A new study from the Ifo Economic Research Institute’s Dresden branch indicates that structural funding from the European Union has successfully boosted growth in regions considered underdeveloped. Joachim Ragnitz, the institute’s deputy director, stated that their calculations reveal that every Euro of EU funding ultimately resulted in two Euros of additional gross domestic product over the long term. He noted that support focusing on research, knowledge transfer, and innovation was particularly effective, as these areas generate especially high productivity effects.
Between 2014 and 2020, Germany received nearly 21 billion Euros in structural development funds from the European Union. Almost two-thirds of this money benefited the economically weaker regions in Eastern Germany, as these areas were categorized by the EU as particularly deserving of funding. In these regions, the total amount of supported investment was around 700 Euros per inhabitant, compared to only about 150 Euros per inhabitant in Western Germany. Without this assistance, public investments in Eastern Germany would have been significantly lower. Furthermore, small and medium-sized enterprises also benefited from the EU-co-funded programs.
Ragnitz added that many investments in infrastructure and growth-boosting projects could not have been financed due to the strained financial situations in Eastern German states and their local governments. Given the ongoing negotiations for the EU financial framework for 2028-2034, he issued a warning against any reduction in these funds, stating that “a limitation of EU funding could have severe negative consequences”.