Using the EU Funds between 2007 and 2013 from a Development of Disadvantaged Regions Perspective: the Case of Polish Regions

It is still quite fresh and fetching opportunity to gaining additional financial resources from EU funds for Central and Eastern European economics which changed to a free market not long ago. In regional pattern of such countries disadvantaged regions dominate. These undeveloped regions belong among the less wealthy European Union’s areas which mean they are covered under the objective Convergence of EU cohesion policy 2007 - 2013. This status causes the regions eligible to use huge amount of financial resources in order to improve its economic performance and the standard of living conditions of its inhabitants. The availability of so much “easy money” creates enormous pressure to spending and putting capital in many developing projects. However, not in every case may these projects be in accordance with rational allocation of economics resources. The rule of co-finance allows a maximum of 85% of eligible costs to be covered; so the issue is that using of EU funds provokes some national resources as well. Hence, by incorrect spending from EU funds the citizens can fall into a fiscal illusion i.e. their demand for development is distorted and doesn’t matched to what citizens truly need. Such behaviour can result to making serious troubles through waste of money and getting into debt while the citizens demand for such issues unconsciously rise. The aim of this paper is to examine the development of using financial resources from EU funds between 2007 and 2013 within the Polish NUTS II regions in the aspect of the two sector model of national economy; to decide which fields of interest are influenced by EU funds (based on causality testing in the conventional Granger sense or the Toda-Yamamoto augmentation); and to evaluate the development of ratio between EU funds and national resources putted into co-financed projects. The analysis - applied on quarterly data - was divided into two main parts. The first part is focused on the two sector model: households sector is analysed by development of labour market indicators, and producing sector is analysed by development of financial results of enterprises. Another part targets the development of using EU funds in comparison to national contributions of co-financed projects. Based on empirical results, we can suggest that the influence of funding on regional variables is quite ambiguous. We can say that some causality from EU funds to the variables exists only within some regions, but not in general. Furthermore, among the variables of households rather than among the variables of enterprises some causality relationships have been found. The highest figure of existing relationships has been detected within the variable of average wages and salaries. In connection with another part of the analysis results, we can assume that employing of national resources cause selected variables much more than EU funding itself. We can suggest that the findings are valid in a wider context and can be applied to many other disadvantaged regions. Beyond that, the conclusions can give some little advice for forthcoming period of EU cohesion policy 2014 - 2020.