the regional policy of the EU, only the less developed areas should be in the supported group (Rácz, 2007). Regarding the report there should be a separation between the instruments fostering growth and other interventions supporting cohesion. Other important conclusion of the report highlights the fact that the cohesion policy should focus rather on less developed countries (measured by GDP per capita) than on less developed regions (irrespectively of it the monitoring and implementation could be decentralized). (Sapir et al., 2003; Vaitilingam, 2002) The report concludes that the budget of the EU should be restructured and the establishment of three different funds would be necessary:
• Fund for supporting growth,
• Fund for supporting convergence,
• Fund for supporting structural reform of the economy.
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The eligibility for each fund should be decided using justifiable and transparent criteria. (Sapir et al., 2003) The critics regarding the report acknowledged the aforementioned ideas. There is a consensus over stopping the support of less-developed regions of well-developed countries and the elimination of the concerning administration (bureaucracy). According a study of Pelkmans and Casey (2004) if the eligible areas were the countries instead of the regions among the EU-15, then 40% of the subsidies could be neglected from the system.
Territorial cohesion was emphasized seriously in the recent years in the different documents published by the EU. Originally, cohesion meant the convergence of the less developed areas, later two different meanings of it have been developed: firstly to support solidarity and reduce disparities, secondly to foster convergence and efficiency. In the next planning period the...
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