Cash for reform: did conditional EU funding deliver structural reforms in Member States?

Sammanfattning

The EU's Recovery and Resilience Facility (RRF), a crisis response of 673 billion euro to the Covid-19 pandemic, made it possible to reward reforms in Member States for the first time. This thesis investigates whether the RRF can promote structural reforms, in line with the Eu-ropean Semester's Country Specific Recommendations (CSRs), using a principal-agent framework to theorise the RRF’s novel structures of incentive and conditionality. The re-search design matches fulfilled RRF reforms to the 2019 and 2020 CSRs for all 27 Member States and analyses the relationship between each Member State's score of addressed CSRs and the size of its RRF envelope as a share of GDP. The analysis finds a positive and statisti-cally significant relationship, robust after controlling for the number of CSRs and economic vulnerability. The incentive structure proved most effective for CSRs in energy, transport, and education policy, whilst the limits of the incentive structure are most visible in CSRs on pensions, taxation, housing, and business environment, areas characterised by high political salience and strong national competence. The answer to the research question is a cautious yes: to some degree, the EU can pay its Member States to do structural reforms.