Location: Eastern Europe

In advance of formal membership, candidate countries are offered three pillars of EU assistance: trade concessions, stabilization and association agreements and financial support. These instruments aim both to prepare candidates economically, politically and administratively, and to signal accession’s benefits to their populations. In this paper we describe the channels in which the third pillar – the EU pre-accession funds – affected Poland’s economic and institutional development ahead of its 2004 membership. The funds were designed to accelerate institutional transformation, modernize agriculture, strengthen rural communities, improve transport networks, and promote environmental protection. In Poland, between the mid-1990s and 2003, they supported extensive investments that produced unprecedented improvements in technical infrastructure. Poland’s accession referendum in 2003 turned decisively in favor of EU membership, despite strong regional variation in support. While no causal evidence is available, we argue that without the EU-funded infrastructural transformation, its outcome would have been less certain. For current EU candidate countries, Poland serves as an excellent example of how targeted external financial assistance can support structural transformation ahead of integration with the EU.

Introduction

Seven countries are currently eligible to receive financial support through the European Union’s Instrument for Pre-Accession Assistance (IPA III): Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia, and Türkiye. The funding allocated within the program for the 2021–2027 period amounts to 14.162 billion EUR (in 2021 prices; European Commission, 2024). IPA III is the successor to the former two IPA editions, which have provided support exceeding 24 billion EUR since 2007 to countries in the then EU enlargement region. IPA aims to support countries that have entered a pathway to EU membership, expected in the foreseeable future, to facilitate progressive alignment with EU rules, values, and various standards and policies enforced in the European Union before they become full members. It constitutes one of the pillars of assistance offered by the EU to countries with a prospect of membership, with trade concessions and stabilization and association agreements (SAAs) serving as the other two.

Next in line to obtain financial help through the pre-accession funding are Moldova and Ukraine, both of which were granted candidate status by the European Council fairly recently. While they have already started their accession negotiations and may benefit from trade concessions and SAAs, they still need to fulfill certain requirements to be eligible for IPA. Though formally also a candidate since late 2023, the accession process of Georgia is currently suspended due to concerns about democratic backsliding, implementation of controversial laws and disputed parliamentary elections.

In this paper, we examine Poland’s experience in utilizing the funding available prior to the 2004 EU enlargement to undergo important structural and systemic changes. Given the goals of the funding, we discuss the evolution of a number of economic indicators which can serve as evidence of the socio-economic advancement that occurred in Poland in the years leading to its EU accession. These examples illustrate different dimensions of development that societies in countries embarking on the EU accession process could benefit from on their way towards full integration.

EU Pre-accession Funding Options in the 1990s

Together with nine other countries, mainly from the Eastern European region and the former communist bloc (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Slovakia, and Slovenia), Poland joined the EU in 2004. It was the largest enlargement of the European community both in terms of the number of new countries and population-wise.

On the pathway to EU membership, these candidates benefited from a coordinated set of financial instruments designed to accelerate their political, economic, and institutional development. During the 1990s and early 2000s, three programs offered financial assistance: Phare, SAPARD, and ISPA. Each addressed a different strategic challenge that candidates faced during their accession period – many of which underwent the transition from centrally planned to free market economies.

From the pool of soon-to-be EU members, Hungary and Poland were the first among the post-communist Central and Eastern European countries to formally start the accession process as early as 1994 (Cyprus and Malta applied in 1990). These two countries also inaugurated the distribution of financial assistance among the EU applicants. They became the first beneficiaries of the Phare program, which concentrated on supporting public administration reform, improving institutional capacity, and preparing regions for effective absorption of EU structural funds. It also helped modernize local infrastructure and provided targeted assistance to sectors undergoing major restructuring. Phare was soon extended to cover all other candidate countries.

The second initiative – SAPARD, concentrated on the needs of the agricultural sector and rural communities. The goal was to raise the competitiveness of local farming and modernize food production.

The third program, ISPA, funded major environmental and transportation initiatives.

These three programs helped close the gap between the candidate countries and older EU member states by improving infrastructure and enhancing the functioning of their institutions. Formally, they also helped ensure that the new members met EU strict standards and legal directives and built the foundations for their long-term cohesion. More detailed descriptions of the objectives of each program, with a special focus on Poland, are included in Box 1.

Figure 1 presents the annual expenditures between 1990 and 2003 within each of the three analyzed instruments provided by the European Union to Poland (bars, left axis). With connected lines, we show the scope of each program in cumulative amounts over time (right axis). During the 1990s, the budget spent on Poland under the Phare program was kept under 200 million EUR annually (in the last year of the decade, it increased to almost 300 million EUR). However, after the program’s restructuring since the beginning of the 2000s, annual spending through this instrument doubled. Among the three, Phare was the major funding source for Poland, as the country received a total of 3.5 billion EUR until 2003 (equivalent to 1.9% of the Polish GDP in 2003) – almost five times more than under the SAPARD program. Poland also obtained the highest total amount of funding of all candidate countries at the time, corresponding to 30% of the overall provided financial assistance (Kawecka-Wyrzykowska & Ambroziak 2006).

Figure 1. Values of  EU pre-accession funds in Poland

Source: Own compilation based on Tables 3, 4, 6 from Kawecka-Wyrzykowska & Ambroziak (2006). Note: in 2003 prices.

In 2000, ISPA and SAPARD were introduced to further support specific areas identified during the 1990s as critical and requiring targeted funding – the agricultural sector, initiatives to enhance the transportation network, and environmental protection. Through SAPARD, projects related to farming and rural infrastructure received approximately 150 million EUR per year in Poland, accumulating to 700 million EUR over the four-year period until 2003. Since one of the prerequisites in SAPARD was national co-funding of ca. 25% of the public contribution in the investments, overall 1.1 bn EUR (0.6% of the 2003 GDP) of public money was committed to different projects in Poland through this instrument (ARiMR 2025; investments consisted in 50% of private resources).

Projects supported within ISPA on average obtained 300 million EUR annually in Poland, with total spending reaching 1.4 billion EUR until 2003 (0.8% of the 2003 GDP). Poland was still the major beneficiary of these two types of financial support, though the total share of the funding received within each of them was much lower than in the Phare program, respectively 32% in SAPARD and 34% in ISPA (Kawecka-Wyrzykowska & Ambroziak 2006).

Box 1. Financial instruments offered in the 1990s on the pathway to EU membership: Phare, SAPARD, ISPA

Originally known as Poland and Hungary Assistance for Restructuring of the Economy, Phare was launched in 1989 at a pivotal moment in European history. Initially designed to support the two countries in their transition from communism to democracy and a market economy, Phare quickly expanded to cover other parts of Central and Eastern Europe. Its mission was not only to help rebuild economies, but also to support political democratization. At first, it operated through national programs, but as regional cooperation gained importance, Phare introduced international initiatives to foster cross-border collaboration. The evolving challenges faced by the transforming countries led to a significant change in the program’s operation in the late 1990s. Financial support was now focused on two main pillars: investment in essential infrastructure, which consumed about 70 per cent of resources, and institutional development, which received the remaining 30 per cent. Poland benefited from several specialized initiatives within Phare. Socio-Economic Cohesion focused on modernizing regional infrastructure and preparing Polish regions to efficiently absorb EU structural funds. Cross-Border Cooperation strengthened ties between Poland and its neighbors. Institutional Building contributed to more efficient and transparent public administration.

The Special Accession Program for Agriculture and Rural Development, SAPARD, was established in 1999 to help transform the agricultural sectors and rural economies of ten countries aspiring to join the EU at the time. The goal was to prepare farmers and food processors to meet strict EU sanitary and veterinary standards. In Poland, SAPARD played a major role given the country’s vast rural landscape and the important role of agriculture in the economy – accounting for 7% of the GDP in 1995 (CSO 2014). Around 75% of the total budget was allocated from EU funds, with the remainder covered by national co-financing. However, the rules required an own contribution from each beneficiary, thus around half of the total value of all investments realized through SAPARD was private capital (Supreme Audit Office, 2002). SAPARD in Poland focused on, on the one hand, the modernization of agriculture and, on the other, on rural development. A large part of the program went into modernizing agricultural holdings, supporting farmers in buying new machinery, improving farm buildings, and upgrading agricultural production to meet EU standards. Equally important was the modernization of food processing industries, like meat, dairy, fruits and vegetables. Another significant part of the program concentrated on infrastructure in rural communities — building roads, sewage systems, and improving basic services. To encourage economic diversification, assistance was provided to develop non-farming businesses and create new job opportunities outside of agriculture (EU Council, 1999a).

Created in 1999, the main goal of ISPA was to finance large-scale projects in two critical sectors: transportation and environmental protection. Projects selected for funding were typically expensive, exceeding 5 million EUR, and had a strategic, national or at least regional impact (EU Council, 1999b). From the society’s perspective, these initiatives improved living standards, protected public health and the natural environment and promoted sustainable development. In the environmental sector, ISPA focused mainly on critical areas, including improving the quality of drinking water, building modern sewage treatment plants, managing waste more efficiently, and reducing air pollution. Given the EU’s strict environmental directives, addressing these issues was a fundamental condition for accession. ISPA concentrated also on modernizing and expanding major roadways and railway lines, especially those which were signified as part of the Trans-European Transport Network. Improved transport connections facilitated trade, mobility, and regional development, essential for increasing economic competitiveness and tightening of physical linkage with the rest of Europe.

The total amount of received funding was only one of the factors that may have played a role in the scope and pace of overall socio-economic changes in Poland. Importantly, the spatial distribution of investments provided a unique opportunity to reduce the geographical inequalities deeply rooted in Polish history and related, in particular, to the partitions of Poland lasting from the late 1700s till the end of World War I (Becker et al. 2016; Grosfeld & Zhuravskaya 2015). The eastern regions of Poland were historically much less developed, with the agricultural sector maintaining a critical position in economic activity and employment.

To illustrate the differences in regional distribution of the funding, we use a number of indicators related to investments realized with the help of the SAPARD instrument – which was specifically targeted at supporting infrastructure in rural areas and advancements in the agricultural sector. In Figure 2, we present three measures of investment allocation – the total (public+private) value of investments completed in each region (a), total value of investments per capita (b), and per hectare of agricultural land (c). Depending on the analyzed indicator, we obtain a slightly different picture of the distribution of the investments in SAPARD throughout the country. It appears that the Western regions of Poland received the least funding from SAPARD, whereas the Eastern and most rural regions were less successful in securing the funding. In all three cases, though, the Wielkopolskie Voivodship – a region in the Central-Western part of Poland – stands out as the one that collected the highest funding not only overall, but also when calculated per inhabitant or, most crucially, per area of agricultural land.

Figure 2. Spatial distribution of the SAPARD investments in Poland, total amount (public+private) for the period 2000-2003

Source: Own compilation based on Table 7.2 from Rudnicki (2008). Note: Converted from PLN to EUR using 4PLN/EUR exchange rate; c) per hectare of agricultural land. As compared to Fig. 1 the amounts for SAPARD include private resources spent

The most likely reason behind the particular allocation of the funding is related to the application process. The total amount of the funding was granted to Poland with limited distributional guidelines, and the funds were allocated on the first-come, first-served basis (ARiMR 2003). The maps in Figure 2 suggest that farmers, agricultural producers and manufacturers, and rural municipalities in Wielkopolskie region were quick and efficient when it came to funding applications. The scale and scope of the investments, though – looking at the three different measures – shows the flow of substantial benefits to all central and eastern regions.

Infrastructural Metamorphosis of Poland in the 1990s

As described above, an exceptional stream of additional funds from the EU was directed to Poland from the early days of its transition. The funding programs evolved with time during the 1990s and became more specialized closer to EU accession to address the specific needs of the candidate countries. While causal evidence of the impact of EU pre-accession funds on evolving infrastructure remains scarce and is methodologically challenging (with just a few exceptions on more recent pre-accession funding schemes, like Denti 2013), a simple overview of a number of key indicators might serve as strong suggestive evidence that the funds actually made a significant difference. In this part of the paper, we take a closer look at some examples of Polish infrastructure that underwent enormous progress in the late 1990s and early 2000s. We stipulate that the EU funding played a crucial role in the acceleration of this development.

All three analyzed EU instruments – Phare, SAPARD and ISPA – shared some common objectives, for instance, increasing access to clean water in the population, reducing pollution in lakes, rivers, and the sea, and improving road conditions, especially the low-rank ones in remote, rural areas. In Figures 3-5, we present the scale of improvement observed in these three areas on the lowest level of regional disaggregation, namely, in Polish municipalities. We compare the three selected indicators over almost a decade, between 1995, the initial year of data availability, and 2004.

We begin with Figure 3, which depicts the expansion of the water pipe network measured in kilometers per 1,000 inhabitants in each municipality. As specified in the legend, the darker the green category, the higher the density of the water pipe network. The rapid expansion of the network between 1995 and 2004 is evident, especially in some parts of the country. Most often, the upgrade to the top category happened in regions that lagged well behind the rest of the country in 1995. Here, the notable examples are the central regions of Poland (Kujawsko-Pomorskie and Lodzkie Voivodships, including the northern part of the Mazowieckie Voivodship) and the north-eastern frontiers (Podlaskie and Warminsko-Mazurskie Voivodships).

Figure 3. Length of the water pipe system (in km) per 1000 inhabitants in Polish municipalities in 1995 and 2004

Source: Own compilation based on the statistics from the CSO Local Data Bank (BDL); Geodata: National Register of Boundaries (PRG). Note: The legend is based on 2004 data: the two top and bottom categories in the legend cover 10% of observations each, and the rest of the categories cover 20% of observations each. Municipality borders marked in white, voivodship borders in yellow. Poland underwent an important administrative reform in 1999, when 49 voivodships were aggregated into the current 16. For the year 1995, we use the post-reform voivodship division of the country. Between 1995 and 2004, only negligible administrative changes took place at the municipal level.

In Figure 4, we show the share of the population enjoying access to sewage treatment plant services. The progress over time in this respect was related, on the one hand, to the construction of new treatment facilities and, on the other, to the concurrent expansion of the sewage pipeline network, which resulted in a higher share of users for the existing wastewater treatment plants. The increase in the usage of the treatment plants over time is striking, especially given that at the starting point, in 1995, only a limited number of municipalities had a wastewater treatment plant in operation. These municipalities were mainly concentrated in the northwestern corner of Poland and in the southwestern region of Silesia.

In comparison to the water pipe system in Figure 3, the development of sewage treatment plant access was concentrated in regions that were already ahead of the rest of Poland in 1995 – specifically, the northwestern and southwestern ones. However, a substantial increase in access to sewage treatment services is also visible in central and eastern parts of Poland, where in 1995 plants offering these services were extremely rare. This particular type of development can also be viewed from the perspective of the extent of pollution reduction in Poland’s internal waters. The number of scientific reports documented a sharp decline in biochemical factors of industrial, agricultural and household origin, hazardous to both humans and the environment, commonly polluting Polish rivers and lakes in the 1990s (Gorski et al, 2017; Marszelewski & Piasecki, 2020).

Figure 4. Number of residents connected to sewage treatment plants per 1000 inhabitants in Polish municipalities in 1995 and 2004

Source: see Figure 3. Note: The legend is based on 2004 data: due to high prevalence of zeros the bottom category in the legend covers 30% of observations, the rest of categories cover 10% of observations each. Municipality borders marked in white, voivodship borders in yellow (see Notes in Figure 3 for details).

The third pair of maps (Figure 5) illustrates the development of the country’s road network. The Figure shows the expansion and modernization of the lower rank roads administered by municipalities, which seem particularly important from the point of view of day-to-day transportation and quality of life of local populations.

Figure 5. Length of the municipality road network (in km) per 1000 inhabitants in Polish municipalities in 1995 and 2004

Source and Note: see Figure 3.

The data in Figure 5 cover both paved or hard-surfaced roads and dirt roads. One point to keep in mind here is that with an overall development of a municipality and of the neighboring region, the status of the municipality’s small-scale road may be updated to a higher rank, administered by the county or even by the voivodship. Figure 5 does not account for such an update of rank (in the Figure of roads), so the numbers presented are likely to represent a lower bound of the actual advancement. The maps in Figure 5 compare the length of municipal roads per 1000 inhabitants in 1995 and 2004. While a significant improvement in the road system is visible almost all over the country, the central regions seem to have gained the most, at least when it comes to this particular type of roads.

Investments and Development vs. Public Perception

Overall, all three figures above demonstrate that during the decade before Poland integrated with the EU, significant progress was achieved in terms of improving the quality of life, increasing accessibility of public utilities, reducing environmental degradation and capturing sustainable urban development. Substantial investments in rural areas had an important impact on reducing regional disparities.

Another important observation when examining all three figures together is that, while advancement occurred throughout the country, the bulk of improvement in each of the considered aspects was concentrated in slightly different parts of it, and almost all Polish municipalities recorded an important inflow of investments related to the pre-accession funding. While again we cannot provide any causal evidence, below we confront the spatial distribution of infrastructural modernization from Figures 3-5 with public support for joining the EU expressed in the referendum organized in 2003, a year before accession.

Figure 6. Support for the EU accession in the referendum in 2003

Source: Own compilation based on the statistics from the National Electoral Commission; Geodata: National Register of Boundaries (PRG). Note: The bottom category in the legend covers municipalities that voted against EU integration (12.3% of observations), the rest of the categories cover 25% of the remaining observations each. Municipality borders marked in white, voivodship borders in yellow.

In Figure 6, we present the results of the vote on the municipal level, with darker blue shades indicating higher support for EU membership. The map clearly highlights high geographical variation in support for European integration, with much stronger proportions of votes in favor of EU membership in western and northern Poland. In contrast, the support in central and eastern Poland was substantially lower, reflecting a higher degree of skepticism towards the benefits of the EU. Clearly, many factors influenced people’s choices at the time of the referendum. They depended on their economic conditions, the degree of exposure to relations with Western European countries, the level of awareness of the potential gains from integration, as well as fears concerning the future of local economies and those related to cultural influences.

Just by looking at the map of support, it is impossible to say much about the degree to which the EU pre-accession funds affected the outcome of the referendum. For that, we would need to know more about the dynamics of support across regions. Yet, while the share of votes in favor of integration in many eastern municipalities was below 50%, people in a substantial majority of localities expressed overwhelming support for joining the EU. The result of the referendum was 77,45% in favor. Although no causal analysis linked the results to EU pre-accession funds, the scale of investment and its visibility, as well as its tangible effects – the direct translation of EU funds into daily quality of life all across Poland, are very likely to have turned many people’s votes in the EU’s favor.

Conclusion

Since the early 1990s, on the path to EU membership in 2004, Poland, like other candidate countries, received generous European pre-accession financial assistance. The combination of three financial instruments in operation at the time – Phare, SAPARD, and ISPA – enabled Poland to make substantial investments in key economic sectors, including public administration, agriculture, environmental protection, and physical infrastructure. The early launch of the Phare program prepared Poland to follow various EU standards and prerequisites, and contributed to the implementation of the cohesion policy. Initiation of assistance within SAPARD and ISPA instruments since 2000 strengthened the rural economy and competitiveness of Polish agriculture, and allowed for modernization of the transportation and environmental infrastructure. In pre-accession assistance, Poland received a total of 5.5 billion euro (over 3% of the 2003 GDP), by far the highest support provided to the candidate countries at the time.

Substantial investments made during the 1990s and early 2000s, largely covered by pre-accession financial aid, had a remarkable impact on the quality of existing infrastructure in Poland. Kilometers of roads were built and renovated in Polish municipalities, thousands of households acquired a connection with the water pipe network, and hundreds of wastewater treatment plants were constructed. This is only a small subset of selected advancements that can be demonstrated using quantitative data collected in a comparable way over time. Numerous other types of infrastructure received substantial investments to support development, modernization or enhancement. On top of that, all these improvements have likely contributed to further spill-over effects through higher levels of regional growth, a boost in the labor market with the creation of new jobs, a reduction of unemployment, or enhanced labor productivity. All these changes, taken together, played a key role in determining the overall quality of life for the Polish population, reducing regional economic inequalities, and improving the quality of the local natural environment, etc.

The distribution of support for Poland’s accession to the EU, as reflected in the 2003 referendum results, differed significantly by region. Enthusiasm for the EU was significantly lower in the eastern parts of the country, while residents of many western municipalities voted overwhelmingly in favor of membership. Yet, even at a very fine geographical distribution, we see only a relatively small group of municipalities – 12.3% – where less than 50% of residents voted in favor of EU membership, and the overall outcome across the country was a decisive “YES”. Thus, although the substantial advancement in infrastructural development all across the country did not convince the majority of residents in each and every locality, the number and geographical scope of those voting in favor was very decisive. It is impossible to say how high/low the support would have been without the received support. Yet, given the scale of the resulting changes in various basic dimensions of quality of life, it seems safe to say that, thanks to the funds, many voters looked at the future integration with a higher degree of appreciation. Naturally, other factors played a role in determining people’s decisions in the referendum, with economic conditions and prospects for socio-economic development being just one factor, albeit a likely important one.

Pre-accession funds in the current candidate countries, how they are used, distributed, and how they change people’s daily lives, will again prove important in showcasing the benefits of integration. At the same time, to secure the kind of support that the Polish population expressed in the 2003 referendum, it will be important to also highlight the broader benefits of integration and address fears and concerns of various population groups.

The experience of Poland and other member countries from Central and Eastern Europe can serve not only as an example of the benefits of pre-accession funds, which we studied in this policy paper. The countries’ socio-economic success and the changes in the quality of life, both before and after accession, should be seen as a clear case of fundamental changes, which would have been highly unlikely had the countries decided to stay out of the European Union.

Acknowledgement

The authors acknowledge the support from the Swedish International Development Cooperation Agency, Sida. We are grateful to Patryk Markowski for his assistance in preparing this analysis and detailed background research.

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