Administrative Capacity, Structural Funds Absorption and Development. Evidence from Central and Eastern European Countries

Abstract

Literature acknowledges the importance of the administrative capacity for experiencing high levels of Structural Funds (SF) absorption. By defining the administrative capacity in terms of institutional quality and political management performance, the main purpose of this article is to analyse the impact of administrative capacity on the European Funds absorption level in Central and Eastern European Countries (CEEC), given that they were facing common transformations during the transition period, as well as the impact of SF on development, controlling for the absorption level. Multiple regression analysis was used for testing the impact of administrative capacity on the absorption level during the 2007-2015 period, on the one hand, but also for estimating the impact of SF on development, on the other. The results showed that institutional quality and management performance have positively influenced absorption rates and that SF have managed to support economic development. Given that despite the learning process and the reforms carried out during the previous programming periods the CEEC are still lagging behind in terms of absorption under the current programming period, increasing efforts for improving their administrative capacity is required in order to ease cohesion policy implementation and boost their development.

Keywords: administrative capacity, institutional quality, management performance, structural funds, European funds absorption, development, Central and Eastern Europe