I.

Otola, Synergy Effects in the Aspect of Local Development of Communities, International Journal of Public Administration in Central and Eastern Europe nr 1, 2007, p.62-74

Synergy Effects in the Aspect of Local Development of Communities Iwona Otola Department of Logistics and International Management Faculty of Management, Czestochowa University of Technology ul. Armii Krajowej 19 B 42 200 Czestochowa, Poland Tel: + 48 34 3250 330 E -mail: iotola@zim.pcz.czest.pl Iwona Otola is an assistant professor and works at Department of Logistics and International Management at Faculty of Management, Czestochowa University of Technology, Poland. She holds a PhD degree in Management Science from Czestochowa University of Technology. She has published many articles including local government issues. Her main scientific areas of interest are financial analysis, public finance especially local and regional aspects.

Abstract: The paper presents problem of synergy effects, which are caused by European Union funds, supporting other financial resources of investment outlays on the level of the community. Conducted research aims at: (1) defining phenomenon of synergy and its effects (2) determining phenomenon of synergy on the local level (3) analysis the synergy effects resulting as a outcome of the merging the various financial sources of the communal investment with the special consideration of European Union funds. The base to run the researches were projects connducted by rural local communities located on the south part of Poland.

Keywords: synergic effects, European Union funds, local community, local development

Meaning synergy in processes of management Phenomena when the system composes something much than the algebraic sum of elements, the contemporary science determines with name "synergetics". Synergetics was defined as "theory of co-operative phenomena" (Haken, 1978). This science, called the science about the self-organization too, formulates reliable regularities and rights of rising of

any phenomena of such a co-operation, coherence between each elements of the system, as well as of conditions, which coherence vanishes in and chaos appears (Hubert, 2000). Synergetics is the science about the co-operation of subsystems and elements of components in systems of the higher order and whom the achievement of the determined optimum is the task 'for' (Abt & Wozniak, 1993). The process of the co-operation of elements of the given system leads for obtaining the effect of synergy. Term synergy is coming from the Greek language syn - together and ergon -work. Essence of synergy refers to the connection of some elements to whole, either increasing the activity of some element through including it in the given whole (Pszczolowski 1973). Synergy consists in it, that co-operating elements gives the accident result bigger than the simple sum of consequences caused by every factor from separate. And so co-operating elements allow to reach bigger total effects in the comparison to reached benefits from individual working of these elements. The phenomenon of synergy consists in the maximization of effects through the joint and simultaneous usage of available resources and methods of the activity in configurations assuring them mutual stimulating and strengthening (Suszynski, 1992). Synergy referes to joint effects, created by elements co-operating with oneself in the broad formulation. Rose in this way synergic effect expressed with Arystoteles' thesis, we identify as: "the whole is greater than the sum of its parts". Definitions quoted above of synergy determine it as the positive phenomenon and they reveal profitable synergic effects. Peter A. Corning (2000) gives the different definition of synergy, whom effects produced by wholes are different from what the parts can produce alone. This definition does not suggest that achieved effects of the co-operation are marked by bigger effectiveness. Analysis of concrete decisions about the synergetic orientation however points that negative synergy is the quite frequent phenomenon, but to release positive synergy the efficiency of working of managerial teams influences to a large extent (Abt & Wozniak, 1993). Synergy plays the significant part in most, if not all of scientific disciplines, although its meaning is hidden under many other words: the symbiosis, the symmetry, the co-operation, the complexity, interdependence. Ascertainment when the concept of synergy appeared for the first time is difficult to to determine. The Greek origin of this term is suggesting times of the Middle Ages and the Re-naissance. The concept of synergy appears in philosophical and exact sciences. This term was introduced into management sciences relatively late and Igor Ansoff (1968) is regarded as its precursor, who regards synergy as the inherent element of the

strategy based on the expansion into new markets of the company and for introducing of new products. Considering the essence of phenomenon of synergy it is necessary to refer to the system concept in the management sciences. Because synergy is one of the attribute of the system and permitts to identify the efficiency of system's action. Synergy consists in existence in the system as a whole, completely new attributes, qualitatively different from the sum of attributes of its subsystems leading for synergic effect appearing. From the systems science point of view, the system methodology is the key tool of the examination and the analysis of the organization's problems in the organization and management sciences (Bieniok, 1999). The theory of systems pays attention for the dynamic and bound mutually character of the organization, creating frames for planning action and predicting their direct consequences as well as permit to understand of unforeseen results when such occur (Stoner & Wankel, 1992). The system approach treats the organization as the homogeneous system consisting of subsystems tied with oneself and elements creating them. The theory of systems shows that acting of each element of the organization influenes on acting of all remaining elements. First of all the results of the system approach are (Lichtarski, 2001): getting to know by overall perceiving of objects because the system is always something other than the simple sum of the part; knowledge, that suboptymalisation, i.e. the rationalizing of subsystems, doesn't have to lead for the improvement of functioning of the whole system; stating that whole is exerting bigger influence for functioning of one's elements; noticing the interrelations. The system, defined as the set of elements separated intentionally, which relations on certainly attributes were determined is the basis of the system approach to management sciences (Perechuda, 2000). In M. Bielski (1997) opinion, all organizations pose certain categories of systems and that allow to relate to them the majority of terms and statements referring to systems at all. Because the organization is always plurality of the parts, from which each aimes at reaching the detailed purpose (purposes) and which maintains themselves thanks to interrelations (Bednarski, 1998). Considering the phenomenon of synergy in the system approach it is necessary to study each elements not apart from oneself, but including the relation between them. Each organization is tied with the environment as the element of the higher row, and outside conditions created by this environment influence on its development. Proper acting of

each of subsystems and balance kept between them is the condition of efficient functioning and development of the organization as the system. In order to obtain additional joint effects, it is significant to conscious forming phenomenon of synergy in management's processes. Estimation of results of synergy's phenomenon requires existence of the comparative base - surfaces, either of the benchmark which would serve for showing synergic effects, but would permit determining the size of them too (Suszyski, 1992). It is necessary to consider the phenomenon of synergy in two ways: it is necessary to measure the integrated procedure and no-integrated and to determine what results are in both methods and, it is supposed to expect smaller effects in the nointegrated approach (Soltysik, 2000). And so, it is possible to write down the effect of synergy on the following way (Nowicka-Skowron, 2000): Es = ETEA EIEA, where: Es synergy effect, ETEA joint effect of acting of the set of elements, which the co-operation is occurring between, EIEA sum of individual effects possible to to reach by elements operating individually.

As a result of the occurrence of synergy phenomenon is synergic effect. L. Krzyzanowski (1994) defines the synergic effect as: the difference between the total effect of acting of the set of objects, between which the co-operation occurs, and the sum of individual effects that would be able these objects to gain operating by oneself, i.e. not entering into the cooperation. It is necessary to distinguish the phenomenon of synergy from dissynergy by author's opinion. In case when the arising dissimilarity is positive it is being said about performing the phenomenon of synergy, if whereas negative it is the phenomenon called dyssynergy. Mutual strengthening of elements of the given system is been supposed to generate the additional effects, called synergic effects. These effects, appear in economic processes of the company, organizational structures, and processes occurring in the market surrounding of the company. Analysis of potential synergic effects should determine (Frackowiak, 1998): kind of possible synergic effects, strength of their interaction, conditions of their effective usage.

Mutual interactions between elements are able to lead for strengthening these elements and reducing their attributes. The consideration about synergy effects should include the benefits resulting from these effects as well as the consequences of lack of the occurrence of these effects.The main reason for the negative synergrtic effect is lack of the co-operation, which as J. Zieleniewski (1969) claim, may result from: incompatibility of purposes, in it also of intermediate purposes, i.e. sources of action bad synchronization of action, incorrect selection of components, incorrect structure of particular a number of action or whole of action.

Synergy effects occurring in acting of companies presented in literature are able to embrace (see Goold & Campbell, 1998; Frackowiak, 1998; Malinowska 2002): the benefit of economies of scale and range, benefits resulting from the specialization and the concentration, possibility of the increase in the new owner's income, thanks to increasing financial resources, benefits from compensation for weak point of the one company with strong points of other, obtained effects thanks to completion of resources and know - how, benefits of vertical and horizontal integration, profits from diversification of production, benefits from merged negotiated strength, results of consolidation and the increase in the market position, results of the improvement in the system of the organization and management as well as liquidation of the mismanagement. It isn't possible to accept assumptions that each action leads for obtaining the effect of synergy. However ignoring situations, which merged acting of means, resources, technologies, methods and tools lead for higher effects, than their isolated action, would be the denial of the main goal of the company's activity as efficiency is. Rightly postulates L. Krzyzanowski (1994) that "the phenomenon of synergy underlays and pose sense of creating, function and development of every description of the organization."

Effects of synergy on the local level

The key problem in reflections the synergy phenomenon on the local level covers the issue whether it is possible to observe the tested phenomenon and how to measure its effects. Holistic glance at the community as an open system, operating in the changing environment allows to analyse that phenomenon and its effects. The analysis of the community as the system, its elements and relation between these elements, is the starting point to more far-away reflections. Discussed earlier, system of the organization, permits to recognize the community as the open system which is as the organic whole: the functional - three- dimensional complex system, social - economic complex system, element of the system of the higher row creating its environment, which the exchange of both positive and negative interactions is taking place with for it. The functional - three-dimensional system is composed by the needs and the local community's preferences, utilising space and the natural environment. The community is the particular kind of social - economic system, which occurring elements combinnes for: the area, residents, organs of the community and organizational units such as: the local government, budget institutions, auxiliary households, municipal enterprise, communal companies. The community is tied with the environment as the element of the higher row, and outside conditions created by that environment influence on its development. Proper acting of each of subsystems and the balance kept between them is the reqiurement of efficient functioning and development of the community as the system. It is necessary to emphasize that between elements of the system, as the community is, determined reactions leading the whole for coherence, have to occur. The formulation of the purpose of its existence either of functions it is supposed to fulfil is the next stage in the analysis of the system of the community. The assurance for inhabitants of basic services in the field of the technical infrastructure, the health care, the sport, education, the social assistance is the purpose of the community. The local government's activity should lead for residents' lives to the constant improvement in the level and the quality. This activity, should take place at the same time and harmoniously in areas: social, economic, infrastructure, three-dimensional and environmentally friendly. Realization of purposes, and at the same time functioning and development of the community depends on determined development proportions between each subsystems, and inside each of them, as well as from the relation with surrounding. Occurred interdependence between determined subsystems of community enables to rise the effects of synergy. Total size of 6

results of common action of each of subsystems of the community will be bigger than if these subsystems were working independently. Summing above-mentioned reflections up,it is necessary to notice, that occurrence the phenomenon of synergy in the community is reliable. Determining the areas of phenomenon of synergy and analysis of effects, to which rise that phenomenon may contribute, is the next stage. The studying areas, which the phenomenon of synergy is able to occur in the community allow to introduce generic criteria of the that phenomenon and to determine conditions of rising its effects (see table 1). Performing in organizations synergy of sale refers to storing the usage of resources of the company i.e. wharehousing, storing, distribution channels as well as the promotion and the advertisement for many various products. It is possible in case of the community which doesn't engaged of production but the trading of commodities, what the provision of services for residents to talk about synergy of services. It is possible to obtain synergic effects through the usage of the common advertisement and the promotion for using various communal services and for introducing new services. In the process of the provision of services, the chance to use of common distribution channels and the surface of warehouse also exists, for various services. Utilizing integrated communal resources in the area of the infrastructure and the property, in satisfy processes of determined needs for residents, may contribute to higher effects than if these resources were being utilized independently. Operating synergy is able to manifest itself in pricing savings too. The investment policy of the community influences on its development and tools suitably integrated with oneself stimulating this development are able to bring results in the form of effects of investment synergy. Investment synergy is able to manifest itself in the co-operation of the private and public property too. This method of cooperation is called public - private partnership. Thanks to this agreement, skills and resources of every of these units are used for supplying of services to recipients and making objects available to users. Drawen up in the form of contract, the agreement, permits on the division of the risk connected with the given undertaking. Potential benefits resulting from the co-operation of units undergo the division too. Financial synergy is able to manifest itself in effective using of financial resources, and in gaining outside financial resources by the communal government. Integrated financial resources of the community, coming from various sources, are able to pose as a whole significantly bigger financial potential, intended for the realization of development purposes, than using these elements as separate parts. The chance to use European Union funds will contribute to achieve the synergic effects. However the size and long-lasting results of joint effects depend on local governments' skill for using funds of the European Union. Managment synergy is ralated to employed personnel's abilities, 7

and in particular of managing personnel. Heading actions for solving of communal organizational, strategic and operating problems are able to bring synergic effects. Previous reflections leads for the conclusion that a lot of areas exist in communities which, it is possible to observe the phenomenon of synergy in. The efficiently functioning communal system creates prerequisites for forming synergic effects. It isn't subject to the doubt that purposes of the community are able to be realized in such a mark as existing conditions will afford for and in particular possessed financial resources. Own community financial resources are often not enough for the realization of assumed purposes. And therefore also, the community is able to contract liabilities in the form of loans, credits or the bond issue, with purpose of financing long-term undertakings. Contracted debt by the local government undergoes many limitations written down in the Act on the Public Finance. European Union funds shouldn't be ignored, among many financial instruments which the community has at its disposal to support the local economic growth. The communal government may also take advantage from non-returnable help as funds coming from the European Union assuring. And so phenomena of synergy manifest in the community funds management with the special consideration of European Union funds. Thanks to merging financial instruments coming from various sources (own resources, credits, loans, bonds, resources from EU funds) the effect of synergy will occur. The co-operation of mentioned financial instruments may contribute to the realization of the bigger quantity of assumed purposes or for introducing the big undertaking into practice, of which the realization is impossible within the possessed confines of own financial resources of the community. Main problem of the determining and examining effects of synergy is related to the choice of the kind of estimations the projects financed from European Union funds. The application of the ex-post analysis will permit to study the real synergic effects resulting from implementing a given project. However it is necessary to notice that to the ex-post estimation the projects completed already may be used, i.e. projects financed from EU pre-accession funds. The examination of joint effects is possible in the situation of the comparison of two similar projects - one co-financed from EU pre-accession funds, and other without share of European Union resources. The question whether it is possible examining synergic effects applying the ex-ante analysis seems to be significant. The chance to obtain potential synergic effects is being considering in this case, and the analysis refers to projects co-financed from EU structural funds. Communal government as the applicant of the project, is obligated to present alternative solutions. The obligation to show that the chosen project represents the best solution of every possible alternative variations performes on the initiator of the project. 8

The comparison of alternative variations financed with the share of EU structural funds and without their share is the basis for studying potential synergic effects. It is significant, so that local authority before taking decisions referring to investment undertakings have examined the chances to obtain additional joint effects. The involvement of smaller both material and immaterial resources may be the effect in order to reach of determined benefits. Reaching the synergic effects will permit the better usage of possessed resources, and the same will contribute to quicker local development. It is necessary to remember that economic estimations of investment projects aren't the only determinant in case of the communal government of taking up the investment decisions. The social estimation of projects is the equally significant criterion when taking the decision up. To taking the decision up in favour of forming the local development elaboration of the strategy of the community and the choice of tools which will influence on this development in the proper way has fundamental meaning. Applying for the realization of projects co-financed from European Union funds by the local government may contribute to obtain of additional joint effects. Among determining factors of rising the synergic effects it's necessary to mention: variety financing resources, investment outlays in communities, the level of local development, realization of purposes of the regional policy of the European Union.

Usage of the outside capital, may contribute to the bigger profitability of own financial resources of the community in accordance to the principle for the financial leverage. Many communal investments is financed when engaging financial resources coming from various sources. To the main sources financing the tasks connected with social - economic development in studied communities belong: own resources of the communities and economic units, the central budget resources intended for financing undertakings from the field of active forms of counteracting of unemployment and for creating new places of work (PFRON, the wage-fund), chosen from the investment from the field of the communication infrastructure and the environmental protection (NFOSiGW, WFOSiGW), loans and bank credits, communal bonds, resources from the Agency of Restructuring and the Modernization of Agriculture as well as the Agency of Municipal Development, 9

resources of the Polish Foundation for the Promotion and Development of Small and Medium Enterprises,

European Union funds - pre-accession and structural.

Considering the phenomenon of synergy rising as a result of realizations projects co-financed from European Union funds it is possible to separate effects which refer: the benefit of economies of scale and the range, opportunity of the increase in the property of the community, thanks to increasing financial resources, improvement in the system of the organization and management in the community, liquidation of the mismanagement with communal resources, rational allocation of resources of the community. The benefit of economies of scale and the range manifest themselves in the cut in expenses connected with the realization of the given project. Co-financing the project from UE funds reduces financial expenditure coming from communal resources. Economics of range permitts for bigger material effects and for delivering services or the product to the bigger number of recipients. The implementation of constant procedures in the community applying for European Union funds, towards to the improvement in the system of the organization and management. The realization of projects involves the process of putting into practice, monitoring and control. Employees trainings in the field of management with European Union funds on the community level allow for the better labour organization. The usage of European Union funds leads for the suitable allocation of community's resources too. The realization of many investment projects or the big undertaking, which exceeding financial capacities of the community, is possible as a result of capital integration as European Union funds create. The realization of projects co-financed from UE funds contributes to the occurrence of effects of synergy, and the classification of these effects has been presented on figure 1. Division of synergic effects according to interactions method allows to distinguish indirect and direct joint effects. First of all to indirect synergic effects belong: increase in the level and the quality of the life of inhabitants of the given community, reducing the distance between the level of development of Polish communities and communities in countries of the European Union (i.e. UE15), quicker realization of objectives (1, 2, 3) of the regional policy of UE. Direct synergic effects are the result of the realization of the concrete project co-financed from European Union funds. To direct joint effects belongs such effects as: reduction of unit 10

cost of the realization of the project, reducing the period of the realization of the project, the decreasing the value of product effectivness ratio (calculated as the relation of expenditure of communal resources to the product unit). Classification of synergic effects permitts to distinguish measurable and unmeasurable effects. Material effects such as the lenght of built network e.g. sawage system, water system, road system, newly resultant of public usefulness objects (sports and recreational, culture, health care, educational)are reflected of the quantitative character of effects. Unmeasurable effects are connected with the increase in the enterprenurship and the improvement in the living standard for the local inhabitants. Taking into account the impact of synergic effects for local development it is possible to distinguish economic, social and environmentally friendly effects. The group of economic effects includes the increase in the value of the property managed by the community, increasing budgetary revenues of the community, the increase in attractiveness of communal areas both under investments and under housing construction, as well as fall in unemployment. Social effects which are often also unmeasurable effects pose the significant group of effects. The main social effect is to raise the comfort of inhabitants life. This effect is obtained through building the modern municipal infrastructure, the improvement in working, health, rest and housing conditions, raising of the public safety and through the increase in medical, educational, culture, sports and recreational accessibility to services. Also important group of synergic effects as a outcome of the realization of investments co-financed from European Union funds pose environmentally friendly effects. Main effects arise as a result of action in favour of the improvement in the condition of natural environments through bringing to a stop processes of the degradation of that environments, the elimination of pollutions and threats, as well as rational managing of natural resources (water, mineral raw materials) and development of the system of ecological monitoring.

Analysis of synergy effects

The purpose of the further analysis of

synergy phenomenon is the attempt of the

measurement of its effects. The attempt at summing up the synergy effects is unusual difficult.The regression analysis was used for studying synergy effects at this paper. It is possible on the basis of above-mentioned reflections to state that the realization of cofinanced from UE funds projects bring bigger effects than the realization of projects financed only from communal resources. And so synergic effects will be obtained when:

ECR +EUF > ECR

11

where: ECR +EUF effects of engaged communal resources, as a result of the realization of the project financed from communal resources and European Union funds, ECR effects of engaged communal resources, as a result of the realization of the project financed only from communal resources. Synergic effects pose the difference between above-mentioned kinds of effects. Introduced at the begining definitions of synergy phenomenon show that the effect of the cooperation of factors is different from the sum of effects obtained as a result of isolated action of these factors. The fact that the effects obtained within the confines of of realization of the project only from European Union funds have not been taken into consideration requires the explanation. In accordance to the principle of additionality of the regional policy of the Community, the EU funds are the completion of own investor resources and could not be able to finance projects fully. And so effects obtained within the framework of the project financing from European Union funds, but without the share of communal resources, aren't existing. Own community resources, dragged credits and loans, grants coming from the state budget and earmarked funds are the so called community contribution. For needs for the present study contribution of the community was accepted as a community resources (see table no 2). Carrying out of empirical examinations of synergic effects rising as a result of the realization of projects in communities will permit to prove the hypothesis that European Union funds are able to be the significant element supporting own financial resources of communities assigned to development purposes and reducing development disproportion between communities. To studying synergic effects arising as a result of the realization of projects in communities of the Czstochowa subregion the regression analysis was used. Empirical examinations were carried out on the basis of data referring to 14 projects realized from the discipline of the municipal infrastructure in four communities of the Czstochowa subregion. Studied 14 projects were financed from various sources: of own communal resources, residents' contribution, grants, debt and UE funds. 7 projects were financed only from own communities resources, 3 projects were financed from own communities resources and grants, and the debt was used for the realization of 5 projects. All of these projects were co-financed from UE funds.

12

The effect of the usage of communal rsources was determined as size of communal resources engaged to the project. Two regression functions determining the effect of the usage of communal resources were constructed: y1 project co-financed from European Union funds, y2 project not co-financed from European Union funds.

Synergy effect (ES) will be reached, when: ES: ECR+EUF (y1) > ECR (y2) assuming, that: y1 < y2.

The function of the regression was expressed with the pattern:

yi = bi aij xij ,
j 1

where: aij - coefficient j of exogenous variable for i variation, bi - free expression, xij - exogenous variable for i variation and j features, n - number of exogenous variables, i - number of the considered variation. The constructed y1 regression function is dependent from four exogenous variables: x11 - size of the produced output, x12 - time of the realization of the project, x13 - relation the number of participants in the project to all inhabitants of the community, x14 - size of European Union funds. Taking under attention calculated coefficients a1j (for j = 1,2,3,4) the regression function for co-financed projects from European Union funds takes following form: y1 = 134,49 x11 + 64864,84 x12 + 57416,23 x13 0,52 x14 371201,34 The y2 regression function is dependent from three exogenous variables: x21 - size of the produced output, x22 - time of the realization of the project, x23 - relation the number of participants in the project to all inhabitants of the community.

13

Function of regressions of projects not co-financed from European Union funds after the consideration of calculated coefficients a2j (for j = 1,2,3) takes the form: y2 = 140,20 x21 + 98317,63 x22 + 44982,16 x23 313832,6 Adjustment of empirical data to the value of the variable in both cases is enough because ratios of determination reach high value: R2 = 0.81 (corrected R2 = 0.73) in case of the y1 function and R2 = 0.89 (corrected R2 = 0.86) in case of the y2 function. The analysis of y1 and y2 regression model leads for the conclusion, that size of communal resources, is the growing function of the xi1, xi2 and xi3 variable and the decreasing function of the xi4 variable for y1. Values of ratios assigned to each variable are significant. Because values of ratios are smaller in case of the y1 function which proves about the smaller increase in communal resources in case of the realization of projects co-financed from European Union funds. The increase in the quantity of the produced output for the one unit in case of projects co-financed from UE funds causes the increase in community resources about 134,49 zloty (at the stability of left factors), but in the case of projects not financed from European Union funds - about 140,20 zloty (at the stability of left factors). Extension the period of realization of the project by the one month makes the increase of share of community resources by 64864.84 zloty (at the stability of left factors) if the project is co-financed from EU funds and about 98317.63 zloty (at the stability of left factors) if the project isn't financed from EU funds. Increase of European Union funds about 1 zloty (at the stability of left factors) in expenses of the project makes reduction about 0.52 zloty of community resources. Values presented on the graph 1 of the regression function were obtained after the substitution of empirical data. The analysis of above-mentioned data lets to notice that y1 < y2 dependence occurs in case of each project. Realization of projects co-financed from UE funds brought bigger effects than realizations of projects financed only from communal resources. It results from above-mentioned reflections, that involvement in the project the EU funds brings big synergic effects. Smaller share of community resources engaged to the given project causes that the community is able to realize the bigger quantity of projects or to produce bigger material effects at lower expenditure coming from community resources. The analysis of additional joint effects was also carried out in the relation of the quantity of produced output and the number of direct beneficiaries of realized projects. The effect of the usage of communal resources has been described as the sum of following fragmentary factors:

14

share of communal resources in own revenues of the community, share of communal resources in subsidies, share of communal resources in grsnts, share of communal resources in debt.

As a result of the analysis the dependence between the effect of the usage of communal resources to the quantity of the produced output and the number of recipient in the investment has been shown on the graphs 2 and 3. The graph 2 presents the dependence between the produced output and the effect of the usage of communal resources. The realization of projects co-financed from UE funds leads in every case for obtaining bigger material effects in the form of the bigger quantity of the produced output. Financing the project by using UE funds allow to produce 381 units of the output more in the case of the construction of the water-supply system in the A community (project no2) and not less than 3406 units of the output more in case of the construction of the sanitary sewage system in the B community (project no14). Dependence between the number of direct recipients of the project and the effect of the usage of communal resources has been presented on the graph 3. Co-finansing of projects from EU funds permitts to increase direct beneficiaries' number also in that case. The increase in users' number of investment for 76 persons in case of the modernization of the communal road in the A community (project no5) and not less than 583 persons in case of the

development of the refinery of sewage in the C community (project no 12) were allowed by co-finansing the projects by UE funds.

Summary The increase in the quantity of the produced output and in the number of direct and indirect recipients of the investments is caused thanks to the usage of European Union funds. Bigger direct results of projects are equivalent to the quicker rate of local development and reducing of development disproportion between studied communities. However it leads for reducing the distance between the level of local development of Polish communities and the communities from other EU countries. Above-mentioned reflections conducts to the conclusion, that integrating many financial instruments with European Union funds in communities leads for obtaining synergic effects. The realization of projects co-financed by UE funds influence positive on the rate and the direction of local development. Action in favour of socio- economic development of communities heads towards to the improvement in the level and the quality of residents' life. Projects realized by communal authorities refer first 15

of all to the access to education, the culture, services, equipping in the municipal infrastructure and the improvement of natural environments condition. The usage of tools of the regional policy of European Union levels also development differences between communities.

References:
Abt, S. & Wozniak, H. (1993) Podstawy logistyki. Stella Maris, Gdansk. Ansoff, I.(1968) Corporate Strategy. Penguin Books, Great Britain. Bednarski, A. (1998) Zarys teorii organizacji i zarzdzania. TNOiK, Torun. Bielski, M. (1997) Organizacje. Istota, struktury, procesy. Wyd. Uniwersytetu Lodzkiego, Lodz. Bieniok, H. (1999) Podstawy zarzadzania przedsibiorstwem. Katowice 1999. Corning, P.A. (2000) The Synergism Hipothesis: the Concept of Synergy and its Role in the Evolution of Complex System. Journal of Social and Evolutionary System No 21, p. 133- 172. Frackowiak, W. (1998) Fuzje i przejecia przedsiebiorstw. PWE, Warszawa. Goold, M. & Campbell, A. (1998) Desperately Seeking Synergy. Harvard Business Review, September October, p.131-143. Haken, H. (1978) Synergetics: an Introduction. Springer Verlag, Heidelberg Berlin New York, 1978. Hubert, J. (2000) Spoeczenstwo synergetyczne. TAiWPN Universitas, Krakow. Krzyzanowski, L. ( 1994) Podstawy nauk o organizacji i zarzdzaniu. PWN, Warszawa. Lichtarski, J. (2001): Podstawy nauki o przedsiebiorstwie. Wrocaw. Malinowska, U. Wpyw efektow synergii na ocene fuzji i przejec przedsiebiorstw. In Duraj J. (2002) Przedsiebiorstwo na rynku kapitalowym. Lodz. Nowicka Skowron, M. (2000) Efektywnosc systemow logistycznych. PWE, Warszawa. Perechuda, K. (2000): Zarzadzanie przedsiebiorstwem przyszosci: koncepcje, modele, metody. Placet. Warszawa. Pszczolowski, T. (1973) Synergia i jej miejsce w teorii organizacji. Prakseologia nr 3-4. Rumelt, R. P. (1974) Strategy, Structure and Economic Performance. Harvard University. Soltysik, M.(2000) Zarzadzanie logistyczne. Katowice. Stoner, P.E. & Wankel, Ch. (1992) Kierowanie. PWE, Warszawa. Suszynski, C. (1992) Synergia w dzialalnosci rynkowej przedsiebiorstw. SGH, Warszawa. Zieleniewski, J. (1969) Organizacja i zarzdzanie. PWN, Warszawa.

16

Table 1 Areas of occurring the phenomenon of synergy in the community Type of synergy Operating synergy Financial synergy Conditions of rising of synergetic effects the infrastructure and the communal property using the overhead costs reduction usage of outside sources for financing integrating of many financial instruments, in it of also European Union funds common distribution channels, storing and warehousing for various services provided by the community the common advertisement and the promotion relationships between communities public - private partnership integrating of tools stimulating development of the community the managers' ability, for solving of organizational, strategic and operating communal problems

Sales/Services synergy Investment synergy Managment synergy

Source: autors based on Ansoff, 1968 and Rumelt 1974.

Figure 1 Classification of synergy effects SYNERGY EFFECTS

Interaction method

Measure

Impact on the local development Economic Social Environmentally friendly

Direct Indirect

Measurable Unmeasurable

Source: by author

17

Table 2 Resources of financing the project Non qualified costs Total project cost Own community resources Debt (bank credit, bond issues, loan) Contribution in kind Community Own community resources contribution Grants (state budget, earmarked funds, inhabitants contribution) Debt (bank credit, bond issues, loan) European Union fund

Qualified costs

Source: authors based on ZPORR (Intergated Operational Program of Regional Development), Warsaw 2003.

Graph 1 Results of regression function

3000000 2500000 2000000 1500000 1000000 500000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Projects

y1 y2

Source: authors evaluation

18

Graph 2 Dependence - effect of engaged comunal resources in the relation to the produced output
4 500 4 000 3 500 3 000

Output

2 500 2 000 1 500 1 000 500 0 0,0 0,5 1,0 1,5 2,0 E Projects financing from CR and EUF Projects financing from CR 2,5 3,0 3,5 4,0 4,5

Source: authors evaluation

Graph 3 Dependence - the effect of using comunal resources in the relation to the number of direct recipients of the project
1000

Number of direct recipients

800 600 400 200 0 0,0 0,5 1,0 1,5 2,0 E Projects financing from CR and EUF Projects financing from CR 2,5 3,0 3,5 4,0 4,5

Source: authors evaluation

19