Does EU funding improve local state capacity? Evidence from Polish municipalities
| Date | 01 September 2021 |
| Published date | 01 September 2021 |
| DOI | 10.1177/14651165211005847 |
| Author | Jan P Vogler,Paweł Charasz |
| Subject Matter | Articles |
Article
Does EU funding improve
local state capacity?
Evidence from Polish
municipalities
Paweł Charasz
Department of Political Science, Duke University,
Durham, NC, USA
Jan P Vogler
Department of Politics, University of Virginia,
Charlottesville, VA, USA
Abstract
Does EU funding improve local state capacity? We focus on two specific types of state
capacity, namely (a) the ability to provide information to third parties and (b) to dis-
criminate between different kinds of inquiries. Because the EU’s structural funds are
distributed through a competitive mechanism and incentivize expansions in administra-
tive personnel, our theory predicts that high levels of EU funding bring about a higher
bureaucratic capacity equilibrium. Empirically, we analyze the effect of structural funds
on local government capacity in the largest recipient country: post-communist Poland.
Through a randomized survey with more than 2400 municipal administrations, we find
that administrations that have benefited more from EU funding, have developed higher
levels of discrimination capacity. Yet we find no evidence for higher information provision
capacity.
Keywords
Bureaucracy, EU structural funds, local government, Poland, state capacity
Corresponding author:
Jan P Vogler, Department of Politics, University of Virginia, P.O. Box 400787, Charlottesville, VA 22904, USA.
Email: jv2mc@virginia.edu
European Union Politics
!The Author(s) 2021
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DOI: 10.1177/14651165211005847
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2021, Vol. 22(3) 446–471
Introduction
After the fall of the Iron Curtain, European leaders recognized that long-term
stability on the continent necessitated that the countries of Eastern Europe develop
strong democracies and robust economies—closer to the living standards of
Western Europe and ideally integrated into what would later become the
European Union’s (EU) supranational system (Schimmelfennig and Sedelmeier,
2005). These goals required massive amounts of regional development aid, which
were eventually channeled through the EU’s structural funds (Bailey and De
Propris, 2002; Becker et al., 2010; Charron, 2016; Dellmuth, 2011; Mohl and
Hagen, 2010). Considering that significant proportions of these funds were admin-
istered by local governments (De Rynck and McAleavey, 2001), we ask: How did
the structural funds affect local bureaucratic capacity? This question is particularly
relevant because strong local governments are indicative of self-governance, which
is a key component of the democratization processes promoted by the EU.
Our project examines the impact of EU funds on specific dimensions of local
state capacity. Building on studies by Wood and Lewis (2017), Berliner et al.
(2018), and Chong et al. (2014), we conceptualize and focus on (a) information
provision capacity (or information capacity) and (b) discrimination capacity,by
which we refer to the capacity of governments to provide information to third
parties and effectively discriminate between different inquiries, respectively.
1
As
elaborated in more detail below, these concepts reflect the increasing role of infor-
mation in determining governance quality.
Although structural funds payment can be considered transfer payments within a
supranational polity (Chalmers and Dellmuth, 2015), there are some parallels to
development aid: 1. The funds’ goal is to promote political and economic develop-
ment; 2. they specifically target the poorest European regions with most funding (for
an important qualification of this goal’s practical implementation, see Dellmuth
(2011)); and 3. despite the supranational transmission mechanism and region-
based allocation rules, these transfers primarily come from wealthier EU member
states and benefit the less wealthy ones.
2
Therefore, this contribution also speaks to
the widely contested question of aid effectiveness (e.g. Bearce and Tirone, 2010;
Wright and Winters, 2010). Importantly, many scholars suggest that aid leads to a
deterioration in governance quality (Easterly, 2007; Moss et al., 2006).
One area marked by significant disagreement pertains to the effects of aid on
bureaucratic capacity and the quality of public services. Previous contributions—
often dealing with other world regions—suggest the entire range from positive
(Goldsmith, 2001; Kim et al., 2013) through conditional (Jones and Tarp, 2016;
Knack and Rahman, 2007; Selaya and Thiele, 2012) to negative effects (Br€
autigam
and Knack, 2004; Moss et al., 2006). An important gap in this literature is the
analysis of a competitive/selective aid distribution mechanism, as provided by the
EU’s structural funds.
We theorize that, when aid is subject to such a competitive allocation process, it
incentivizes administrative capacity investments, which often persist and spill over
447
Charasz and Vogler
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