Christine Lagarde, President of the European Central Bank, was very clear in her statement to the European Parliament on February 8th, 2021: “It is essential that the Next Generation EU funds are disbursed quickly and used to support structural reforms and growth-enhancing investment projects”. Europe needs very timely answers to cope with an economic crisis of unprecedented depth and Cohesion Policy offers the ideal laboratory to provide some guidance on how this can be achieved.
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Our recent study examines the potential structure and organization of Next Generation EU (NGEU) projects to ensure speedy implementation to serve promptly the objectives of NGEU. We studied thousands of individual projects funded under the 2014-2020 cycle of Cohesion Policy in Italy to understand if it is possible to identify characteristics and strategic choices that have systematically favoured or prevented implementation timeliness. Textual analysis has made it possible to identify Cohesion Policy projects that meet the spirit of NGEU by targeting digital (e.g. digitalisation and innovation of firms; e-government; e-health; e-learning; broadband etc.) and green transition (e.g. energy; decarbonisation; clean tech; circular economy etc.) in order to demonstrate which project-level characteristics, ceteris paribus, are systematically associated with delays in their implementation.
The results show that projects in line with NGEU objectives have a higher probability of accumulating implementation delays vis-à-vis all other projects financed by the EU through Cohesion Policy.
To reduce the likelihood of delays:
a) the projects should be coordinated by national governments with simplified procedures;
b) each project should be led by a single individual, without shared responsibility between multiple beneficiaries or multiple territories;
c) projects must be negotiated in advance with the economic actors who will carry them out.
The evidence suggests that timely implementation is achieved – within the EU Commission coordination framework – when national governments liaise directly with their citizens through participatory procedures involving relevant stakeholders. Simplified implementation procedures with clear spatial targeting and limited involvement of regional and local authorities are necessary conditions for the avoidance of implementation delays in countries where the absorption of EU funds has been traditionally slow.
MORE EFFICIENT REGIONAL GOVERNMENTS TO CONSOLIDATE AND REINFORCE STAKEHOLDERS PARTICIPATION
This evidence does not mean that regional governments (or other intermediate governance bodies) should be excluded from the implementation of NGEU. On the contrary, the governance of NGEU should leverage their strengths to the enhancement of both the regional and national economy. Timely implementation is not one of these strengths. Therefore, regional governments should mobilize after the initial direct partnership of national governments and relevant on-the-ground stakeholders, creating a “two-stage implementation strategy” for recovery.
The initial direct leadership of NGEU programmes from national governments (stage one) should ideally be coupled with administrative reforms, radical simplification of procedures and intensive capacity building programmes targeting regional and municipal governments in order to reinforce their planning and implementation capabilities (stage two). NGEU offers a once-in-a-life-time opportunity to reinforce administrative capacity and efficiency by introducing modern managerial practices and simplification in local and regional administrations.
After the initial stage of capacity building and urgent structural reforms, a wider mobilisation of (new) stakeholders – outside the blockages of local interest groups and the rent seeking behavior of local incumbents – will ensure the smooth implementation of the second stage of the programme. Clear targets on institutional and administrative capacity (including use of e-government and simplified procedures) could regulate a differentiated access to the second stage (and the associated funds) by each regional government or municipality. This will allow regions to leverage their experience and convey their fundamental contribution to the implementation of development policies without delaying the urgent ‘shock therapy’ in response to Covid-19.
A CALL FOR EVIDENCE FROM COHESION POLICY SCHOLARS AND PRACTITIONERS
This two-stage approach would reconcile a timely implementation with the strategic contribution of sub-national governments and administrative bodies to the success of NGEU. Realistic approaches to what can be achieved by the regions are integral in the context of an economic calamity of such unprecedented magnitude. The long history of Cohesion Policy offers critical insights on this. We implore more scholars and practitioners working on Cohesion Policy to engage in a wider, evidence-based debate on effective strategies to boost a green and digital recovery in Europe and beyond. The unprecedented funding and scope of NGEU offers a unique opportunity for this community to make a real difference – let’s not miss that opportunity!
Riccardo Crescenzi is a Professor of Economic Geography at the London School of Economics and is the current holder of a European Research Council (ERC) Grant. He is also an Associate at the Centre for International Development, Harvard Kennedy School of Government.
Mara Giua is an Assistant Professor at the Department of Economics – Roma Tre University, and a Member of the Board of Directors of the Manlio Rossi-Doria Centre for Economic and Social Research, Centre of Excellence – Roma Tre University. She is also Visiting Fellow at the London School of Economics.
Giulia Valeria Sonzogno is a PhD Candidate in Urban Studies and Regional Science, Social Sciences, at the Gran Sasso Science Institute. She is also a consultant for the Technical Committee for Inner Areas at the Italian Minister for Southern Italy and Territorial Cohesion.
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