Beyond financial proxies in Cohesion Policy inputs' monitoring: A system dynamics approach

European Union's Cohesion Policy aims to foster development and reduce disparities among regions by redistributing more than one-third of the European budget. Given the policy's importance and complexity, an elaborated monitoring and evaluation system has been established. While attention has been dedicated to evaluating policy impact, the monitoring of inputs (i.e., allocated financial resources) has been limited to the control of financial dimensions (i.e., funds' absorption rate). As the implementation process entails a sequence of steps, this research explores whether financial proxies alone are adequate to monitor the policy inputs. To test this hypothesis, a system dynamics model is built. Simulations highlight that the absorption rate captures shocks that might occur during the inputs' expenditure with significant delay. To that end, we elaborate three novel operative monitoring indicators (i.e., funds' demand, funds' offer, procedural efficiency), which may overcome the financial indicators' mono-dimensionality and time lags' limitations.