Administrative capacity and EU funds management systems performance: the cases of Hungary and Slovakia

ABSTRACT

We analyse European Union (EU) funds management systems performance using the cases of Hungary and Slovakia – two Central European countries with a common history and background, yet different concepts of EU funds management. We explore the role of administrative capacity and institutional stability as key factors affecting performance in both countries. We also provide evidence for the relationship between administrative capacity and non-compliance, measured by financial corrections, with a model robust to different programming periods and model specifications. Using the resulting baseline model applicable to all EU countries, we assess EU funds management system performance in Hungary and Slovakia.

KEYWORDS:

• Cohesion Policy
• performance of implementation system
• comparative analysis
• irregularities and financial corrections

JEL:

• H11
• H83
• R58

ACKNOWLEDGEMENTS

The authors are grateful for the helpful comments provided by the anonymous reviewers and associate editor.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. See http://ec.europa.eu/regional_policy/en/policy/evaluations/.

2. An ‘error’ may include any non-compliance with the rules during the implementation of the EU budget that does not qualify under the definition of an ‘irregularity’.

3. Any breach of EU or national law by beneficiaries of EU funds that has or would have the effect of prejudicing the EU budget by charging an unjustified item (Regulation 1303/2013, art. 2(36)).

4. A criminal act where a person or entity intentionally damages the EU or national budget.

5. The European quality of government index (EQI) is the result of a survey at regional governance level within the EU, focusing on perceptions and experiences with corruption, public service provision and quality.

6. See https://ec.europa.eu/regional_policy/en/information/publications/.

7. See several political speeches, especially those by Viktor Orban (Mór, 21 May 2014, Europe Forum Conference Berlin, 8 May 2014).

8. The three objectives of CP for 2004–06 were Objective 1, ‘promoting the development and structural adjustment of regions whose development is lagging behind’; Objective 2, ‘supporting the economic and social conversion of areas facing structural difficulties’; and Objective 3, ‘supporting the adaptation and modernisation of policies and systems of education, training and employment’ (Council regulation No. 1260/1999).

9. Three ministries (Ministry of Economy, Ministry of Agriculture, Ministry of Employment) and the independent Hungarian Territorial and Regional Development Office.

10. The implementation system carrying out the actual transactions was rather fragmented, with 22 intermediate bodies.

11. The Prime Minister's Office was responsible for member state-level coordination tasks, including the preparation of programming documents, functions related to programme implementation, monitoring of the use of funds, preparation of legislation and proposals for amendment, and centralized management functions related to programmes (e.g., communication, evaluation).

12. Figures are from 2018.

13. A total of 79% of TA allocation in Hungary and 72% in Slovakia (Polverari et al., 2020, p. 83).

Additional information

Funding

This work was supported by the Vedecká Grantová Agentúra MŠVVaŠ SR a SAV (VEGA) [grant number 1/0837/21].