Regional Policy Mitigates Populism

“Ahead of the European elections in June, right-wing populist parties are on the rise in almost all member states. Our research shows that regional policy can effectively counter this trend,” says Robert Gold, Kiel Institute Senior Researcher and co-author of today's Kiel Policy Brief “Paying Off Populism: EU Regional Policy Decreases Populist Support”, which is based on a Kiel Working Paper. 

Robert Gold and Jakob Lehr (University of Mannheim) analyzed election results for the European Parliament in 27 EU countries over the period from 1999 to 2019. They use various analytical methods to determine the impact of EU Regional Policy on the regional vote shares of populist parties.  

In the years 2000 to 2020, the EU invested more than EUR 900 billion in regional development over three funding periods, primarily from the European Regional Development Fund (ERDF) as well as the European Social Fund (ESF) and the Cohesion Fund (CF). Concrete measures are defined and co-financed by the national and regional governments. 

100 Euros per capita reduces right-wing vote share by 0.5 percentage points 

Throughout the entire study period, a subsidized region received around EUR 1.4 billion in EU Regional Policy transfers on average, equivalent to around EUR 530 per capita. As a result, the vote share of right-wing populist parties fell by 15–20 percent or 2 to 3 percentage points. In an average European region, EUR 100 of EU regional funding per capita therefore reduces the share of votes for right-wing populist parties by 0.5 percentage points. 

The authors conclude that one reason for this decline in populist support is that EU regional funding increases trust in the EU and its institutions, and consent with democracy more broadly. This assessment is based on survey data from well over 100,000 households. 

“Right-wing populist movements are based on a nationalist, Eurosceptic agenda. They benefit from a lack of trust in the problem-solving capability of established political structures. The fact that regional policy increases this trust appears to be one reason why populist support is declining in regions supported by EU Regional Policy,” says Gold.  

The EU's funding landscape changed over time, though. With the Eastern Enlargement, a lot of structurally weak regions lost support, just because even weaker regions joined the EU. While in the early periods, regions such as Puglia (Italy) or Leipzig (Germany) exemplified lagging behind regions, in later years, the average supported region rather corresponds to regions like Jihovýchod (Czech Republic) or Kendriki Makedonia (Greece). 

This loss of funding led to a 1.6 percentage point increase in vote shares for right-wing populist parties, on average. In particular, some East German regions were affected. In these regions the AfD and NPD would have received only 10 percent instead of 11.6 percent of votes in the 2014 European elections, if regional funding had continued as before.  

“Of course, there are many different factors influencing populist support, especially in Eastern Germany, not all of which are related to economic parameters”, Gold says. “However, when it comes to the economic causes of populism, there is always a pronounced regional component. And regional policies can counter this political polarization between prosperous and stagnant regions.”