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Einige quantitative Überlegungen zum EU-Budget
[Some quantitative reflections on the EU Budget]

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  • Tausch, Arno

Abstract

The present analysis deals with the relationship of the EU budget and its resources with the Lisbon process. The EU Commission speaks for many years about a lack of transparency in financial relations between Member States and the EU. It even says that the current system fulfils very well the criteria of sufficiency and stability, but clearly not the criterion of visibility and simplicity, and not the criterion of a balanced allocation of economic resources in the EU. The fundamental question is then: how effective are all those billions paid out by the Commission for the Lisbon process in the individual Member States? The "net contributors" • Finland • Denmark • Austria • Belgium • Sweden • Italy • Great Britain • Netherlands • France • Germany already paid a sum total of over 73 billion Euros [€ 73452.5] over the time period of 2003 to 2007, in return states such as Spain, Greece, Portugal, Poland and Ireland cumulated over the period, far more than € 5 billion, with Spain (27.0 billion €), Greece (16.5 billion €), and Portugal (11.3 € billion) being the largest recipients. Although it is true that in the EU-27 countries with a low purchasing power receive more than rich countries, redistribution is relatively weak, and especially many semi-rich states - such as Greece - will continue to receive large sums from the EU budget. Clearly, this is a very huge revenue problem. We apply regression analysis to measure this “revenue problem”: Rich countries above the regression line of “pure distributive justice”, based on purchasing power per capita • Luxembourg • Ireland Rich states below the regression line • Netherlands • Germany • France • Italy • Sweden • Belgium • Denmark • Finland • Great Britain Poor countries above the regression line • Poland • Bulgaria • Hungary • Latvia • Portugal • Malta • Lithuania • Greece Poor states below the regression line • Romania • Czech Republic • Slovenia • Slovak Republic Our analysis shows that over time the weight of the "revenue problem" shifted to the East of our continent. Net inflows should ideally have been used to lift poor countries out of poverty. We estimated the convergence performance and its efficiency with a simple multiple regression model [wealth increase in relation to the wealth level in the previous period (non-linear effects are allowed) and the net financial position in the previous period]. Our calculations show that 1. certainly net transfers enabled the convergence of purchasing power in Europe, but 2. there were substantial deviations of the convergence process 3. over time imbalances seem even to have strengthened The south of Europe, especially Portugal, Italy, and Hungary and Bulgaria do not succeed, and the Lisbon efficiency of the EU financial resources decreased in particular in Denmark, Great Britain, Hungary, Romania and Greece over time. Greece is seen as a specially problematic case because it is the highest net payments recipient during the last years. Our analysis is supplemented by considerations about how funds from the EU budget should be available for the convergence of poorer EU countries. There seems to be a "constancy of subsidies” even long after the reasons for the subsidy long ceased to exist. Ireland, for instance still received massive inflows for many years even after it became one of the richest EU countries. In our estimation equation, we allow for the fact that rich countries may grow faster than very poor countries. Our quantitative analysis shows in any case that with the "big bang" enlargement in May 2004 a first good start towards more convergence and regional redistribution of the resources of the EU budget was made, but that the good performance quickly dissipated again an net transfers again suffered an efficiency loss. The EU-27 returned to the old tendency that the very rich countries grow faster than the poorer countries. Overall, therefore, our findings suggest that convergence funding is far from sufficient to achieve a real convergence in living conditions in Europe. There is also a current "perverse correlation” between corruption and net inflows. Poor states in the Union would do well to carry out consistent anti-corruption policies if they want adequate funding to reduce poverty.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14249.

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Date of creation: 24 Mar 2009
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Handle: RePEc:pra:mprapa:14249

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Keywords: Economic integration; International Relations and International Political Economy;

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  1. Sapir, Andre & Aghion, Philippe & Bertola, Giuseppe & Hellwig, Martin & Pisani-Ferry, Jean & Rosati, Dariusz & Vinals, Jose & Wallace, Helen, 2004. "An Agenda for a Growing Europe: The Sapir Report," OUP Catalogue, Oxford University Press, number 9780199271498.
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