Derangement or Development? Political Economy of Eu Structural Funds Allocation in New Member States - Insights from the Hungarian Case
Abstract: By looking at the allocation of European Union Structural Funds (EU SF) in Hungary for 2004-2008, this paper addresses if and how these are influenced by political and institutional factors. Taking the political economy of intergovernmental grants framework (among others Johannson 2003, Bodenstein-Kemmerling,2006, Veiga-Pinho, 2007 etc.) it comes up with hypotheses specially relevant for the Hungarian context. Data is analysed in search for possible political influences, election motivated/pork barrel type grant allocation decisions. For checking what is affecting the chances of grant receivals (of any applicant or of local government) Probit models have been tested with different sets of political and socio-economic control variables on a combined dataset (created from five different data sources containing socio-economic, budget and election data for all Hungarian municipalities (n=3168)). This period (starting with the country’s 2004 EU Accession) spans two election cycles (2002-2006; 2006-2010) with general and local elections being held in 2006. Estimations are carried out on the whole database and sub-samples by size and different periods pre- and post-election too. Results show partisanship elements (same colour favouritism) raising chances for getting EU SF grants in case of MPs and mayors for certain municipality size categories. Findings also reinforce what the EU SF literature stresses - efficient usage of EU funds depends mostly on institutional conditions - here proxies for local administrative capacity and earlier EU project experience are strongly significant and positive, adding to probabilities of successful EU SF grant receipiency. Socio-economic and need controls show a mixed picture, reflecting the conflict of efficiency vs. equity-driven goals of development policy today.
