OUT OF CREDIT: EVALUATING THE IMPACT OF THE EU STRUCTURAL FUNDS ON HUNGARIAN SMALL BUSINESS GROWTH AND ACCESS TO FINANCE

Abstract

Totaling EUR 29 billion, Hungary is in the midst of implementing its largest
economic development program in its young democratic history. At the center
of the European Union led development program is an effort to revitalize and
reequip Hungary’s languishing small and medium sized enterprises (SME),
long the country's heart of employment. This paper examines the efficiency
and impact of two Structural Fund's instruments to enhance SME development
– ECOP 2.1.1 and JEREMIE. A survey of 1275 SME and interviews with dozens
of top policy-makers paint a flawed development program in dire need of
reform. Despite this, empirical analysis suggests JEREMIE funds may have
dampened the effects of the financial crisis and are crucial for the continued
liquidity of SME, who have been particularly hit hard by the world financial
crisis.