Chapter 6: Quality of government, regional autonomy and Cohesion policy allocations to EU regions
Fostering economic cohesion among the regions of the European Union (EU) is a primary policy goal of the EU Commission, and since the mid-1970s Structural Funds have been used as a key policy tool to achieve this goal. Although Structural Fund grants to regions have relatively clear criteria – namely, the level of economic development and structural factors such as unemployment – several scholars have highlighted an empirical puzzle: there is wide variation among regional allocation of funds that can be explained by factors other than economic ones. This chapter builds on this recent literature that has elucidated many political-institutional variables and adds an alternative explanation as to why certain regions receive more structural fund grants on average – the level of state capacity, or ‘quality of government’ (QoG). The chapter finds that even when controlling for standard economic and political factors, QoG explains significant regional variation in grant allocation, and the effect of QoG is even more pronounced as regions have more political and fiscal autonomy. This finding highlights a strategic dynamic between the three actors – regional, national and European Commission – in the multilevel negotiations for appropriations of Structural Fund grants to EU regions.
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