Governance and the implementation of the EU Cohesion Policy

This paper explores the role of governance in policy implementation, using the European Union (EU) Cohesion Policy as a case study. Leveraging a quasi-natural experiment in Italy, where certain projects were shifted from EU to national management, we evaluate the impact of governance structures on financial execution. Using a non-parametric generalization of the difference-in-differences estimator, we find that otherwise identical projects achieve better financial execution under EU governance. Projects reassigned to national management experience a significant slowdown in financial execution within ten months, with delays reaching nearly 20% after 24 months. These delays are particularly pronounced when projects are managed at the sub-national level rather than by the national government. Our findings contribute to the broader policy debate on the effectiveness of multi-level governance structures in public investment programs.