Economic Policy Review ISSN 1313 - 0544

EXAMPLE FOR EUROPE: Putting to use the structural funds in Ireland

Author: Reneta Dimitrova / 08.08.2008
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Operating programs (OP) financed from the European structural funds

Bulgaria

Ireland

OP Development of human resources

OP Employment and development of human resources

OP Transport

OP Economic and social infrastructure

OP Administrative capacity

OP Regional development

OP Competitiveness

OP Stimulation of the production sector

OP Environment

 

OP Regional development

 

The Irish national plan for development aimed at improving the road infrastructure, the education system and retraining the labor force, as well as the production sector.

During the first two program periods Ireland succeeded in absorbing investments of up to €30 billion, with the European funds contributing a total of €11.3 billion. For the program period 2000-2006 Ireland received €3.35 billion from the structural funds of the EU and €586 million from the Cohesion fund. In comparison, for the program period 2007-2009 the obligations by EC to Bulgaria are €1.53 billion from the structural funds and €767 million from the Cohesion fund.

Why is the comparison to Ireland suitable?

During the period 1950-1988, before the economic boom, Ireland had unsatisfactory rates of economic growth due to the combination of bad political decisions in the area of economics and ineffective government institutions. These initial conditions include low levels of quality human resources, bad physical infrastructure and low levels of investment in research and development activities, similar to those in Bulgaria.

The reasons for the economic development of Ireland are complex but all of them could be reduced to implementing a number of correct policies. Here are the most important components of the formula for success:

  • Building the human resources after an education reform during the 60's of the last century.
  • Significant improvement of the infrastructure, particularly as a result from the financing through the EU structural funds.
  • Maximum openness of the economy with export orientation to fast developing markets and benefits from entering the consolidated European market, as well as direct very large external investments due to the flat corporate tax.
  • Change of the demographic picture and attracting "brains" from abroad.
  • Maintaining stable macro environment for economic development.

In particular the overall effect of the structural funds is arguable, but their contribution to the following areas is recognized by experts and economist in Ireland and abroad.

  • ° Increased investments in transportation and the environment.
  • ° Increased productivity, which is directly linked to programs, supported by the structural funds for improving the private initiative and investments into research and development activities.
  • ° Significant improvement of the quality of human resources as a result of a national campaign for retraining and expansion of the labor market.
  • ° Regional development supported by new methods, defined in the national strategic referent framework, approved by the European commission.

The structural funds as a percentage of GDP of Ireland

Source: Barry et. al. 1997, The European Dimension: The single market and the structural funds, "Understanding Ireland's Economic Growth."

Expenses for structural measures for the period 2007-2009 for the different member countries of the EU as a percentage of GDP.

Source: Ministry of Finance

The road forward for Bulgaria

The Irish experience of not only employing the structural funds but in creating the prerequisites for a working market economy is useful for countries like Bulgaria. It is not by accident that the Government of Slovakia agreed to an exchange of experts and knowledge as well as joint activities with Ireland in order to improve the effective use of the funds. Slovakia is inviting at least one expert from Ireland to head the beginning of the separate operating programs for the period 2007-2013. This is a great initiative and show of political will, which is missing in Bulgaria which has been noted and now censured by the EC.   

The European Union is a mirror in which Bulgaria is forced to get to know and become aware of itself. Our membership is not a political and economic intervention, but an external stimulus to overcome the political-criminal paralysis of the Bulgarian society by extending the personal and economic freedom of the Bulgarian citizens.