Multi-level governance, regional government, and the impact of structural funds: Evidence from European regions

This paper investigates the impact of the Structural Funds expenditure on economic growth in 158 regions in the programming period 2000-2006. The multi-level model governance (MLG) model has been endorsed as the best governance system of cohesion policy. This model emphasizes the role of sub-national governments in the policy-making process. The basic idea is that local governments are necessary to adapt policy to local context thanks to their better knowledge of local contexts. We explore to what extent regional governments contribute in making cohesion policy more effective by looking at their quality and their degree of political decentralization. We find that regional governments play a significant role in affecting the impact of Structural Funds expenditure on economic performance. The quality of regional government is particularly important, while political decentralization plays a less important role. Policy implications for cohesion policy are discussed.