Why convergence remains elusive: an institutional political economy perspective on EU cohesion policy

This paper analyzes EU Cohesion Policy from a political economy and institutional economics perspective. It focuses on how institutional structures and capabilities shape economic resilience within the European Union’s multilevel governance system. Rather than evaluating the outcomes of cohesion in terms of success or failure, the analysis conceptualizes the policy as an evolving institutional experiment at the macro (European), meso (national), and micro (regional) levels, whose effects are mediated by domestic governance capacity, collective learning, and crisis management practices. Using policy documents, statistical evidence, and semi-structured interviews with senior political and administrative officials, the paper examines how EU-level rules and institutions interact with national political and administrative systems during periods of economic expansion and crisis. Using Greece as a case study, the paper finds that Cohesion Policy has contributed to macroeconomic stabilization, infrastructure provision, and administrative professionalism over time. However, its developmental impact has been limited in the long run because transformative and efficiently adaptable institutions are more complex and difficult to achieve than increasing funding volumes or improving absorption rates. Crisis-related conditionalities strengthened monitoring and procedural efficiency, but also short-term compliance and risk-aversion in decision making and project selection. The analysis highlights how inertia poses challenges for resilience emerging from the interaction between institutional capacities for learning and innovation in development policy across governance levels. As argued, to understand differentiated cohesion outcomes, attention must shift from financial inputs to the political economy relations and processes through which resilience is constructed, constrained, and “distributed” unevenly across member states.