Since their creation in 1975, European Structural and Investment Funds (ESIF) have been increasingly invested in local development projects in the EU. Drawing on figures from France and Italy, Lisa Dellmuth and Dominik Schraff illustrate that at least part of the ESIF is used to help buy political support, but that this appears to be more common in countries that use majority voting systems rather than proportional representation. They argue that we need to better understand what motivates domestic politicians to spend these funds, as only needs-based spending will solve local social and economic problems.

In all EU member states, politicians are spending ever-greater amounts of European Structural and Investment Funds (ESIF) on local development. Over the past ten years, about €500bn in EU funds have been channeled through regional and national governments to local projects in areas such as transport and communications infrastructure, business development, environment protection, active labour market policies, and social inclusion. The hope is that domestic politicians, which decide on how EU funds are being spent locally, will find better and sustainable ways to promote social and economic development.

Indeed, EU funding has effectively promoted growth and support for the EU in the past. Yet EU funds are often not spent in line with EU goals, potentially undermining effectiveness. Politicians have spent EU funds to support other already existing domestic spending policies, or to enhance their own re-election chances. At the same time, the European Commission lacks both the mandate and the necessary resources to enforce EU goals. To improve EU funding policies, we need to better understand how domestic politicians use EU funds, and why.

In a recent study with Michael F. Stoffel, we demonstrate how and why electoral institutions provide politicians with incentives to use EU funds to buy votes. Political science research has convincingly shown that the voting rules underlying electoral systems shape how politicians spend public funds more generally. Research on vote-buying originated in the United States, where the single-member district plurality system provides politicians with incentives to allocate public funds to their districts to create a personal following, but evidence comes from democratic states worldwide.

Our study shows a clear link between electoral institutions and EU spending by comparing a two-round majority voting system (France) and a proportional representation system (Italy). Controlling for needs-based factors such as GDP per capita, unemployment rates, and urbanisation, we statistically examine whether NUTS 3-level counties in these two countries receive larger amounts of EU funding the more county residents support the national government, measured as vote share of the governing party of the Italian prime minister, L’Unione, and second-round vote share for President Jacques Chirac in France. Two findings stand out from this analysis.

1. Politicians use at least a part of the ESIF to buy votes in counties

In Italy, spending levels were higher where L’Unione had greater electoral support in the election of 2006. Moving from a province with particularly low support for the left-wing parties (10th percentile) to a strong-hold province (90th percentile) – a difference of about 20 percentage points in vote shares – raises funding through the European Regional Development Fund (ERDF) by more than half, all else being equal (as shown in Figure 1).

Figure 1: Predicted effect of vote share on ERDF (European Regional Development Fund) spending per capita in Italy and France

Note: Authors’ own calculations

In France, the figure above shows that moving from the 10th to the 90th percentile in vote share (i.e. increase in 13 percentage points) more than doubles ERDF spending in a département (by a factor of 2.4). Findings in the context of the European Social Fund (ESF) are similar but more variegated. Both with regard to ERDF and ESF spending, there is limited evidence for an effect of needs-based criteria on funding. These findings indicate that domestic politicians enjoy much leeway in allocating EU funds to the electoral benefit of the national executive.

2. Vote-buying appears more common under majority voting than under proportional representation

The vote-buying literature helps explain this finding: in contrast to their executive counterparts in majority voting systems, national chief executives in proportional representation systems should have fewer incentives to provide disproportionate amounts of funding in specific counties, as they cannot claim singular responsibility for the allocation of EU funding to counties. Figure 2 depicts the estimated difference in spending between Italy and France (with 95 per cent confidence intervals).

Figure 2: Predicted difference in ERDF spending per capita under majority voting (France) and proportional representation (Italy) electoral systems

Note: Authors’ own calculations

Negative values indicate that a county received less spending in France than in Italy, whereas positive values indicate the opposite, all else being equal. The difference is negative for low levels of vote share and positive for high levels, indicating that the distributive effect of vote share is stronger in France. These findings suggest that vote-buying with EU funds is more common under majority voting than under proportional representation.

Understanding the link between political institutions and the allocation of EU funds

Taken together, we observe that the implementation of European Structural and Investment Funds faces serious challenges. Electoral institutions play a central role in determining the degree of vote-buying. Domestic politicians pursue their own electoral interests with EU funding, whereby vote-buying is more pronounced under majority voting than under proportional representation. This distorts a needs-based allocation of the ESIF.

What is needed is more targeted research on the linkages between political institutions and the domestic allocation of supranational funds in the EU. In this respect, our study demonstrates how a systematic cross-national comparison of vote-buying behaviour allows for adjudicating between rival explanations. What is more, future research could compare the political and economic determinants of supranational funding across supranational organisations.

Supranational spending is rising in different world regions. For example, the Common Market of the South (Mercosur) has established a Fund for the Structural Convergence of Mercosur in 2006 similar to the ESIF in terms of spending goals and domestic implementation. Only if we better understand how political institutions affect how politicians spend supranational funds can we enhance the ability of supranational policy-makers to craft effective regional funding policies.

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Note: This article gives the views of the author, and not the position of EUROPP – European Politics and Policy, nor of the London School of Economics.

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About the author

Lisa Maria Dellmuth – Stockholm University
Lisa Dellmuth is Associate Professor of International Relations at Stockholm University. Her research focuses on fiscal redistribution, European Union politics, and public opinion and legitimacy in regional and global governance.

Dominik Schraff – ETH Zürich
Dominik Schraff is a post-doctoral researcher in the European Politics Group at the Center for Comparative and International Studies. His research focuses on public opinion, economic inequality, and European Union regional policy.

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