The Use of EU Funds in Poland

Poland is a relatively large (over 38 million inhabitants, not counting the two million people who have emigrated) and underdeveloped member state. Nevertheless, as the only EU country it has not been directly affected by the crisis, and its rate of growth since 1990 belongs to the fastest in the Union. And since 2007 it is the largest net recipient of cohesion policy funds. In the period 2007–2013, Poland was granted EUR 67.284 billion (“Convergence” 44.377 billion, Cohesion Fund 22.176 billion and European Territorial Cooperation 7.31 billion). There was also EUR 20 billion on the Common Agricultural Policy (which we are going to leave aside for a lack of space, although there are many common problems here).

The use of EU funds may be analyzed in two ways: quantitative and qualitative. The first one (finance and products) should formally be used only for the purposes of financial monitoring. The second one regards the quality of the achieved results (goals). It is a more difficult approach, requiring expert knowledge (and hence interdisciplinary teams). This method is rarely used in practice, because it requires complex and professional studies, which additionally may result in a negative assessment (and these studies are commissioned by policy managers). In addition, it so happens that the earnings of the management have not been based on progress in achieving the objectives. Therefore, product indicators by far outweigh indicators of outcome (or impact).

If the current system has been efficient (see reports about cohesion No. 1–5), why did it not prevent the crisis or help in overcoming it across the Union?

Let us start by defining the features which modern development should possess:

• Strategic, long-term, oriented towards future development needs;
• Should create higher quality jobs and income;
• Should comply with the current paradigm and its factors in the post-industrial economy, based on knowledge and information society;
• Should be concentrated on a small number of goals and achieving them (not on product indicators);
• Should be integrated, coordinated in such a way as to achieve a synergy effect.

Is it like that?

According to a report on the state of implementation of cohesion policy programs 2007–2013 in Poland until July 6, 2015, 301,700 formally correct applications were submitted with a total value of (national and EU funds) PLN 613.3 billion (EUR 147.4 billion). 106,100 contracts were signed in the amount of 410.5 million PLN (EUR 98.7 billion), including PLN 288.4 million (EUR 69.3 billion) of EU funds, which amounts to 102.7 percent of EU funds for 2007–2013. Expenses considered as eligible (in accordance with the requirements and regulations) amounted to PLN 342.8 billion (EUR 82.4 billion), and the EU co-financing was PLN 243.2 billion (EUR 58.5 billion). In terms of absorption capacity, we are undoubtedly at the forefront of the EU countries.

What effects did we achieve? According to data on the website of the Ministry of Infrastructure and Development “Effects of European funds” (accessed June 12, 2015) the outcomes for the period 2007–2013 were as follows: In the area of labor and entrepreneurship, 413,200 jobs were created and 30,900 enterprises and 258 business environment institutions received support; R & D and innovation: the number of supported organizations and projects: 1,413 universities and research units, 642 research centers, 2,955 innovative ideas; 3,722 technologies implemented; information society: 55,806 km of broadband network, 214,000 of households received funding for Internet access, 5,834 new services; transport: 11,500 km of roads (from national to local), 1,633 km of built or modernized railway lines, 2,633 purchased or upgraded municipal transport fleet vehicles; environmental protection: 499 sewage treatment plants (no information available whether they were built or modernized—MWK), 24,200 km of modernized or built sewerage system, 6,900 km of built or upgraded water mains, 715 investments in renewable energy sources, 1,756 investments in energy efficiency. This presentation describes the state at the end of April, based on contracts signed rather than executed.

It is clear that the vast majority of the information cited above regards the number of contracts signed or organizations supported. It does not regard the effects, perhaps with the exception of the 413,200 jobs created (but it is not applicable, for it describes promises from contracts rather than facts). On this basis, it is difficult to talk about results.

It seems that this is due to several reasons.

First, not many members of the public have noticed that in a few very eventful years we have moved from the era of industrial economy to post-industrial one (where the causative agent of development is no longer infrastructure, but “soft” factors such as culture—and I do not mean only the so-called high culture, but the quality of institutions, the quality of the business environment, R&D and innovation, competitiveness, urbanization and metropolitanization, networks and flows, talent, tolerance and technology). The old solutions no longer correspond to contemporary problems, and yet investments in infrastructure are still preferred.

The belief in the pro-development role of infrastructure also follows from the pressure of media and politicians, preferring spectacular events. Inauguration of any piece of technical infrastructure can be filmed and photographed, it attracts many viewers and VIPs. Moreover, infrastructure is usually an expensive but simple undertaking, which makes spending the resources easier.

Cohesion policy in Poland until 2014 pursued many goals and priorities. There is an impression that those responsible want to satisfy the needs (not always development needs) of all important social and professional groups. The only simple way of summing up the diverse goals and priorities is presenting the effects in the financial/ product form. Everyone can understand what proportion of cohesion policy funds we have spent. And this is where the interest of politicians, media and public opinion usually ends. For they wrongly assume that every penny spent at home and serving mostly the grassroots needs is fostering development. As a result also managers of the projects (from Brussels to the implementing organizations) pay more attention to expenditure than to effects. Also evaluations focus mostly on removing barriers to spending money. The managers have become hostages of the beneficiaries: they will be successful only when they spend the funds, and in order to achieve that, they must spend them in accordance with the needs of the beneficiaries.

And this is how we arrived at the common (because useful) phenomenon of “lock-in”, that is being mentally trapped in old thinking, assuming a number of similar forms: cultural regression (Hryniewicz), anchoring (Zaucha et al.) or replacement of purposes (Merton, Opolski and Modzelewski) and the mechanism of informal mutual arrangements. Replacement of purposes means replacing complex and difficult undertakings with ones which are easier to execute. So instead of learning how much innovation has increased thanks to EU spending, we only learn how many projects were supported and how much money was spent (most of it in the public sector and universities, and channeled into infrastructure, while the number of innovations developed by Polish businesses has significantly decreased recently). Revitalization, is—despite a clear ministerial definition—commonly reduced to repairs, construction or modernization of sidewalks, squares, renovation of individual buildings, less often groups of buildings, and even places quite incompatible with revitalization, such as parks and cemeteries, because people do not live or work there. Instead of developing tourist products, we have numerous renovations of buildings generally inaccessible to tourists (for example town halls). Similarly, expenditures in culture are mostly spent on buildings. Roads are built in an uncoordinated way (apart from motorways and expressways, but even here you have to wonder why construction is fastest in forested areas, where the need for them is small, and not around big cities, where they are most needed). The few existing analyses of coordination of projects at regional and local level have proved that coordination is almost non-existent. Low social capital translates into lack of cooperation between institutions.

The “lock-in” phenomenon generally pervades all areas of intervention, especially when funding something is prohibited (hence, for example, renovations instead of revitalization—the Union doesn’t provide funds for renovations). It is enough that the providers of financing turn a blind eye. And this is why the reports (starting from the central ones) focus on finances and products rather than effects. All this is regardless of which party is in power.

What Examples of Effects Can Be Given?

The national income has grown significantly, in some part thanks to the cohesion policy, although up to 2012, ministry claimed that supply effects had not appeared yet. So we were efficiently spending on quality of life and infrastructure—they are related to each other— rather than building a modern economy.

Despite a higher rate of GDP growth, we are still among the four or five most underdeveloped EU states. In terms of such an important factor as innovativeness, we are four or five places up from the bottom of the EU rankings. Examples could be multiplied—such as construction of environmental protection infrastructure in areas of Eastern Poland with rapidly shrinking population.

We are achieving great progress (mostly quantitative) in the quality of human capital, but Polish youth is lagging behind in problem-solving tests. Human capital, the foundation of cooperation, still does not look good.

And finally, the last example of effects of development policy, this time Polish rather than European. Despite considerable European and Polish investment in many spheres of life, more than 2 million Poles have emigrated. Why? In my opinion, the reason is that we have been persistently spending EU and Polish funds on infrastructure, not coordinating development projects, for example not relating infrastructure projects with economic ones, and not connecting economic projects with education. People entering the labor market and the unemployed need above all relatively stable jobs and income, and only then they care for quality of life (new sidewalks). It is still difficult to speak about strategic management. These are the obvious guidelines for Polish development policy in 2014–2020.