DID STRUCTURAL FUNDS CONTRIBUTE TO THE STABILITY OF

THE EU?
Codruța MARE
Babeș-Bolyai University, Faculty of Economics and Business Administration, Department of Statistics, Forecasting, Mathematics,
Cluj-Napoca, Romania

INTRODUCTION RESULTS
An important goal of the 2007-2013 European Structural Funds was to increase the Fig. 1. Annual evolution of the SMSI and the ESF absorbed by member states.
convergence level in the European Union in order to insure stability. BE
6.4

6.0 .5
BG
7
CZ
8.0

7.5
DK
5.00
4.75
DE
8.6

8.4
EE
6.4
6.0
6 4.50 5.6
5.6 7.0 8.2
4.25

Starting from this idea, the present research evaluates the impact of funds absorbed
.4 5.2
.50 .48 .60 .7 .4
5.2 5 6.5 4.00 8.0 4.8
.45 .3 .44 .6
.55 .3
.40
.40 .5
.2 4 .36 .2
.35 .50
.32 .4
.30 .1 .28 .45 .3 .1

by member states and of the absorption rate upon their national stability. The latter
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

IE GR ES FR IT CY
5.6 8.50 8.8 8.0 8.8 4.8
8.25 4.4
8.6 7.8
.5 8.4 4.0

aspect was measured through a classical indicator – the Macroeconomic Stabilization

5.2 8.00 8.4 7.6 3.6
.4 7.75 8.0
8.2 3.2
.3 .45 7.4
7.50 .40 2.8
.16 8.0 .40 7.6 .5
.3 4.8 7.2
.2 .35 .35 .4
.12
.2 .30 .3
4.4 .08 .1 .30
.2

Indicator, in its standardized form. Derived from the Macroeconomic Stabilization

.25
.1 .04 .0 .20 .25 .1
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

LV LT LU HU MT NL
6.4 6.8 4.0 8.0 4.5 7.0

Pentagon (MSP), it was chosen because it gives information about the most important
.6
6.5
6.4 3.5 7.5 4.0
6.0 .50 6.0
.4 .5 6.0 3.0 .4 7.0
.8 .7 5.5
.45 3.5
.4 .7 2.5 .3 .6
5.6 5.6 5.0
6.5
.40
.3 .2 3.0

aspects of a national economy – budget, labour market, prices and foreign trade.
.2 .6 .5
.2 .5 .1 .35 .4
5.2
.0 .1 .4 .0 .30 .3
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

AT PL PT RO SL SK
5.8 9.0 8.4 8 6.5 7.5

If the ESF really contributed to the stability of the European Union, this should be
5.6 6.0 7.0
7
5.4 8.5 .30 8.0 5.5 6.5
5.2 .4 6 5.0 .35 6.0
.6 .40 .25 7.6 .5
5.0 8.0 4.5
.3 5 .30 5.5
.35 .4
.5
.30 7.2 .3 .25
.20

seen in a positive relationship between the variables in use.

.4 .2
.25 .2 .20
.3 .20 .15 .1 .1 .15
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

FI SE UK
6.0 6.00 8.0
5.75 7.6
5.5 5.50
.32 7.2
5.25
.6 .72 6.8
5.0 5.00 .28
.5 .68
.24 6.4
.64
.4
.60
.3 .20
.56
.2 .52 .16
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

S MS I LFUNDS

Source: own calculation in Eviews7.

METHODOLOGY and DATA
Table 1. Descriptive statistics of the variables.
To achieve the goal of this research, first the Standardized Macroeconomic SMSI FUNDS (mil. EUR) ABSR (%)
Stabilization Indicator (SMSI) was computed. Mean 0.345 1257.84 30.01
The Standardized Macroeconomic Stabilization Indicator (SMSI) was computed using Median 0.332 422.3 27.1
the methodology presented by Kolodko (1993) and Krowiak (2007). There are five Maximum 0.709 7318.9 70.95
variables considered to be the most important economic variables in terms of Minimum 0.031 13.4 5.00
stability: Std. Dev. 0.157 1571.37 18.88
•the real GDP growth rate (rGDP), Skewness 0.21 1.64 0.26
Kurtosis 2.52 5.31 1.86
•the unemployment rate (Ur), Source: own calculation in Eviews7.
•the inflation rate (expressed based on the Harmonized Consumer Price Index) (π),
•the share of the budgetary balance in the GDP (the general government budgetary Table 2. Panel regression results – SMSI dependent.
deficit/ surplus) (BB), Eq. Coef. t-stat Prob. R2 Adj. R2 LL F-stat Prob. (F) DW
•the share of the current account balance in the GDP (as a proxy for the foreign trade 1 - LFUNDS 0.027 3.132 0.002
0.74 0.69 210.06 13.54 0.000 1.19
sector, also deficit/ surplus) (CA). 1-c 0.18 3.42 0.000
2 - ABSR 0.001 0.906 0.366
0.78 0.73 193.91 14.51 0.000 1.24
2-c 0.311 8.043 0.000
Each pair of variables represents a certain aspect of the national economy.
Source: own calculation in Eviews7.
Values were standardized on the 0 – 1 scale as follows:
•for variables whose optimum is positive maximization (GDP growth rate, share of the Table 3. Granger causality results.
budgetary and current account balance in the GDP), the standardized value was
obtained:
S = (Xi - Xmin)/(Xmax – Xmin)
•for variables whose optimum in minimization (unemployment rate and inflation
rate), the standardized values were computed as:
S = (Xmax - Xi)/(Xmax – Xmin)
Source: own calculation in Eviews7.

The area of the macroeconomic stabilization pentagon is called the macroeconomic

stabilization indicator (MSI) and is computed as:
CONCLUSIONS
(rGDP×Ur + Ur×π + π×BB + BB×CA + CA×rGDP) × 0.475,
where 0.475 is the value of 1/2×sin72°. The amount of ESF absorbed by member states determines the level of stability
The standardized macroeconomic stabilization indicator was computed measured through the SMSI. The regression coefficient is significant and positive,
SMSI = MSI / standard MSI, showing an increase in stability brought by additional funds. Thus, when measured in
absolute values, the goal of the ESF is achieved.
where the standard MSI=2.375 – the perfect situation when all variables are at their
optimum (=1). The degree of funds absorption does not significantly influence the level of stability.
The coefficient of absorption rate, although positive, has a probability of 0.366 >0.05.

In the second stage, several panel data regressions were estimated, out of which the When assessing the long term relationship between the variables, no causality was
most significant proved to be the following: found based on the Granger methodology.

(eq. 1) SMSI it = c +  it  LFUNDSit + i + t

(eq. 2) SMSI it = c +  it  ABSRit + i + t
Thus, the final regressions contain both cross-section and time fixed effects. They
were constructed with the White cross-section method for the coefficients’
covariance.

Data consists in the values of the used variables for the 27 European Union member
states that benefited from the 2007-2013 financing programme. The annual data from CONTACT
2007 to 2013 was gathered from the official statistics site of the European Union –
Eurostat and from the annual financial reports of the European Union. A total number [Link]@[Link]
of 189 observations was used in the analysis. [Link]@[Link]

Analyses were run in Excel 2007 and Eview 7. 58 – 60, Theodor Mihali str., 400591
Cluj-Napoca, Romania
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