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HOW TO MEASURE COHESION IN THE EU?
Dimitar Hadjinikolov
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e-mail: d.hadjinikolov@unwe.bg; www.hadjinikolov.pro
Summary
Cohesion is a very important precondition for implementing several EU internal and external
policies such as functioning of the single market, Eurozone, Customs Union, Common
commercial policy, Competition policy, Environmental policy, etc. Therefore, the accurate
assessment of the scale of cohesion in the EU is one of the main tasks of European researchers
and institutions. But to assess the development of the EU cohesion process and thereof the
effectiveness of ongoing EU cohesion policy, it is necessary to introduce and assess the results
of certain cohesion indicators. The article presents two approaches to the assessment of
cohesion in the EU. The first approach, the so-called traditional approach, is based on
understanding of the cohesion process mostly like a catch-up development of member states
and regions lagging the EU average. The so-called new approach, which is introduced in the
article, focuses on fitness and readiness of member states, regions, and citizens in the EU to
function together as one single organism. A set of new criteria has been proposed by the author,
grouped by the three types of cohesion in the EU: economic, social, and territorial.
Key words: cohesion, cohesion policy, cohesion indicators, European Union
JEL: C83, F15,
Introduction
It is well known that the term “cohesion” first appeared in research publications in the
17th century related to Physics and Chemistry. Cohesion is described as a force capable to hold
together molecules of a chemical substance. Later, in the 20th century cohesion becomes a new
meaning in the form of “social cohesion”, which is a force keeping together different social
groups in a society, regardless of their ethnic, racial or gender differences (Stanley, 2003).
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PhD and Dr. habil, professor at UNWE, Department “International Economic Relations and
Business.
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In publications of EU institutions, it can be read that cohesion is “an Overall Value of
the European Union” (European Committee of the Regions, 2021), but unfortunately the legal
acts and other documents of the EU institutions lack a clear definition of the term "cohesion".
It is only assumed that cohesion refers to the force that brings member states, regions, and
people together. In Article 3 of the Treaty on European Union we can read that the union
“…shall promote economic, social and territorial cohesion, and solidarity among member
States” (European Union, 2012). Recently, public attention has focused on a new concept
related to cohesion in the EU, namely the so-called cohesion spirit, assuming that it should
cover, if not all, then almost all EU policies, similar to the approach already used to introduce
environmental norms into all EU policies (European Committee of the Regions, 2021).
But why is exactly the correct evaluation of EU cohesion so important?
Firstly, because the EU's cohesion policy is quite expensive, and its effectiveness needs
to be carefully monitored. According to the European Court of Auditors “the EU’s economic,
social and territorial Cohesion policy accounts for around one third of overall spending under
the EU budget” (European Court of Auditors, 2020, p. 4).
Secondly, because several EU policies depend strongly on the level of the EU cohesion
(see table below).
Table 1: Main cohesion impacts on EU policies
Impacts
Affected EU policies
Higher
economic
cohesion
means...
Lower costs to comply with
standards and safety
requirements
Single market, Environment policy,
Competition policy, Common agricultural
policy, Common transport policy
Greater convergence by
economic cycle
Eurozone
Greater similarity in export
specialization
Customs union, Common commercial policy,
Development policy
Higher energy efficiency
Common energy policy, Climate change
policy, Environment policy, Common
foreign policy, Development policy
Higher social
cohesion
means...
Convergence of national
social models and gradual
establishment of a single
EU social model
Social policy, Education policy, Health care
policy, Budget policy, Eurozone
Bridging the gap between
Western and Eastern
Europe
Common foreign policy, Common security
and defence policy, Neighbourhood policy,
Development policy, Single area of freedom,
security, and justice
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Higher
territorial
cohesion
means…
Lower logistic and
transport costs
Single market, Tourism, Customs union,
Common commercial policy
Lower costs for
transmission of electricity
and natural gas
Common energy policy, Climate change
policy, Common foreign policy,
Neighbourhood policy
Better communications
Single market, Single information area,
Education policy, Innovation policy
Lower investment costs
Industrial policy, Single market, Budget
policy, Eurozone, Innovation policy
Source: The author
And thirdly, because cohesion in the EU aims to correct imbalances between countries
and regions and in this way to strengthen solidarity and justice and especially solidarity and
justice are what the EU strongly needs in the present situation of high turbulences after Brexit
and Covid-19 and in the time of the war in Ukraine.
Traditional approach to cohesion assessment
The most synthesized cohesion indicator is without doubt the indicator “GDP per
capita”. It has been used to measure cohesion by several authors (Bal-Domańska, Sobczak,
2016; Hadjinikolov, 2017, etc.). The more similar the results of different member states or
regions are, the stronger the cohesion is, and vice versa, the greater the deviations are from the
average, the weaker the cohesion is. The main handy tool for measuring differences (or
similarities) is mean average deviation (MAD) with the following formula:
where, n = 28 (the number of EU member states), хi is the GDP per capita in the member state
i, while is the mean size of GDP per capita in the EU.
In addition, the Coefficient of Variation can be calculated. The formula is:
CV =
where, , represents the mean.
Both of these instruments, of course, can be used also to establish differences
(similarities) in other cohesion indicators like “People at risk of poverty and social exclusion”,
“Export specialisation”, or even in such an indicator as “Total length of motorways (km) per
1000 km2 territory.
Some authors use more complex models like Propensity Score Matching (PSM) (Bal-
Domańska, Sobczak, 2016), Structural Equation Modelling (SEM) (Maucorps, Jestl, Römisch,
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2020), Markov Chains Method (Begu, 2011), or Regression-Discontinuity Design (RDD)
(Becker, Egger, Ehrlich, 2010). Regardless of how complex the method applied by the authors
is, the goal is always similar - to determine the reduction or increase of differences between the
subjects due to the EU cohesion process.
But why this traditional “catch-up approach” to cohesion estimation is not enough for
decision making bodies and researchers? Because although catch-up development is an
important sign of increasing cohesion, it is not really the core aim of the cohesion process in
the EU. If we compare the German unification at the end of the last century with the cohesion
process in the EU, we can say that the catch-up development of the eastern German Lӓnder
(provinces) was essential, but the main condition for the success of the unification was another
- the creation of a functioning single economy, a functioning single social and political system.
We can say that if the EU wants to become a single economic and political system it has to
follow the way of the German unification and to use the Cohesion policy in the same direction
as it was done in Germany in the late 90s. But if we formulate the goal of cohesion in this way,
then we cannot accept the use of only criteria and methods that measure convergence
(similarity) without considering the goal of the cohesion process. The United Kingdom, for
example, was very close in several economic and social parameters to the core of the EU, and
this did not prevent it from leaving the union.
What should be done?
In short, for measuring of all three types of cohesion in the EU, we should use not only
criteria that measure degree of achieved structural homogeneity among member states and
regions, reflecting in catch-up development, but we should use also criteria measuring achieved
fitness of member states and regions to function together as one single organism.
There are already some significant achievements in this direction, such as the EU
Cohesion Monitor. Several indicators, included in this instrument are oriented on the goal of
the EU cohesion and not only to the catch-up aspect of cohesion. Such indicators are for
example: “Citizens of other EU countries”, “Visited another EU country”, “Socialised with
people from other EU countries”, “Trade in goods with the EU”, “Trade in services with the
EU”, “Trade openness towards the EU”, “EU spending in country”, “Contribution to the EU
budget”, “Number of opt-outs in policy integration”, “Single market transposition deficit”,
“Single market infringements”, “Participation in multinational deployments”, “Multinational
commands and forces” ((European Council on Foreign Relations, 2022).
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At the same time, however, some criticisms can be made regarding EU Cohesion
Monitor. Above all, too many criteria are based on the subjective assessment of the EU citizens
surveyed. How Europeans feel about European integration is important, but no less important
is whether there are objective prerequisites for achieving high cohesion. For example, citizens
of a country like Albania may have a very positive perception of European integration, but does
this mean that Albania is highly involved in the European cohesion process? That's why it
would be good if more indicators were included in the monitoring, which are by relating
statistics. Another critical note is that the monitoring lacks indicators to measure territorial
cohesion in the EU. Greater attention should also be paid to the ability of not only citizens but
also businesses to cooperate, as well as the effectiveness of European instruments to create a
better business environment at the Union level.
Some proposals
Based on the postulate presented above for orienting the cohesion indicators towards
the goal of cohesion, we could make some proposals.
Table 2: Proposals in the field of EU economic cohesion
Indicator
Affected EU policies
Schengen area population proportion to EU
population
Internal labour market, Single visa policy,
Common asylum policy
Euro area population proportion to EU population
Single monetary policy, Internal market for
goods, services, and capital
Share of intra-Union FDI flow and stock
Capital markets union, Securitization of
economy
Number of non-German EU companies listed on
Frankfurt Stock Exchange
Capital markets union, Securitization of
economy
Number of European Commission investigations
into infringement of EU internal market rules
Competition policy, Internal market for goods,
services, and capital
Number of European Commission investigations
into infringement of EU customs union rules
Single customs policy, Common trade policy,
Number of enterprises included in European
business register
Enterprise policy, Internal market for goods
and services
Number of enterprises included in European
patent register
Innovation policy, Enterprise policy, Internal
market for goods and services
Source: The author
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Table 3: Proposals in the field of EU social cohesion
Indicator
Affected EU policies
EU budget proportion to EU GDP
Social policy, Environment and climate
change policy, Education, Healthcare, Europe
in the world, European Neighbourhood Policy,
Justice, and Home Affairs, etc.
Cohesion expenditures proportion to EU budget
total expenditures
Social policy, Environment and climate
change policy, Education, Healthcare, etc.
Share in EU employment by citizens of member
state different from state of employment
Social policy, Enterprise policy, Competition
policy
Share in EU total number of students by students
of member state different from state of studying
Education, Innovation policy
Number of EU citizens receiving a pension from a
member state different from state of permanent
residence
Social policy, European Pillar of Social Rights
Value of medical services received in the EU by
citizens different from state of permanent
residency
Healthcare, European Pillar of Social Rights
Number of EU citizens supported by Union level
programs for employment
Employment policy, European Pillar of Social
Rights Action Plan
Number of Union level programs supporting
healthcare in the EU
Healthcare, European Pillar of Social Rights
Source: The author
Table 4: Proposals in the field of EU territorial cohesion
Indicator
Affected EU policies
Length of completed cross-border transport
corridors
Transport policy, Internal market for goods
and services, Environment, and climate
change policy
Average speed on cross-border transport corridors
Transport policy, Internal market for goods
and services, Tourism policy
Length of completed cross-border gas pipelines
Energy union, Environment, and climate
change policy
Share of intra-EU electricity exports in total EU
electricity exports
Energy union, Environment, and climate
change policy, Internal market for goods and
services, Competition policy
Number of member states' violations of common
rules in energy
Energy union, Environment, and climate
change policy, Internal market for goods and
services, Competition policy
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Volume of data transmitted via intra-EU roaming
Internal market for goods and services,
Competition policy, Consumer policy
Number of member states' violations of common
rules in telecommunications
Internal market for goods and services,
Competition policy, Consumer policy
Source: The author
Conclusions
✓ Cohesion in the EU has a very high economic, social and political price and therefore
its precise assessment is a must.
✓ Traditional approach ("catch-up approach”) is not enough for strict assessment of the
level of cohesion in the EU.
✓ We must find criteria for measuring the fitness and readiness of member states, and
regions to function together as one single organism.
✓ The specified criteria must cover all three forms of cohesion in the EU - economic,
social, and territorial.
References
Bal-Domańska, B., Sobczak, E., (2016), On the Relationships between Smart Growth and
Cohesion Indicators in the EU Countries. Statistics in Transition, Vol. 17, No. 2, Wrozlaw, pp.
249-264.
Becker, S., Egger, P., Ehrlich, M. (2010) Going NUTS: The effect of EU Structural Funds on
regional performance, Journal of Public Economics, 94 (9-10), pp. 578-590.
Begu, L.-S. (2011) Cohesion in the European Union – Used Markov Chains Method, Review
of General Management Volume 14, Issue 2, pp. 91 – 96.
European Committee of the Regions (2021) Cohesion as an Overall Value of the European
Union, Brussels.
European Council on Foreign relations (2022) EU Cohesion Monitor. Available at: EU
Cohesion Monitor – European Council on Foreign Relations (ecfr.eu). Accessed: 02.10,2022.
European Court of Auditors (2020) Implementing Cohesion policy: comparatively low costs,
but insufficient information to assess simplification savings, Special report 07, Luxembourg,
European Union (2012) Consolidated version of the Treaty on European Union, Official
Journal if the European Union, C326/17, 26.10.2012, Brussels.
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Hadjinikolov, D. (2017) Bulgaria in the EU Cohesion Process, Economic Alternatives, 2017,
Issue 2, pp. 213-225.
Maucorps, A., Jestl, S., Römisch, R. (2020) The Effects of the EU Cohesion Policy on Regional
Economic Growth: Using Structural Equation Modelling for Impact Assessment, wiiw,
Working Paper 185.
Stanley, D., (2003), What Do We Know about Social Cohesion: The Research Perspective of
the Federal Government’s Social Cohesion Research Network. The Canadian Journal of
Sociology, Vol. 28, No. 1, Special Issue on Social Cohesion in Canada (Winter, 2003),
Montréal, pp. 5-17.
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Narodostopanski arhiv, (4), pp. 57-72 [Тодорова-Петкова, С. (2021) Проблеми пред
сближаването на плановите райони в България, Народностопански архив, (4), с. 57-72].