EU cohesion policy, access to EU development funds – the panacea for all, or the trigger for (further) problems?

10/02/2023

Petra Edina Reszkető, senior researcher at BI, gave a guest lecture to MA students of the Hertie School in Berlin on EU cohesion policy and the policy challenges of using EU development funds in Hungary.

During the interactive discussion she highlighted the findings of the international theoretical and empirical research that demonstrate why the social welfare- and growth enhancing effects of the EU funds is not evident – especially, in countries with weak public institutions or ineffective regulations.

The efficiency of EU funds is undermined if, for example, conditions of fair competition in public procurements are violated and the public contracts of winning companies entrusted with project implementation are overpriced. The social costs of EU funds may easily be negative if the support schemes do not target the groups most in need (e.g., the long-term unemployed, micro and small enterprises with no access to loans, or municipalities in disadvantaged situation), but to individuals, firms and municipalities whose development projects would be carried out even if they would turn to be no-beneficiaries of these support schemes – that means, even if the EU funds were not available.