Driving EU Pre-accession: Poland’s Unique Model of Decentralisation and Regional Policy for EU Funds Absorption

Polish structural and regional policy has undergone a significant evolution over the last thirty years: from the abandonment of any strategic planning and any territorially oriented activities in the early 1990s, through the gradual restoration of its importance and role in the system of public policies. This ultimately led to the situation at the turn of the first and second decade of the twenty-first century, in which EU cohesion policy became a key government policy setting the goals of the entire socio-economic policy of the Government, methodological standards, and even the way in which institutions implement their socio-economic development function. 

To a large extent, this has become possible thanks to the development of a unique model of decentralisation and regional policy among the countries of Central Europe, as well as good preparation of the procedural and institutional system of absorption that allows for full use of European funds. Absorption in this regard should be understood not only as the acquisition and full spending of EU funds (Poland has used all the funds allocated under the cohesion policy since EU accession in 2004 until today – nearly EUR 170 billion), but also directing these funds to support the processes of structural change that allow Poland and its regions to improve their competitive position and raise the quality of life (chart 1).

Regional policy and decentralisation of the state

Poland’s systemic transformation and undoubted economic success in the past 30 years have been achieved thanks to several inter-dependent and crosscutting factors of political, economic, social and even cultural origin. From the very beginning of the transformation efforts at the end of 1980s, building an efficient regional policy system based on EU standards and implementing the radical decentralisation agenda became an important component of the academic debate and political considerations on how to transform the communist mentality and poorly functioning centrally planned economy. One of the first reforms of the non-communist government effective from January 1st, 1990 was the re-establishment of municipalities (local self-governments). The municipalities are accountable to citizens and bear a wide range of responsibilities for provision of various public services and goods.

The expected results attributed to decentralisation and local government reform were the following:

• improvement of efficiency of the state – better delivery of public services and goods;
• spreading and rooting democracy;
• decreasing the level of corruption and misconduct;
• at the later stage – preparing for EU membership.

In 1994 the Government formulated a set of principles and directions for the development of a modern regional policy in the market-oriented economy. Not surprisingly the main focus of the policy was on:

• supporting positive structural changes in regions leading to an increase in their competitiveness and
• addressing social and economic problems of the most affected areas by supporting structural transformation processes.

The first objective is associated with the pro-active function of the regional policy, which is to help increase the competitiveness of each territory thus contributing to the overall economic development of the country (focus on efficiency). In practical terms it meant that a substantial part of the regional policy funds has been used for supporting productivity growth through support of expanding metropolitan functions of big cities, supporting regional growth centres and building and modernisation of strategic infrastructure for the whole economy (roads, railways, airports, energy grid, etc.) as well as support to develop human resources and enterprises with the highest potential for growth (these sectors and enterprises were evaluated according to their business plans and a panel of performance indicators). 

The second objective is to establish the regional policy as an important tool for the equalisation of the socio-economic situation between regions and assuring minimum standards in delivery of public goods and services which otherwise – under free liberal market economy – would not be available to people living outside the most economically prosperous areas. Counteracting territorial imbalances and disparities  was regarded since the beginning of the transformation as an important but rather complementary objective of the national regional policy. In the pre-accession period, only limited national resources were used to support people and gminas (municipalities) with the highest unemployment rates. The situation started to change gradually since the end of 1990s with the use of pre-accession funds for regional development which were available to designated problem areas. 

Over time, the importance of internal cohesion as an objective for regional policy has grown due to increasing internal disparities at regional level (in terms of GDP per capita) and gradual socio-economic decline of some rural areas and smaller urban centres. After a new political party took power in late 2015, the national regional policy focus was officially changed in 2017 by adopting a new medium-term strategy – Strategy for Responsible Development 2017 – which declared socio-economic and spatial cohesion as the key goal of regional policy.

Establishment of the implementation system for EU funds

Since the early 1990s, anticipating the deepening of the European integration process in years to come and the transfers of money from the EU budget for development purposes, the main goal of Poland’s regional policy was to build a coherent system of absorption. This system coordinates sectoral policies and establishes regional structures capable of programming and implementing structural policy using their own resources at their own risk and responsibility. The government announced a regional policy concept in 1993-1994 that postulated the creation of institutional structures at both central and sub-national levels that could receive and absorb EU assistance effectively using methods and procedures of European cohesion policy, thus contributing to fast integration with the EU and use of resources.

The concept called for preparing the legal grounds for an institutional system of regional policy with two important features:

• a strong national level institution that can coordinate national policies with an impact on territories, while curbing sectoral silo type approaches within the Government, and that can represent the government vis-à-vis regional level institution to discuss interregional policies and activities of national importance;  
• strong regional institutions that are able to plan and implement policies in their respective territories using their own resources and legal responsibilities, while also contributing to interregional policies.

The way of thinking about regional policy goals and priorities, which was developed at that time, provided direction for the efforts of several governments over at least two decades. The establishment of regions took place as early as 1999, prior to Poland’s accession to the EU. Furthermore, a strong coordination centre within the Government gradually took shape since 1999, culminating in the creation of a robust Ministry of Regional Development in 2005.

Since 1989, Poland had utilised the PHARE (Poland and Hungary: Assistance for Restructuring their Economies) pre-accession assistance programme to support the process of adapting to EU standards. However, it was only in 1993, following the decision made during the Copenhagen Council to invite Poland to the EU, that the programme began to finance investment projects and built administrative capacity to absorb EU funds, including in the area of regional policy.

Even larger financial resources mobilised on a basis similar to the Structural Funds under Cohesion Policy have been flowing to Poland since 2000 in the form of programmes such as:

• ISPA – Instrument for Structural Policies for Pre-Accession (ISPA) for infrastructure projects in the EU priority fields of environment and transport.
• SAPARD – Special Accession Programme for Agriculture and Rural Development
• New PHARE socio-economic-cohesion combining the European Regional Development Fund (ERDF) and European Social Fund (ESF) approaches and implemented in the form of national and cross-border cooperation programmes.

The first regional development programme PHARE-STRUDER was launched in 1993, with a focus on voivodships (regions) in Poland that were facing challenges due to industrial restructuring or economic backwardness. The funds from this programme, totalling about EUR 70 million, were mainly allocated to co-financing investments in small and medium-sized enterprise (SMEs) and municipal infrastructure. To coordinate the implementation of the programme, the Polish and Regional Development Agency (in Polish Polska Agencja Rozwoju Regionalnego – PARR) was created as a special structure outside the state administration. PARR was able to offer better salaries than the public sector (initially financed by the EU) and operated with flexibility. It was directly supervised by the European Commission to ensure compliance with established procedures for pre-accession assistance. During this period, regional development agencies were created in individual voivodships to implement the components of the STRUDER programme, as well as subsequent regional programmes of PHARE in 1997, 1998, and 1999.

Until 1999, the direct participation of the central and local government administrations in the implementation of PHARE pre-accession programmes was limited to negotiations with the EC on the content of programmes and participation in decision-making bodies as partners. Instead, pre-accession programmes in this area were supervised by the national coordinator of preparations for accession to the EU – Office for European Integration (since 1996).

The need to create an institution coordinating regional policy at the government level became evident from 1997 when Poland was invited to start accession negotiations (Luxembourg Council). This was driven by several factors, including the increased role of regional policy in the accession process. Since 1997, EU funding for regional policy had started to increase, gradually covering the entire country. It became clear that after accession to the EU, EU cohesion policy would require a robust administrative structure. Another factor was the decentralization efforts in 1999, when the new Government implemented a decision to create 16 large voivodships instead of 49 small ones, where the key role was entrusted to regional self-governments. This required the creation of a strong national-level partner for self-governments in conducting regional policy.

The creation of a centre responsible for regional policy, programming, and implementation of EU co-financed programmes was a process that took place over several years. After several changes of government (1997, 2001, 2004, 2005), the concept formulated at the beginning of the transformation for the creation of a strong centre materialised in 2005 with the establishment of the Ministry of Regional Development (PARR was abolished by that time). This ministry was tasked with functions related to regional policy, management of EU funds and national strategic socio-economic and territorial programming.

For the implementation of pre-accession programmes since 2000 (ISPA, SAPARD PHARE Socio-Economic Cohesion) and cohesion policy programmes (after joining EU in 2004), the government decided to entrust full responsibility for their implementation to public administration, including government bodies and later, from 2006, also to regional governments. This resulted in the liquidation of the former PHARE implementation system, including the Polish Regional Development Agency (PARR), increased government supervision over central agencies (such as the Polish Agency of Entrepreneurship Development established in 2000) and subordination of regional development agencies to regional self-governments. This was possible to large extent thanks to the fact that around 4% on average of EU cohesion policy funds (and even more under pre-accession programmes, especially in the early times of preparations for the EU) was possible to be utilised for supporting employment, trainings, and various types of capacity building within public administration.

The efficiency of the Polish system in absorbing EU funds and implementing regional development policies can be attributed to several key factors, including:

• Agreement across political divides on prioritising preparations for EU membership and building an effective system for the absorption of European funds.
• Creation of a unified programming and monitoring system for development, regional, and EU policies, which ensured strategic coordination, improved preparation of plans and projects at the operational level, and transfer of procedures to national policies.
• Establishment of a strong management centre, led by the Minister in charge of regional policy, responsible for programming and implementing EU funds, as well as conducting regional policy and overseeing the entire socio-economic system of the government.
• Decentralization of management with simultaneous implementation of robust mechanisms of partnership and strategic coordination between the government and provincial governments.
• Devoting great attention to building and strengthening the competences of administrative staff involved in programming and implementing EU programmes and projects.
• In the initial period, influx of new highly motivated staff during the creation of new institutions, which was of significant importance in government administration and regional self-government.
• Stability of the staff in the created institutions, despite political changes, including the units involved in the implementation of EU funds.

This article covered only some aspects of the establishment of the Polish system of absorption of cohesion policy funds connected to development of a unique model of decentralisation and regional policy. To learn about procedural and institutional systems of absorption as such, please read the second article based on the paper “EU Pre-accession Processes in the fields of Decentralisation, Regional Policy and Coordination of Structural Instruments” by Piotr Zuber.