Measuring for Absorption: How the Institutionalisation of EU Cohesion Policy Influences the Use of Performance Indicators in Hungary

We investigate the performance measurement of the implementing agencies of EU Structural Funds in Hungary. Following the advice of Thiel and Leeuw (2002), we focus on the incentives created by the institutional environment of these agencies. The core of this environment is a double principal-agent relationship between the European Commission (EC), the national government and the Managing Authority. We investigate its institutional features and the resulting organisational incentives for Managing Authorities in Hungary. Relying on programme evaluations, we explore how these incentives actually affected the design and use of performance measurement by Authorities in two policy fields: active labour-market policy and higher education. We find that external incentives to focus on absorption and formal compliance created bias against integrating performance measurement into the policy process and tackling problems of performance risk and non-measurability.