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Territorial revisions to increase cohesion policy funding from the EU: the case of the new member states
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In order to support economic development across all European Union regions, €351.8 billion –almost a third of the total EU budget– has been set aside for the Cohesion Policy during the 2014–2020 period. The distribution of this budget is made through five main structural and investment funds, after long and difficult negotiations among the EU member states. This paper analyzes the problem of allocating the limited resources of the European Regional Development Fund as a conflicting claims problem. Specifically, we attempt to show how the conflicting claims approach fits this actual problem, and we propose alternative ways of distributing the budget via (i) claims solutions or (ii) the imposition of bounds (guarantees) to each of the regions. By applying this approach we also show that there is a claims solution that performs better than the others by reducing inequality and promoting convergence to a greater degree. It is clear that political bargaining will always be part of the allocation process. However, having an intuitive initial proposal may help politicians to find the best agreement. To that effect, we propose the use of a claims solution as a way to find an initial proposal for future policy changes concerning the allocations of the EU structural funds.
This introductory chapter presents the main development in the EUs Cohesion Policy and its objectives, and the rise of evermore spatially relevant EU policies and funds raising questions on the combined effects. The chapter outlines nine major narratives, that provide explanatory force to the development of the EUs Cohesion Policy: changing narrative to economic support schemes, a weak urban focus, changing demands with changing EU membership, the retainment of decision-making power with the Council, reduction of DG Regio to an administrative, less political DG; increase of topics and policies at the EU level, disintegration and nationalism and new global challenges.
This paper determines the extent to which rural areas in Poland have been beneficiaries of the EU’s Cohesion Policy (CP). The amount of funds allocated to rural areas at the local (gmina/commune) level as part of the total CP obtained by Poland from 2007 to 2018 was estimated. The spatial distribution of that allocation was then determined. Whether the level of absorption is linked to the separately computed rural development level in communes was examined. This then made it possible not just to determine the spatial pattern of the absorption of CP funds but also to identify the main social and economic correlates of their high levels of absorption. It was found that nearly 40% of CP funds for Poland were allocated to rural areas, inhabited by 40% of the country’s population. However, this seemingly balanced allocation was somewhat undermined by its spatial distribution: the highest absorption was reported in over a third of communes with a high level of development while it was also found in less than a fifth of communes with a low level of development. Communes with higher levels of absorption have a more favourable local budget situation and a high degree of deagrarianisation of their local economies. The absorption level is more highly correlated with the variables characterising the extent to which an agricultural area has turned into a multifunctional area than with a commune’s absorptive capacity.
The UK has been a recipient of European Union (EU) Cohesion Policy funding since its inception, and it has played a key role ever since in local and regional economic development across the UK. However, in the run up to the Brexit referendum in 2016, discussions about the significance of EU Cohesion Policy funding to the UK’s cities and regions, which have benefitted from this support for decades, was not a major topic of discussion. Paradoxically, the demise of EU Cohesion Policy in the UK, post-Brexit, comes precisely at a time when spatial inequalities are rising. Moreover, real questions remain about the UK government’s commitment to tackling regional economic development in the coming years. Having said that, as this Commentary discusses, several decades of EU Cohesion Policy implementation in the UK do provide a number of significant policy lessons, which should inform the contours of future UK regional economic development policy.
Cohesion policy is one of the European Union’s central spending policies, which is characterized by path-dependency and only incremental change. However, the policy has been reformed significantly in 2013. This case study sets out to trace this ground-breaking and significant reform in a fairly path-dependent environment by using Kingdon’s multiple streams approach (MSA).The approach is adapted to the characteristics of policy-making in the European Union, the particularities of the Union’s multilevel governance with its institutionalized and well-practised policy-making and almost predictable policy windows. The modified approach helps to separate two windows of opportunity with two different policy entrepreneurs. The first agenda window with the European Commission as entrepreneur prepared the grounds for the decision window with an entrepreneurial group of Member States. The second coupling reframed and refocused the proposals of the agenda coupling and linked cohesion policy more closely with the Union’s economic policy co-ordination.
Administrative capacity or quality of political governance? EU Cohesion Policy in the new Europe, 2007–13. Regional Studies. The enlargement towards Central and Eastern Europe offers new opportunities to examine the effectiveness of the European Union’s Cohesion Policy. This paper examines the management and implementation of Structural Funds in Bulgaria and Romania, two outlier but diverging cases, during 2007–13. Drawing on original empirical data, it argues that their variation in capacity and performance can be understood by examining how political factors influenced administrative capacity developments and the processes surrounding the absorption of funds. Taking stock of domestic political governance is essential as to explain the ability of new member states to manage European Union regional and Cohesion Policy.
The impact of European Cohesion Policy in urban and rural regions. Regional Studies. This paper presents an evaluation exercise on the impact of European Cohesion Policy on the economic performance of the most disadvantaged European areas (Objective 1 regions) for the programming period 2000–06. By performing the analysis at NUTS-3 rather than NUTS-2 level to exploit the exogeneity of the treatment status in the context of a regression discontinuity design (RDD), the analysis shows that European Cohesion funds have positively contributed to generating economic growth in lagging areas. However, their effect is mainly driven by the successful performance of rural areas close to the main urban agglomerates. Favourable geography and the progressive suburbanization of the rural landscape created new opportunities for rural areas close to cities, thus boosting the effect of the policy.
NUTS classification of territorial units is a framework for presenting a standardized statistical data in geographical areas throughout the European Union (EU). The main purpose of the NUTS classification of geographic areas is to provide a framework for collecting and publishing standardized statistical information, which can be used for the analysis, as well as a framework for European policy initiative. According to the NUTS classification geographic areas are divided according to different hierarchical levels: NUTS 1 is the largest territorial unit, which includes territorial group of 3 to 7 million inhabitants. NUTS 2 has a range of 800 thousand to 3 million and NUTS 3 has a range of 150 to 800 thousand inhabitants. Serbia has classified their regions according to NUTS 2 classification, because this classification is adequate for institutional support in Serbia. NUTS 1 and NUTS 3 classification are less applicable in Serbia due to inadequate institutional support, lack of political will or the high costs of regionalization.
Purpose
The purpose of this paper is to analyse income inequality for a sample of 14 European countries and their composite regions using data from the Cambridge Econometrics regional dataset from 1980 to 2009. The purpose of the paper is to provide insight into the dynamics of regional and national cohesion among the EU‐14 countries studied.
Design/methodology/approach
Initially, inequality is decomposed using the Theil coefficient into between and within country inequality to assess the extent to which convergence has occurred. To investigate the underlying causes of the changes in inequality, the Theil coefficient is further decomposed to assess the contribution of productivity and employment‐population ratio differentials to inequality.
Findings
The results indicate that while between‐country inequality has declined, within‐country inequality has increased by approximately 50 percent. Subsequent decomposition indicates that while productivity levels among regions have converged, the employment‐population ratios have diverged substantially driving increasing levels of inequality. This suggests that while EU cohesion policies have reduced productivity inequalities they have had little effect in stimulating convergence of employment‐population ratios across regions.
Research limitations/implications
The paper argues that national priorities, particularly in the context of the current European economic crisis, are likely to hinder European Union level policies to reduce income inequality at a regional level. This may result in further increases in regional inequality among European regions.
Originality/value
This paper's main contribution is to highlight how national convergence can lead to regional divergence being overlooked. The value of the paper is that it provides policy insights, based on empirical evidence, for European cohesion policy.
The aim of this article is to reassess the effectiveness of Cohesion policy. It examines the evidence for the performance of the policy since 1988, with a view to testing four main assumptions: that convergence is taking place at national and regional levels; that Cohesion policy has made a durable contribution to convergence and regional restructuring, in terms of GDP and employment; that Cohesion policy funds have been spent in the most effective way; and that there is a wider added value from Cohesion policy spending. The article goes on to consider issues for the budget review and how the effectiveness of Cohesion policy at the European level might be improved.
Explaining cross-country differences in growth rates requires not only an understanding of the link between growth and public
policies, but also an understanding of why countries choose different public policies. This paper shows that ethnic diversity
helps explain cross-country differences in public policies and other economic indicators. In the case of Sub-Saharan Africa,
economic growth is associated with low schooling, political instability, underdeveloped financial systems, distorted foreign
exchange markets, high government deficits, and insufficient infrastructure. Africa's high ethnic fragmentation explains a
significant part of most of these characteristics.
The EU Cohesion Policy has progressively diversified the financed sectors, with possible heterogeneous impacts on local growth. However, the literature is still largely oriented to the analysis of aggregate impacts. Our study offers a granular investigation of the sectoral impacts of Structural and Cohesion Funds on European NUTS 2 over the period 2007–2014. We find that expenditures in energy, R&D, and transportation sectors stimulate higher GDP per capita growth with persistent effects, coherently with reduction of production costs, higher accessibility and innovation in recipient regions. These effects are enhanced when expenditures are more diversified across sectors. Spatial panel models show that transport sector generates the highest spillovers, leveraging on agglomeration and proximity, while at geographical level we find substantial spillovers cross-cutting national boundaries. From a policy perspective, our analysis suggests how spatial and sectoral effects can contribute to the design of a more effective allocation of the EU budget.
This chapter aims at providing an overview of the EU Cohesion Policy. The origins of the EU Cohesion Policy are discussed and so are the main changes, such as the shift in policy-thinking and policy-logic leading to the place-based approach in the aftermath of the Barca-Report. The chapter discusses three major challenges shaping the interregional landscape and the EU Cohesion Policy context, namely Brexit, the Covid-19 pandemic as well as climate change policies and the Green Deal.
Several recent political crises represented a setback for the European integration process. In a face of rising Euroscepticism European Commission is looking for ways to foster integration by promoting European identity among citizens in EU regions. In this respect EU Cohesion policy is thought to have potential to be instrumental in achieving this goal. The aim of the paper is to assess the Commission proposals for Cohesion policy within MFF 2021–2027 in this context. The paper analyses new measures introduced by Commission proposal in view if they can deliver to better EU image in the regions. The proposal to change cohesion funds allocation methodology by adding into calculation more social factors can potentially be counterproductive as it leads to funds’ re-allocation compared to the current status. Evaluation of bringing into Cohesion policy smaller social and values oriented programs is more positive. Detailed analysis of the Justice, Rights and Values program shows high potential as a source for experience-based driven identification with Europe and can be instrumental in fostering European integration.
Entrepreneurship is one of the key directions of the state development, which forms its competitiveness, security and welfare. The state is interested in developing the institute of entrepreneurship as one of the sources of job creation, production of goods and services. The research purpose is to analyze the regional business environment using the method of correlation and regression analysis, and nonparametric statistical methods. The key hypothesis of this research was the thesis that a positive business environment is typical for regions with a high level of socio-economic development. The authors analyzed indicators of the development state of small and medium-sized businesses in Russia, conducted a multidimensional assessment of business environment in the Russian regions, and made a conclusion about the key role of socio-demographic, general economic and innovative infrastructure conditions of regions in the development of their business environment.
This paper reviews the theoretical arguments provided by the extant literature for understanding the process of creation of a European identity. We discuss the grounds of mechanisms and determinants driving citizens’ identification with Europe, stressing the role of the territorial dimension on European identity formation. More precisely, our focus is on the literature that have considered the link between European identity and EU policies that influence the citizens’ socio-economic conditions, in general, and Cohesion Policy in particular. This is a major policy within the EU that accounted for some 350 billion euros in the 2007-2013 programming period, about a third of total EU budget. Consequently, it is expected to determine the way citizens identify with the European project, both in the regions more and less benefited by the policy. The study also considers arguments supporting a sort of urban-rural divide in European identity, which could interact with the influence of the Cohesion Policy. Initial descriptive evidence on these links is provided based on results from a comprehensive survey for 15 EU member states.
This paper analyzes the effects of cohesion policies on the gross domestic product (GDP) per capita of the 20 Italian administrative regions for the period 1994–2013. The analysis includes both European Union and national funds. It estimates average partial effects through a control-function approach based on the funds’ allocation rules, and allows for the role of the regional environment on the impact of regional policies. A positive impact of European Union funds is found, as well as a less significant impact of (nationally financed) subsidies to firms. Quality of government has no relevance for European Union funds, but it enhances the impact of subsidies to firms.
In recent years regional representation offices have proliferated in Brussels. Among the many aims of these offices are influencing the allocation and securing the transfer of European Structural and Cohesion funds. However, our knowledge about whether they have succeeded in this goal is limited. In this paper, we assess whether regional offices in Brussels have managed to affect the commitment and payment of Structural and Cohesion funds beyond the officially stated economic criteria of eligibility. The paper uses a custom-made survey of Brussels offices, complemented by economic, institutional, and political data. The results of the analyses for 123 regions over the period 2009–13 highlight that the capacity – proxied by the budget and staff of the office – of the regional offices to influence the commitment and payment of Structural and Cohesion funds has been negligible, when not outright negative. Regional lobbying in Brussels does not lead to more funds or to an easier disbursement of regional development funds.
The impact of European Cohesion Policy in different contexts. Regional Studies. Cohesion Policy, an important pillar of the European Union, has always been closely scrutinized and subject to debate because of the size of the budget and supranational role of the European Commission. Recent research has acknowledged that the impact of Cohesion Policy is far from uniform; academic interest has shifted away from attempts to assess its ‘total impact’ towards an emphasis on the ‘conditioning factors’ that explain where, when and how policy is effective. This provides insights that can contribute to policy design. The five papers in this thematic issue contribute to this research agenda by showing in what contexts and under what conditions Cohesion Policy can be more effective.
Exploring the role of the ERDF in regions with specific geographical features: islands, mountainous and sparsely populated areas. Regional Studies. In recent years there has been a policy shift in the European Regional Development Fund (ERDF) to encourage regions with specific geographical features (islands, mountainous and sparsely populated regions) to exploit their respective territorial ‘assets’ rather than view them as ‘handicaps’. This paper compares the role of the ERDF in three case study regions to explore the ways in which respective territorial differences are tackled (or not) at the local level. Whilst the shift to exploiting territorial ‘assets’ is not straightforward in these regions, the ERDF continues to play a crucial role and the need for continued support should not be forgotten.
What regional factors can explain the heterogeneity in Structural Funds distribution to European Union regions? Past studies have shown that aside from the level of economic development and rates of unemployment, other political, and economic factors systematically explain why certain European Union regions receive greater funding than others, in particular where there is room for bargaining. In this article, a novel theory is posited which argues that the determination of Structural Funds is based on an interaction between a region’s formal institutions (the level of a regional autonomy) and informal institutions (its level of quality of government). In cases of low regional autonomy, member states and European Union level actors prefer to allocate greater levels of Funds to regions with lower quality of government in order to increase cohesion. Yet in cases of high regional autonomy, risks associated with absorption failure in lower capacity regions lead states to strategically allocate greater levels of transfers to regions with higher quality of government. The theory is tested on data for 171 European Union regions for the 2007–2013 budget period. The results show robust empirical support for the theoretical claims.
Why do some regions grow faster than others, and in ways that do not always conform to economic theory? This is a central issue in today's economic climate, when policy makers are looking for ways to stimulate new and sustainable growth. OECD work suggests that there is no one-size-fits-all answer to regional growth policy. Rather, regions grow in very varied ways and the simple concentration of resources in a place is not sufficient for long-term growth. This report draws on OECD analysis of regional data (including where growth happens, country-by-country), policy reviews and case studies. It argues that it is how investments are made, regional assets used and synergies exploited that can make the difference. Public investment should prioritise longer-term impacts on productivity growth and combine measures in an integrated way. This suggests an important role for regional policies in shaping growth and economic recovery policies, but also challenges policy makers to implement policy reforms.
Dall’Erba S. and Fang F. Meta-analysis of the impact of European Union Structural Funds on regional growth, Regional Studies. This paper offers a meta-regression analysis of the controversial impact of European Union Structural Funds on the growth of the recipient regions. It identifies the factors that explain the heterogeneity in the size of 323 estimates of their impact recorded in 17 econometric studies. Heterogeneity comes from the publication status, the period examined, the control of endogeneity and the presence of several regressors, but not from differences in functional forms.
On classification, labelling and packaging of substances and mixtures, amending and repealing Directives 67/548/EEC and 1999/45/EC, and amending Regulation (EC) No 1907/2006
This article examines implications of assuming that applying business-type operating standards will enhance the efficiency and effectiveness of government operations. Of particular interest is how standards and expectations for public sector output are different and more complex than those for the private sector. This condition suggests that when public administrators modify their managerial controls to conform to business standards rather than concentrating on basic legislative intent, they may make little headway toward increasing the effectiveness of public services.
Cohesion policy is by far the largest development policy of the EU. The present paper examines the debates regarding place-neutral versus place-based policies for economic development. Many of the previously accepted arguments have been called into question by the impacts of globalisation and a new response to these issues has emerged, a response both to these global changes and also to non-spatial development approaches. The study unveils that the serious limitations in the availability of evidence on cohesion policy results have certainly played a relevant role in discouraging public debate, as have the limitations of the reporting system.
Regional convergence has become a heated topic in the last decades. To address it, most papers define regions on the base of normative/administrative criteria, although some consider that it could lead to misleading conclusions. In view of that, this article explores, over the period 1995–2006, the per capita income distribution of two sets of European regions: administrative (NUTS2) and functional (Metropolitan) regions. From a methodological point of view, a distribution dynamics approach – examining the external shape and movements within these distributions – is applied to analyse the issue of convergence. The study does reveal the presence of a process of convergence across both types of regions; however, this seems to be more rapid with Metropolitan than NUTS2 regions, which prompt us to proposing some relative major changes in the EU regional policy.
This paper evaluates whether the learning mechanisms of the European Cohesion policy have contributed to improve the economic impact of Structural Fund expenditure over time. It intends to show whether the evolution of the policy in response to greater internal monitoring and consultation and external scrutiny and criticism has resulted in a more efficient and better targeted Cohesion policy. This is tested using an econometric model which evaluates the effect of Structural Fund expenditure on the growth of regional GDP per capita – conditional on factor endowments, institutional quality and initial conditions – during the last programming periods for which full sets of data are available (1994-1999 and 2000-2006). The results of the analysis unveil an increase in the effectiveness of the policy in successive periods. This positive association is robust to controlling for the level of development of the country and the relative economic position of a region within a country. The results also show that, when structural factors are taken into consideration, Structural Fund investment tends to yield higher returns in better-off countries and wealthier regions within countries.
The Structural Funds of the European Union have proved to be blunt policy instruments in serving their stated purpose of enhancing both economic and social cohesion. Cohesion policy is embedded in a context of inter-governmental bargaining on budgetary allocations which structures the core of the policy around the yardstick of GDP per capita. This complicates the targeting of the funds on real deprivation. Moreover, a pork barrel logic in policy implementation favours better organized and advantaged groups within regions. This situation, as well as the growing saliency of inequality issues at EU level, have raised concern with the question of 'who benefits?' from cohesion policy.The European Commission, some member states and local actors are responding by developing efforts to tackle deprivation as experienced by EU citizens locally. However, they face important constraints in doing so, which raises broader questions about political representation and access to decision-making in the Union.
This paper investigates the effects of administrative reform in the Commission on policy implementation and outcomes through a study of EU Cohesion policy auditing. It argues that the growth in audit has taken a distinctively compliance-oriented form, in contrast with the performance audit model adopted in other countries that have embraced administrative modernization agendas. Further, the link between organizational efficiency and governance effectiveness postulated by other studies of Commission administrative reform is challenged, as the underlying audit and control problem in Cohesion policy – the high error rate – remain unresolved. Lastly, the proliferation in Cohesion policy auditing is presented as a classic example of unintended consequences: originally intended to improve policy performance and accountability, it has in fact undermined the strategic performance of the policy and is even threatening its sustainability.
The European Union (EU) provides grants to disadvantaged regions of member states to allow them to catch up with the EU average. Under the Objective 1 scheme, NUTS2 regions with a per capita GDP level below 75% of the EU average qualify for structural funds transfers from the central EU budget. This rule gives rise to a regression-discontinuity design that exploits the discrete jump in the probability of EU transfer receipt at the 75% threshold for identification of causal effects of Objective 1 treatment on outcome such as economic growth of EU regions. We find positive per capita GDP growth effects of Objective 1 transfers, but no employment growth effects.
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