ERDF support for SME competitiveness – Design weaknesses decrease effectiveness of funding

Summary:

We assessed whether the European Regional Development Fund helped improve the competitiveness of small and medium-sized enterprises (SMEs) in the period 2014-2020. We found that Member States aimed at funding a large number of SMEs rather than targeting the key factors that limit SME competitiveness.

Most calls funded specific productive investments with no lasting impact on competitiveness. Projects were mostly awarded through non-competitive selection procedures and grants.

The support stimulated SMEs’ willingness to invest, though several would have made the same investments without public funding. In some cases, the support negatively affected the economic prospects of other SMEs competing in the same markets. We recommend improving the design of SME calls, reviewing ERDF selection procedures for grant awards, and prioritising the use of repayable aid.

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