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Journal ArticleDOI

Partisan Politics in Regional Redistribution: Do Parties Affect the Distribution of EU Structural Funds across Regions?

01 Sep 2006-European Union Politics (SAGE Publications)-Vol. 7, Iss: 3, pp 373-392
TL;DR: In this paper, the authors apply the traditional literature on partisan politics and national redistribution to the case of the EU and show that the traditional left vs. right cleavage can have an impact on the size of regional transfers.
Abstract: The current debate on the role of regional politics in the Euro pean Union (EU) is dominated by approaches that focus upon either intergovernmental bargaining or multi-level govern ance. Because Structural Funds are the main EU-wide redis tributive policy, we propose to apply the traditional literature on partisan politics and national redistribution to the case of the EU. We use a new data set on both the distribution of Structural Funds across regions and the distribution of vote shares for different factions of the European Parliament. These data provide empirical details for some of the partisan competition that takes place at the regional level. Specifically, we show that the traditional left vs. right cleavage can have an impact on the size of regional transfers.

Summary (2 min read)

Introduction

  • The article examines the influence of political partisanship on a specific policy outcome at the European Union level, namely the interregional redistribution in EU Structural Funds (SF) policy.
  • To derive their hypotheses the authors rely on the traditional literature on partisan politics and redistribution at the national level.
  • The redistributive logic of SF policies may not be a conflict just between richer and poorer regions.
  • On the one hand, the Commission, the Council and the regional actors bargain over the selection of regions.

Descriptive empirics and data

  • In this section the authors introduce indicators measuring regional partisanship and the SF received per subnational unit.
  • To measure SF allocation at the regional level, the authors use the official data of the EU Commission’s financial budgetary planning for the period 2000–6.
  • Data on regional partisan cleavages Measuring the regional distribution of different party families across Europe is a daunting task.
  • For all these parties the authors report their votes received according to region in national elections and in the European elections, respectively.
  • The authors defined the following European party factions as being part of a leftist party family: the Party of European Socialists Group, the Confederal Group of the European United Left/Nordic Green Left, and the Greens/European Free Alliance Group.

Data on Structural Funds

  • The authors extracted information on Funds for Objectives 1 and 2, which are the only fiscal transfers that can be attributed to individual regions.
  • Funds for these two objectives make up roughly 70% of total spending on SF.
  • This is due to the administrative structure of each member state.
  • All together, the authors gathered information for 83 out of a total 137 European regions that receive Objectives 1 and 2 funding.
  • Obviously, there is a negative relationship between these two variables, but ‘being poor’ is neither a strong nor a sufficient predictor of the amount of SF per head a region receives, as the upper-left observations and the outlier of Ireland show.

Testing the hypotheses

  • This section provides an empirical test for the two partisan hypotheses.
  • First, official economic criteria such as per capita GDP (GDP/CAP) for ‘Objective 1’ and the unemployment rate for ‘Objective 2’ should have an impact on the allocation of SF per capita.
  • In such circumstances, it is difficult to establish whether the Tobit results are always superior to OLS.
  • Apparently, the strength of left and Eurosceptic parties adds substantial information to the puzzle of SF allocation.
  • In model 3, the interaction term ESCEP FED affects the significance of LEFTPAR and reduces the coefficient and significance of ESCEP.10.

Conclusions

  • This paper has explored the impact of European partisan politics on the allocation of SF in subnational European regions.
  • There is an ongoing debate about which political actors at different political levels shape European SF policy, and whether this policy field is giving rise to a new mode of European governance.
  • Partisan politics does not play a major role in this literature.
  • Therefore the authors applied the traditional partisan hypothesis from the literature on national redistribution and have found visible, though not always robust, evidence for a link between partisanship and SF policy at the regional level.
  • If, for instance, interregional redistribution is really driven by political or institutional factors, this may be one reason Structural Funds have proved ineffective in economic terms (e.g. Boeri et al., 2002).

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Partisan Politics in Regional Redistribution
Achim Kemmerling, Thilo Bodenstein
To cite this version:
Achim Kemmerling, Thilo Bodenstein. Partisan Politics in Regional Redistribution. European Union
Politics, SAGE Publications, 2006, 7 (3), pp.373-392. �10.1177/1465116506066264�. �hal-00571731�

Partisan Politics in Regional
Redistribution
Do Parties Affect the Distribution of EU
Structural Funds across Regions?
Achim Kemmerling
Social Science Research Center Berlin, Germany
Thilo Bodenstein
Free University of Berlin, Germany
ABSTRACT
The current debate on the role of regional politics in the Euro-
pean Union (EU) is dominated by approaches that focus upon
either intergovernmental bargaining or multi-level govern-
ance. Because Structural Funds are the main EU-wide redis-
tributive policy, we propose to apply the traditional literature
on partisan politics and national redistribution to the case of
the EU. We use a new data set on both the distribution of
Structural Funds across regions and the distribution of vote
shares for different factions of the European Parliament.
These data provide empirical details for some of the partisan
competition that takes place at the regional level. Specifically,
we show that the traditional left vs. right cleavage can have
an impact on the size of regional transfers.
373
European Union Politics
DOI: 10.1177/1465116506066264
Volume 7 (3): 373–392
Copyright© 2006
SAGE Publications
London, Thousand Oaks CA,
New Delhi
KEY WORDS
fiscal federalism
partisan politics
redistribution
structural funds

Parties as the missing link in regional politics?
Despite the lively discussion in recent years about the role of political parties
in shaping European politics (e.g. Marks and Steenbergen, 2002), the analysis
of the role of party politics in determining political outcomes at the European
level has yet to develop. Many authors have referred to partisan motives
when, for example, explaining treaty revisions, but only recently has there
been a literature that systematically evaluates how partisanship affects politi-
cal outcomes at the European level (Manow et al., 2004). In this vein, the
article examines the influence of political partisanship on a specific policy
outcome at the European Union level, namely the interregional redistribution
in EU Structural Funds (SF) policy.
The current debate on the role of regional politics in the EU is dominated
by two strands of argument, neither of which ascribes a central role to politi-
cal parties. On the one hand, adherents of the intergovernmentalist perspec-
tive maintain that the political influence of regional actors is mostly absorbed
by the logic of bargaining between national governments (Pollack, 1995;
Allen, 2000). On the other hand, scholars devoted to the multi-level govern-
ance approach argue that the integration of new policy areas – and especially
the development of regional policy in the EU – has introduced regional actors
into the evolving political system and created a third level. In particular, the
so-called principle of partnership in the governance of SF has aroused
considerable academic interest, since it requires that planning procedures are
developed in close cooperation with subnational authorities such as local
governments or social partners (Evans, 1999).
SF policy is the key mechanism of regional redistribution in the EU for
which we propose an alternative route of investigation focusing on the role
of (regional) partisan politics. To derive our hypotheses we rely on the
traditional literature on partisan politics and redistribution at the national
level. Partisan politics may act as a ‘missing link’ in the debate between the
approaches of intergovernmentalism and multi-level governance, because it
relates preferences to ideology rather than to the political fissures between
national and regional actors. Empirically, we investigate the relationship
between regional variation in partisan preferences – left vs. right and pro-
Europe vs. anti-Europe – and the level of SF per capita that the respective
regions receive. For this purpose we have constructed a data set that combines
regional information on both elections and SF transfers. Our results indicate
that there is a visible, though not very robust, relationship between the
strength of left-wing political parties in a region and the size of the transfers
that region receives. We also find a similar link between Eurosceptic parties
and transfers, but this result is more sensitive to influential outliers.
European Union Politics 7(3)
374

Regional partisan politics applied to EU regional policy
Most political scientists agree that political parties play a pivotal role at the
national level. Parties represent the ideological cleavages within the elec-
torate, and should therefore affect policy. EU studies, however, are dominated
by functionalist, institutionalist or intergovernmentalist approaches in which
political parties are not at the centre of analysis. Research on parties in the
EU has therefore focused mainly on either European elections (Van der Eijk
and Franklin, 1996) or the formation of the party system in the European
Parliament (Hix and Lord, 1997). Because the consequences of partisan
politics for EU policies have remained largely unnoticed, we will first explore
the literature of partisan preferences and redistribution at the national level.
Next, we will compare the SF policy of the EU with national redistribution.
Finally, we will derive two hypotheses that link partisan politics and inter-
regional redistribution in the EU.
Partisan politics and national redistribution
It is not at all obvious that partisan ideology can be ‘mapped’ into prefer-
ences for redistribution at a national level. In fact, the standard Downsian
approach to political competition argues that parties should completely
converge and that the size of redistribution depends merely on the character-
istics of the median voter. An example is the hypothesis that the size of
redistribution is determined by the relationship between median and mean
income in a society (Meltzer and Richard, 1991). Wittman (1983) was one of
the first to propose an alternative model that allows for ideological partisan
preferences. Roemer (2001: 72) takes up his idea and shows that divergence
between partisan manifestos is likely only if the Wittman model assumes
uncertainty about the precise distribution of voter preferences.
The partisan argument has figured prominently in numerous empirical
studies that investigate the amount of welfare spending in advanced econ-
omies (Huber et al., 1993), the specific form of redistributive policies imple-
mented (Boix, 1998) or the link between party manifestos and the policies of
incumbent parties (Klingemann et al., 1994). The empirical record is ambiva-
lent, however, since a simple mapping of partisan ideology into policy output
is difficult. First, the ideological structure of the ‘voter space’ may go beyond
a simple one-dimensional division between ‘left’ and ‘right’. Second, politi-
cal institutions affect the aggregation of voters’ preferences. It has been
argued, for instance, that proportional or multi-party systems spend more
money on redistribution than do majoritarian ones (Persson, 2002).
The second point is particularly relevant for multi-tier political systems
Kemmerling and Bodenstein Partisan Politics in Regional Redistribution
375

that are characterized by a complicated decision-making process of fiscal
federalism. The addition of a cleavage between different political layers
makes theoretical predictions fairly difficult (e.g. Dixit and Londregan, 1998;
Persson, 2002). Depending on the specific nature of the federalist institutions,
subnational entities may have an incentive to extract rents from the central
government. However, this effect is not unambiguous because decentraliza-
tion arguably reduces the total level of rent extraction (see Rodden and
Wibbels, 2002). In particular, the political economy of fiscal federalism does
not render the partisan argument obsolete. For instance, Cadot et al. (2002)
build a model that combines both partisan and pork-barrel politics in a model
for national regional policy.
To conclude, the partisan model of public redistribution is far from
flawless, but it remains the strongest competitor to political economy-based
explanations along the lines of Anthony Downs. It clearly constitutes a simpli-
fication, but it deserves consideration as a parsimonious explanation of inter-
regional redistribution in the EU.
Comparing national and EU-wide politics of
interregional redistribution
EU regional policy fulfils the classic criteria of a redistributive policy. This is
visible in the overall objectives governing the distributive mechanism, which
have been reorganized under the recent Agenda 2000 reform into three focal
areas: ‘Objective 1’ for the development of regions that are lagging behind in
their economic development; ‘Objective 2’ for regions with declining indus-
trial and rural sectors; and ‘Objective 3’ for the promotion of skill and employ-
ment policies in regions other than for ‘Objective 1’. To qualify for Objective
1, the per capita GDP of a region must lie below 75% of the EU average. Objec-
tive 2 covers industrial regions with an unemployment rate above the EU
average and a declining employment rate in the manufacturing sector.
The fact that Objective 1 is given clear financial priority shows the domi-
nance of redistribution from rich to poor regions. Although the total amount
of SF is not particularly large – around 0.3% of the GDP of the EU – it is
significant for some regions. Regional redistribution in the EU currently
accounts for one-third of the budget of the European Union. In the period
20006, the regions that receive most SF on a per capita basis are Madeira,
with 2870 and the Azores, with 3590. These facts, taken together, show that,
among all EU policies, SF are most directly comparable to national redistrib-
utive mechanisms.
The EU decision-making process is more complex and dynamic than
national systems of fiscal federalism. The governance of SF has been evolving
European Union Politics 7(3)
376

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Abstract: The allocation of Structural Funds, the most important component of the European Union (EU) cohesion policy, is subject to intense bargaining between national governments and across layers of political governance. Using Structural Funds data for each cohesion objective over 1989–99, we examine which variables, economic and political, determine the actual funds allocation. We test our hypotheses with a Tobit model that accounts for the two-stage allocation process and our limited dependent variables. Our results indicate that economic criteria are not the only determinants of funds allocation. Indeed, we find that the political situation within a country and a region and the relations between various layers of governance influence the allocation process. This article is also the only study to measure the impact of additional funds provided by the region or the country itself, and to differentiate the analysis by cohesion objective.

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Cites background or result from "Partisan Politics in Regional Redis..."

  • ...Before the 1 With the exception of Kemmerling and Bodenstein (2006)....

    [...]

  • ...While some recent studies (Bodenstein and Kemmerling, 2005; Kemmerling and Bodenstein, 2006; Carruba, 1997) have discussed the influence of politics on the allocation process, none of them have considered the implication of the additionality principle on the allocation and, thus, on the efficiency…...

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  • ...Carruba (1997) finds that countries with larger EU-sceptical populations do get larger net transfers, while Bodenstein and Kemmerling (2005) and Kemmerling and Bodenstein (2006) find that regions with larger EU-sceptical groups in the EU Parliament get on average more objective 1 and 2 funds (the…...

    [...]

  • ...To our knowledge, only Kemmerling and Bodenstein (2006) and Becker et al. (2008) use more recent data....

    [...]

  • ...This discrepancy with some earlier papers (notably Bodenstein and Kemmerling, 2005; Kemmerling and Bodenstein, 2006) can also be explained by differences in our measure of EU-scepticism....

    [...]

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TL;DR: Roemer as discussed by the authors argues that not only is the premise of the Downsian model, that political parties seek election without policy objectives of their own,historically incorrect, but it also leads to implausible predictions.
Abstract: Political Competition: Theory and Applications. By John E. Roemer. Cambridge, MA: Harvard University Press, 2001. 352p. $60.00.John Roemer sets out to slaughter a golden calf of positive political theory: the Downsian model of electoral competition and its famous implication, the median voter theorem. Roemer contends that not only is the premise of the Downsian model—political parties seeking election without policy objectives of their own—historically incorrect, but it also leads to implausible predictions. Throughout political history, he postulates, parties have represented disparate interests and have advocated divergent policies; thus, a model that is premised on the opposite and predicts convergence as the only equilibrium—provided an equilibrium even exists—cannot be the right tool for analyzing politics.

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  • ...The dominant research question regarding ERDF in the literature has been how the allocation of the funds can be explained (see, for example, Kemmerling and Bodenstein, 2006; Bouvet and Dall’Erba, 2010; Dellmuth, 2011; Dellmuth and Stoffel, 2012)....

    [...]

  • ...…of the EU.1 With regard to the funding allocation, the Council must collaborate with the Commission and the regional authorities (see, for example, Kemmerling and Bodenstein, 2006; Bouvet and Dall’Erba, 2010; Dellmuth, 2011; Dellmuth and Stoffel, 2012), resulting in a multi-level political…...

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TL;DR: The authors assesses the causal links between electoral incentives on the recipient side, European funding goals, and local grant allocation and finds that sub-state governments' electoral concerns distort the local allocation of structural funds.
Abstract: The European Union budget is distributed primarily in the form of intergovernmental grants to sub-state governments, which invest the grants in local projects. Transfers are allocated under the auspices of the European structural funds. This article assesses the causal links between electoral incentives on the recipient side, European funding goals, and local grant allocation. Tobit regressions of the allocation patterns in 419 local districts in Germany for the period 2000–6 suggest the following: although recipient sub-state governments enjoy substantial discretion in selecting projects, their distributive choices are largely in accord with European goals. As theoretically predicted, however, there is robust evidence that sub-state governments’ electoral concerns distort the local allocation of structural funds.

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Cites background or methods from "Partisan Politics in Regional Redis..."

  • ...Moreover, we use a measure of unemployment rates because the unemployment rate of a district is the key concept for measuring economic need for Objective 2 funding (Bouvet and Dall’erba, 2010; Kemmerling and Bodenstein, 2006)....

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  • ...Areas are eligible if they have an unemployment rate above the EU average and a declining employment rate in the manufacturing sector (Kemmerling and Bodenstein, 2006)....

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  • ...Turning to the economic variables, we derive a measure for GDP per capita in PPP from Eurostat, because this is the key concept for measuring economic need for Objective 1 funding (Dellmuth, 2011; De Rynck and McAleavey, 2001; Kemmerling and Bodenstein, 2006)....

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References
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TL;DR: In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule as mentioned in this paper, where voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting.
Abstract: In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule. Voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting. The share of earned income redistributed depends on the voting rule and on the distribution of productivity in the economy. Under majority rule, the equilibrium tax share balances the budget and pays for the voters' choices. The principal reasons for increased size of government implied by the model are extensions of the franchise that change the position of the decisive voter in the income distribution and changes in relative productivity. An increase in mean income relative to the income of the decisive voter increases the size of government.

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TL;DR: The Economic Effects of Constitutions as discussed by the authors ) is an empirical sequel to their previous theoretical analysis of economic policy, taking recent theoretical findings as a point of departure, they ask which theoretical findings are supported and which are contradicted by the facts, and find that presidential regimes induce smaller public sectors, and proportional elections lead to greater and less targeted government spending and larger budget deficits.
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Abstract: The literature on the determinants of welfare state effort displays many inconsistencies and contradictins. This article takes imoprtant stepts toward resolving these issues with the use of pooled ...

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"Partisan Politics in Regional Redis..." refers background in this paper

  • ...The partisan argument has figured prominently in numerous empirical studies that investigate the amount of welfare spending in advanced economies (Huber et al., 1993), the specific form of redistributive policies implemented (Boix, 1998) or the link between party manifestos and the policies of…...

    [...]

  • ...The partisan argument has figured prominently in numerous empirical studies that investigate the amount of welfare spending in advanced economies (Huber et al., 1993), the specific form of redistributive policies implemented (Boix, 1998) or the link between party manifestos and the policies of incumbent parties (Klingemann et al....

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TL;DR: In this article, a formal model of electoral behavior is developed under the assumption that candidates have policy preferences as well as an interest in winning per se, and the model is shown to have an equilibrium in a k-issue space when there are two candidates.
Abstract: A formal model of electoral behavior is developed under the assumption that candidates have policy preferences as well as an interest in winning per se. This model is shown to have an equilibrium in a k-issue space when there are two candidates. The implications of this model are compared to the implications of the Downsian-type model where candidates are interested only in winning. Testable propositions are derived via the use of comparative statics. The results of recent studies are shown to coincide with the synthesis model but not the pure Downsian model.The theoretical model bridges the gap between formal theory and empirical research and unifies a variety of seemingly unrelated studies.

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"Partisan Politics in Regional Redis..." refers background in this paper

  • ...Wittman (1983) was one of the first to propose an alternative model that allows for ideological partisan preferences....

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TL;DR: A theory of Democratic Policymaking and a revised view of party competition was proposed by Sabatier in this article, which is a theory of democratic policymaking based on measures and models.
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"Partisan Politics in Regional Redis..." refers background in this paper

  • ..., 1993), the specific form of redistributive policies implemented (Boix, 1998) or the link between party manifestos and the policies of incumbent parties (Klingemann et al., 1994)....

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  • ...…in numerous empirical studies that investigate the amount of welfare spending in advanced economies (Huber et al., 1993), the specific form of redistributive policies implemented (Boix, 1998) or the link between party manifestos and the policies of incumbent parties (Klingemann et al., 1994)....

    [...]

Frequently Asked Questions (1)
Q1. What are the contributions mentioned in the paper "Partisan politics in regional redistribution" ?

Because Structural Funds are the main EU-wide redistributive policy, the authors propose to apply the traditional literature on partisan politics and national redistribution to the case of the EU. Specifically, the authors show that the traditional left vs. right cleavage can have an impact on the size of regional transfers.