Development of interrelated multi-criteria approach to distribution of funds

Abstract

The Cohesion Policy is an essential and powerful tool designed to provide a basis for the prosperity and wellbeing of people in a vulnerable position due to providing considerable financial support to the lagging regions. Around 33 % of the EU budget needs an effective redistribution amongst correctly identified lagging regions satisfying their social and economic needs. However, at the present days, the rules of a redistribution game are not transparent, have some methodological and theoretical unsoundness and on the final step of decision-making are the subject to political negotiations. In particular, the decision-making process, underlying the Structural funds' distribution, is still in its infancy phase and requires improvements regarding the measurement of regional performance, its classification, and optimisation of funds' distribution. The research objective is to develop the interrelated multi-criteria approach to the solution of the real-life problem of Structural funds’ distribution. The proper solution to this problem heavily depends on such considered aspects as measurement, selection and optimisation. Application of this approach will improve an existent set of rules and procedures employing deliberately developed, selected and logically interconnected MCDM methods, optimisation models and approaches providing an objective, rigorous and verified measurement of regional performance and fair distribution of Structural funds. The novelty of results steams from the identified gaps in the literature related to the measurement, classification and selection aspects of MCDM methods' application. The main contribution is that all methodological suggestions are gathered into the interconnected multi-criteria approach allowing the solution of the main practical problem of funds' distribution. Implementation of the developed interrelated multi-criteria approach, which is based on selected MCDM methods, optimisation models and comprehensive measurement approaches, will minimise the need for the political negotiating and eliminate subjective influence on the decision-making process underlying the distribution of Structural funds. The application part used the cross-sectional 2013, 2015 years data from official statistical web sites describing the socio-economic performance of Ukrainian and EU regions.