THE USE OF EUROPEAN FUNDS BY COMMUNITIES WITH DIFFERENT LEVEL OF DEVELOPMENT IN EASTERN POLAND

Maciej Stawicki
Department of European Policy, Public Finances and Marketing, Faculty of Economic Sciences, Warsaw University of Life Sciences (SGGW)

ABSTRACT

The goal of the article was to determine the use of European Union's structural funds acquired by communes characterized by different development level localized in Eastern Poland (contains the following provinces: warmińsko-mazurskie, podlaskie, lubelskie, świętokrzyskie and podkarpackie). Statistical analyses led to the conclusion that best developed municipalities acquired the largest amount of European funds. The highest absolute and relative value of implemented projects characterized biggest cities. Faster development in peripheral rural and rural-urban communes resulted mainly from technical and secondarily social infrastructure development. In this group of communes a weak correlation between the volume of acquired funds and development speed was observed.

Key words: EU structural funds, evaluation, regional policy, local development, communes, Eastern Poland.

INTRODUCTION

In May 2011, 7 years have passed from Polish accession to the European Union. At that time, by implementation of community policies, Poland received from the EU budget about 58 billion euros. More than half of this amount (60%) consisted of support under the Cohesion Policy [1], which aims to support specific areas of the member states, enhance their competitiveness and to support the process of convergence. Thus, it improves the quality of life of residents and contributes to the development in regional and local scale. Since special attention on the structural funds spending is directed to less developed regions (mostly rural), the author focuses on the peripheral regions, because they are the primary purpose of assistance by the cohesion policy. Voivodships of Eastern Poland (Warmia and Mazury, Podlaskie, Lubelskie, Świętokrzyskie and Podkarpackie), before the accession of Bulgaria and Romania, occupied the last 5 places in terms of level of development measured by the size of GDP per capita in the EU-25, not exceeding 37% the EU average. This area is characterized by very low level of economic, social and territorial cohesion, high levels of employment in agriculture and poorly developed market services. The communities received millions of support under the EU assistance, which aim was to accelerate development and reduce disparities in regional development. As the first programming period after the accession to the EU (2004-2006) has been completed in 2009, the author analyzes and evaluates how did the Structural Funds acquired by local governments stimulate development processes at the eastern Polish peripheral areas, being also the periphery of the European Union.

MATERIAL AND METHODS

The article presents the use of the Structural Funds and The Cohesion Fund available in the period 2004-2009 (financial perspective 2004-2006) implemented through the Operational Programmes and Community Initiatives by municipalities of five provinces belonging to Eastern Poland. The development was measured at local level (due to the availability of statistical data municipality is the most local dimension possible to investigate). Measuring the level and dynamics of local development was performed for all 708 municipalities of the study area, divided into urban, urban-rural and rural areas.

The following variables were selected, on the basis of which the author calculated synthetic level of development (Wr) and the dynamics of development (Wd): the municipalities' own revenues per inhabitant in PLN, working people per 100 people at working age, the number of unemployed in relation to the number of people at working age, users of water supply system in %, users of the sewage systems in %, users of wastewater treatment plants in %, people conducting economic activity per 100 persons of working age, the number of foundations, associations, and social organizations per 1000 residents. Synthetic level of development indicator of municipalities Wr was calculated according to the method of addition the values of individual sub-indices [2], consisting of normalized variables.

Measuring the absorption of European funds was based on a database of the Ministry of Regional Development providing information on the use of EU funds at the financial perspective 2004-2006 (according to state at the first quarter of 2009). Of the approximately 85 thousand projects available in the database only those implemented by the municipalities from the 5 subjects provinces were selected – the author has identified 1834 such projects. The synthetic rate of EU funds utilization was calculated by using 3 partial indicators: the value of projects completed per 1 inhabitant in PLN, the number of types of projects completed, the number of projects per 10000 inhabitants.

RESULTS AND DISCUSSION

In 2004-2009, the Eastern Polish municipalities (including cities with county rights) implement a total of 1834 projects co-financed from EU funds available within the operational programs and initiatives of the National Development Programme (NDP) 2004-2006. The largest number of projects (over 1100) with a total value of PLN 2.7 billion were implemented in the Integrated Regional Operational Programme (IROP). In second place in terms of number of projects (565) was Sectoral Operational Programme (SOP) Rural Development, however the projects characterized much smaller value with a total of PLN 183 million. In second place in terms of value of completed projects was the Cohesion Fund, under which only 13 projects were completed for a total of PLN 1.3 billion.

Both the average number of ongoing projects, as well as the average value of the project increases with the increase in the number of inhabitants of commune and is associated with its type. The largest amount, both absolute and per capita gained the urban municipalities (especially the city area of more than 100 thousand inhabitants), followed by urban-rural, and the smallest projects were implemented in rural communities.

In the calculations carried out for the entire group of municipalities in Eastern Poland a weak positive correlations of the absorption rate and indicators of development appear. Calculation results by types of municipalities are presented in the table below.

Better developed municipalities were characterized by higher acquisition of EU funds in 2004-2009 (see Fig. 1). This relationship is particularly evident in the group of municipalities (urban communes), among which the largest and best developed cities (performing the functions of regional and sub regional centers) have carried out many projects with the highest amount. Co-variableness is greatest when comparing the income of municipalities and index of funds use. It is clear that more rich cities were characterized by a higher level of European funds absorption. Quite the opposite results were obtained by Ł. Satoła and J. Żmija in rural mountain areas, where smaller share of own revenues correlated with higher absorption of EU funds [3]. A very weak positive correlation between the level of development and the use of EU funds can also be observed in the group of rural municipalities. In the remaining group of urban-rural communes there were no statistically significant relationships.

Figure 1. Development of communities and their use of EU funds Source: based on data of Regional Data Bank (RDB) by Central Statistical Office (CSO) and the Ministry of Regional Development

Comparison of four quartiles of municipalities separated on the basis of differences in the level of development led to the following conclusions. Half of the least developed municipalities raised a total of only 820 million PLN, mainly involving IROP (83%) and SOP Rural Development (14%). 25% of municipalities with the highest income per capita have implemented projects for almost 3.5 billion PLN, in which about 40% is the result of investments financed by the Cohesion Fund, and 53% of IROP. Also, analyzing the value of projects completed per capita can be seen a large (though smaller than the data in absolute terms) disproportion between the group of 25% most developed municipalities and the rest of the units. The best developed municipalities (mostly cities, including cities with county rights) acquired approximately 2.5-3.5 times more EU funds than other municipalities, which is mainly a consequence of conducting a number of valuable infrastructure projects financed from the Cohesion Fund. On the basis of the calculations it can also be noted that more developed municipalities were more active in the use of EU funds. Thus, the best developed areas gained the highest amount of UE aid.

Figure 2. The value of obtained EU funding per resident and the level of development of municipalities Source: based on data of Regional Data Bank by Central Statistical Office and the Ministry of Regional Development

Figure 3. Structure of actions taken by the communes in projects under the NDP 2004-2006 Source: based on data of RDB by CSO and the Ministry of Regional Development

The analysis of the ways of spending EU funds in municipalities with different level of development leads to the conclusion that they were similar in 3 of 4 groups. Only in the quartile of most developed municipalities one can notice a greater share of promotional projects and scholarships and a much smaller number of projects relating to social infrastructure. This is a consequence of the fact that most developed municipalities less likely invested in social infrastructure. In most developed group of municipalities has also the highest proportion of training projects and projects supporting labour market and entrepreneurship and other non-investment projects.

Figure 4. Structure of projects implemented by municipalities by type Source: based on data of Regional Data Bank by Central Statistical Office and the Ministry of Regional Development

Most activities undertaken in rural areas (about half of all projects) were the construction and modernization of social infrastructure, particularly cultural facilities and schools. Projects included renovation of community centers, cultural centers and their equipment, adaptation of rural buildings for community centers, etc. In second place, there were projects involving construction or upgrading sewage systems, sewage treatment plants, roads and sidewalks. Also played an important role expansion of sports facilities (primarily courts, gyms) and recreational (eg. playgrounds) and renewal of public space. In the group of municipalities close to 40% of the projects were involved in technical infrastructure, especially roads, and a frequent motive for this was to prepare the land for investment. Another 40% were training projects, scholarships and other non-investment activities. To this group belong numerous activities in the field of promoting entrepreneurship and job market through training and scholarship programs for pupils or students. Attention was also paid to water supply infrastructure (water treatment plants, modernization of the network) and the expansion and construction of sewage treatment plants.

CONCLUSIONS

The largest cities, including the capitals of provinces, are leaders of the absorption of EU funds, both in absolute terms and per capita. All of them carried out projects obtaining PLN 50-190 million from EU funds for 2004-2006. The average value of the project amounted to PLN 6.4 million, but the median value of the projects amounted to only 1.2 million, which indicates that a half of Eastern Polish municipalities implemented projects, which raised a total of less than 750 thousand zloty of EU aid. 18% of municipalities did not receive any project during the period considered.

Eastern Polish community benefited most from the European Regional Development Fund and the Cohesion Fund, Guidance Section of European Agriculture Guidance and Guarantee Funds (EAGGF) and the European Social Fund. The analysis has shown that the municipalities in five provinces surveyed characterized large variation of absorption of EU funds accessible under the NDP 2004-2006. The use of individual operational programs, through which the funds were obtained showed no significant regional differences. Large differences in the sources and directions of spending of EU funds was recorded, depending on the type of municipality. Cities have benefited in large part from IROP, the Cohesion Fund, and the large agglomerations also of SOP Transport. Urban-rural and rural communes to a comparable extent acquired EU funds through SOP Restructuring and Modernization of Food Sector and Rural Development and IROP.

The main direction of structural funds spending by Eastern Polish local governments in 2004-2009 was the expansion and modernization of infrastructure. In municipalities dominated construction and modernization of technical infrastructure, mainly roads, water, sewerage and sewage treatment plants. The urban-rural and rural communes implemented many projects on development and modernization of social infrastructure, above all, cultural facilities, community centers and rural schools, in second place were the expansion and modernization of technical infrastructure.

In rural and rural-urban areas weak correlation between the dynamics of development and the use of EU funds was found, but in several municipalities, which carried out infrastructure projects they were very clear. Without a doubt, one can confirm the fact that the implementation of projects co-financed by European funds leads locally to improved quality of life. This involves both the extension and upgrading of road infrastructure (roads, sidewalks, bike paths) and environmental infrastructure (improved water supply, sewerage system expansion, water treatment, waste management). Many activities, especially in rural areas were devoted to culture: the construction and upgrading of community centers, and rural education (school modernization, construction of sports facilities, etc.). A large number of promotional activities and trainings activated communities to formulate local development strategies and implement development-oriented actions.

In the majority, the investments were responding to the current needs of residents, and to a lesser extent they reflected the strategic development needs of municipalities designated by experts in the Strategy for Socio-Economic Development for the entire area [4]. Only one in ten one in twenty project implemented by local communities was directly connected with the main objective and specific objectives of the National Development Programme 2004-2006, which was the development of a competitive economy based on knowledge and entrepreneurship. Other activities, including mainly infrastructure, could indirectly contribute to the development of entrepreneurship through preparation of investment areas or improvement of accessibility. Projects co-financed by EU funds implemented by the Polish communities in Eastern Poland contributed to improving the situation of the region primarily in the level of development of technical and social infrastructure, but to a lesser extent they influenced the improvement in the labour market.

REFERENCES

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