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down of the distribution of the Structural and Cohesion Funds during the
period 1992-2004.
Considering
Figures 4.2
to
4.4
together, it is clear that the budgetary expan-
sion of the SCF increases in response to the growing size and the increasing
disparities in terms of income per capita within the Union. Indeed, the members'
GDP per capita is an excellent (negative) predictor of the share of structural
actions to be received by any given country member (Mattila
2004
).
Figure
4.4
in particular shows how the bigger beneficiaries of structural actions are
the lower income countries during the period 1986-1994, when the Union
expanded to fifteen members and the monetary union crystallized. From the
early 1990s onwards, these programs provide a significant amount of redistri-
bution within the Union.
As a large body of literature has documented, the design of the EU bud-
get is the product of a long series of intergovernmental bargains between the
constituent members of the Union (Carruba 1997; Lange
1993
; Mattila
2004
;
Mattli
1999
; Moravcsik
1998
; Rodden
2002
; Weber
1999
). In the context
of these bargains, those areas in which the EU plays a role in redistributing
resources across members develop as a compensation to the “losers” of the
creation of a common market. In other words, the CAP and the Structural
Actions are normally theorized as side payments without which further market
or political integration would not be feasible (Moravcsik
1998
). For instance,
the creation of the Cohesion Fund is generally accepted as a direct compen-
sation to Ireland and the South European countries for joining the European
Monetary Union, modeled after German Bundesbank, and essentially giving
up their monetary policy autonomy (Lange
1993
). Yet these payments did not
come at the cost of member states' fiscal policy autonomy. However com-
pelling, the notion of horizontal redistribution as a mechanism to expand and
preserve European markets does not explain the lack of centralization, or even
coordination, of public social insurance and redistributive policies in the EU.
5
In sum, the fiscal design of the European Union presents a clear dual struc-
ture. The absence of anything resembling a conventional system of interper-
sonal redistribution (with the exception of some of the income support compo-
nents associated with the CAP) is accompanied by a complex web of programs
of interregional redistribution that constitute a very significant and increas-
ing share of the total EU budget. Countries remain overly protective of their
fiscal policy capabilities even after five decades of economic integration. The
diversity of Europe's economic geography helps explain the absence of ver-
tical fiscal integration, but it does not speak to the second main aspect of
the fiscal structure of the Union, namely the increasing presence of programs
5
I should underscore that the lack of fiscal centralization in Europe by no means implies an
absence of fiscal effects of the EU. A rich literature has focused on the effects of market and
monetary integration on the fiscal policies of the member states. For an excellent overview, see
Hallerberg (
2002
). The analysis of these indirect effects, though, is outside the scope of this
topic.