Are ERDF Efficient in Strengthening the Switch to a Low-Carbon Economy? Some Insights with Value-Based Data Envelopment Analysis

Abstract

AbstractWe assessed the execution of European Regional Development Funds (ERDF) allocated to promote a Low-carbon economy (LCE) in 23 EU Member States (MS). Each MS is evaluated using the Value-Based Data Envelopment Analysis (VBDEA) method. In the first stage, the efficient MS were identified, and the major reasons that might affect the efficient performance of the ERDF. From the results obtained, 43% of the MS were deemed efficient in the application of ERDF committed to fostering an LCE, and these results were mostly justified by their financial spending rate. At the second stage of the analysis, the changes that needed to be done by inefficient MS to “try and replicate” their efficient counterparts were computed. Furthermore, from the robustness assessment conducted it was possible to show that with thresholds of δ = 5% and δ = 10%, 22% of the MS managed to attain a robust efficiency. While Spain is the leading country in terms of robustness efficiency, Romania (robustly inefficient for δ = 5%), Hungary, and the Czech Republic (the worst in the ranking of inefficient MS) could not apply these funds properly. Given this information, the EU should continue to push policies that secure financial opportunities from engaging in LCE, particularly for MS with limited financial capacities, while still supplying them with improved funding mechanisms and technical expertise.