Regional disparities, absorption capacity and Structural Fund payments: A case study of the Czech Republic

Abstract

The intention of this paper is to provide empirical evidence on how the factors of socio-economic disadvantage and absorption capacity influence the spatial distribution of Structural Fund (SF) payments among the Czech Republic's micro-regions during the 2007-2013 programming period. The empirical results indicate that agglomeration economies, innovation and entrepreneurship are associated with higher SF absorption capacity and higher SF payments, challenging the tendency for socio-economically disadvantaged regions to converge. SF absorption capacity measured especially by the number of project applications submitted for SF financing and by the average SF budget per project application, is a crucial concept in order to understand the relationship between within-country regional disparities and SF interventions.