Do digitalization and institutional capacity improve EU fund management for bridging territorial gaps? Evidence from the 2014–2020 Cohesion Policy

Abstract The Cohesion Policy (CP) plays a crucial role in reducing disparities among EU Member States, facilitated by the distribution of European Structural and Investment Funds (ESIFs). Maximizing the impact of these financial resources requires robust administrative performance throughout the fund management cycle. However, such performance varies considerably across European countries and may be shaped by a range of institutional and technological factors. A comprehensive investigation is required to identify their determinants and potential levers for improvement. This study aims (1) to assess and compare the performance of EU Member States in managing ESIFs during the 2014–2020 programming period and (2) to investigate the role of e-government and broader institutional factors in shaping such performance. A three-step methodological strategy was adopted. Three performance indicators were constructed to evaluate countries’ capacity to commit, absorb, and implement funds. Then, a cluster analysis was applied to classify countries according to their performance. Finally, an econometric analysis was carried out to identify the impact of digitalization and institutional variables in shaping performance. Findings demonstrated diverse strengths and weaknesses across the fund management cycle among EU Member States. They indicated that digitalization alone does not improve performance, whereas institutional factors emerge as key drivers of efficiency, particularly during the spending and implementation stages. This research contributes to a more realistic view of the mechanisms that drive the effectiveness of CP. Understanding how digitalization and institutional quality combine to determine outcomes is essential for designing more equitable and sustainable European policies.