Structural Funds Implementation and Administrative Capacity: the case of Italian Objective 1 Regions

Abstract

Why do some regions, after 15 years of receiving Structural Funds, still have difficulties in spending their allocated resources? Empirical evidence shows that Funds implementation rates have been very poor in Italy. However, investigating individual Italian Objective 1 regions, it appears that not all follow this general trend. We identify administrative capacity of the regional governments as an independent variable accounting for Structural Funds implementation variation. We introduce a novel definition of administrative capacity and using two regions as case studies we measure the degree of the existing capacity. The paper provides evidence to suggest that administrative capacity is positively correlated to implementation. Furthermore, we indicate the factors that might account for the different degree of capacity between these regions.