A new study from the Ifo Institute’s Dresden branch indicates that European Union structural funds have helped boost growth in less developed regions. Joachim Ragnitz, the institute’s deputy head, stated that their calculations show that every Euro of EU funding resulted in an additional two Euros of gross domestic product over the long term. He added that funding for research, knowledge transfer, and innovation was particularly effective due to its high productivity effects.
During the 2014-2020 funding period, Germany received nearly 21 billion Euros in structural funds from the EU. Almost two-thirds of this money went to the structurally weaker regions in eastern Germany because they were classified as particularly eligible for funding according to EU criteria. The total supported investment in these eastern areas reached around 700 Euros per inhabitant, significantly higher than the approximately 150 Euros per inhabitant recorded in western Germany. Ragnitz also noted that without this support, public investments in eastern Germany would have been considerably lower. Small and medium-sized enterprises also benefited from the EU-co-financed programs.
Ragnitz explained that many investments in infrastructure and growth-promoting projects in eastern German states and their municipalities could not have been financed due to tight finances. Given the current negotiations regarding the EU financial framework for 2028-2034, he cautioned that any reduction in EU funding could have serious negative effects.
