Do levels of governance make a difference? Investigating the effects of the structural funds on convergence within the European Union

After World War II, the six original members of the European Union claimed economic convergence to be one of their main goals in the Treaty of Rome. Since then, the organization has had to deal with global economics trends, membership enlargements, and other issues which have created divergence. In response to this, the EU created a regional policy in 1973, which is supported by the European Regional Development Fund. The ERDF served as the instrument where the EU was able to give grants to the underdeveloped regions of member states. However, until 1989, the ERDF was distributed via a quota based formula, supposedly going to states with economic need. After the 1989 reforms of the ERDF, when it became a part of the new Structural Funds, it was distributed via the Community Support Frameworks, which served as an organization tool where the European Commission would be able to identify those regions which need the most economic assistance as well as how these regions would spend this money. To examine how effective the ERDF/Structural Funds have been in spurring economic growth and convergence, I ask three main research questions: First, is the money being distributed to those states which have some economic need or is it going to those states with more power? Second, in the different distributional phases of the ERDF and Structural Funds, can we witness different trends in economic growth as a result of distributional functions? Third, if economic growth is occurring, is the money from the ERDF/Structural Funds distribution positively assisting in economic convergence?; I propose a theory related to multilevel governance to discuss how the distribution of the ERDF and Structural Funds in these different periods may result in various outcomes due to the distributional schemes. I expect to find that in the post revision period, the Structural Funds are better equipped via their distributional processes to achieve the goals set forth by the Treaty of Rome. The empirical evidence supports this conclusion, in that although convergence is not occurring in either period examined, the poor regions of the European Union are growing economically due to the assistance from the Structural Funds.