1European Economic Integration – 110451-0992 – 2014 VII Core Policy 3 Cohesion Policy (CP)EU to focus funds forregional developmenton creating jobs andsustainable growth.Cooperation between regionsProf. Dr. Günter S. HeidukSource:
2CohesionPrinciple: Financial solidarity (to the less prosperous regions and social groups)Cohesion: “The act or state of sticking together tightly” (Merriam-Webster)Cohesion Policy: “…is aiming at ensuring economic, social and territorial cohesion across the EU. Its integrated approach has largely proven to be beneficial to most territories across Europe, taking into account the different parameters that support the development of a region. Even if it is difficult to assess its precise impact, the tremendous contribution that cohesion policy makes to regional development and territorial cohesion in Europe should not be underestimated.”Assembly of European Regions (2010). Cohesion in Europe: Regions Take Up the Challenge, p 3.Transferring resources from wealthier to poorer parts of the EU.“More growth and jobs for all regions and cities in the European Union – this message is in the heart of cohesion policy and its instruments between 2007 and ” EU (2008). Working for the Regions.New development paradigm: Shift of the development strategy from the national level toward the regional/local level (territorialization), thus emphasizing themobilization of endogenous resources Leonardi, R. (2006). Cohesion in the EU, 160.New policy design: Multilevel governanceCauses of regional inequalities within the EU:Geographic remotenessEnlargement (“shock absorber” for new member states that are exposed to single market competition)
3PrinciplesConcentration - of resources on the poorest regions and countries (81.9% ofstructural funds)- of effort (e.g. research and innivation; information society; energy;environment; transport; health; employment; social inclusion)- spending (e.g. one programme=one fund; co-financing ceilings)Programming Multi-annual national programmes; no funding for individual projectsPartnership Collective process (European, regional, local authorities, socialpartners, organizations from civil society)Additionality Financing from the European structural funds may not replacenational spending by a member country.The Commission agrees with each country upon the level of eligiblepublic (or equivalent) spending to be maintained throughout theprogramming period, and checks on compliance in the middle of theprogramming period (2011), and at the end (2016).
6Building regions in the EU Eurostat (2010). Regional Yearbook, p 12.
7NUTS 1 - 3The NUTS classification (Nomenclature of territorial units for statistics) is a hierarchical system for dividing up the economic territory of the EU for the purpose of :The collection, development and harmonisation of EU regional statistics.Socio-economic analyses of the regionNUTS 1: major socio-economic regionsNUTS 2: basic regions for the application of regional policiesNUTS 3: small regions for specific diagnosesFraming of EU regional policies.Regions eligible for aid from the Structural Funds (Objective 1) have been classified at NUTS 2 level.Areas eligible under the other priority objectives have mainly been classified at NUTS 3 level.The Cohesion report has so far mainly been prepared at NUTS 2 level
26Degree of Regional Specialisation by Activity, EU-27 and Norway, by NUTS 2 Regions, 2008 (%, share of non-financial business economic employment)
27At-risk-of-poverty or social exclusion rate, 2011 and 2012 Source: EUROSTAT, ilc_peps01
28Regional policy in the past Annual resources of the Structural Funds and the Cohesion Fund,Regional Policy 2000 – 2006:European Regional Policy is conducted through two main types of funds.On the one hand, there are the European Structural Funds (€ 195 bn), which account forthe main share (91.55 %) of Regional Policy expenditure.The Cohesion Fund resources amount to about €2.5 billion per year from 2000 to 2006,(a total of €18 billion at 1999 prices), or 8.45% of Regional Policy expenditure.
29The Structural FundsEuropean Regional Development Funds (ERDF), whose principal objective is topromote economic and social cohesion within the European Union through the reduction of imbalances between regions or social groupsEuropean Social Fund (ESF), the main financial instrument allowing the Union torealise the strategic objectives of its employment policyEuropean Agricultural Guidance and Guarantee Fund (EAGGF - Guidance Section), which contributes to the structural reform of the agriculture sector and to the development of rural areasFinancial Instrument for Fisheries Guidance (FIFG), the specific Fund for the structural reform of the fisheries sector
31Regional Policy, 2000 – 2006, 213 billion Euro European Structural Funds: 195 billion Euro· Objective 1: 70% of the funding goes to regions whose development is lagging behind (GDP per capita < 75% of EU-Average). They are home to 22% of the population of the Union.Objective 2: 11.5% of the funding assists economic and social conversion in areas experiencing structural difficulties. 18% of the population of the Union lives in such areas.Objective 3: 12.3% of the funding promotes the modernization of training systems and the creation of employment outside the Objective 1 regions.Community initiatives: 5.35% of the funding is spent on Community Initiatives seeking common solutions to specific problems, such as:· cross-border, transnational and interregional cooperation (Interreg III);· sustainable development of cities and declining urban areas (Urban II);· rural development through local initiatives (Leader +);· combating inequalities and discrimination in access to the labor market (Equal).Fisheries: 0.5% are allocated to the adjustment of fisheries structures outside Objective 1 regions.Innovation: 0.51% of funds are spent as provisions for innovative actions to promote and experiment with new ideas on development.Cohesion Fund: 18 billion Euro - improving the environment and developing the transportinfrastructure in Member States whose per capita GNP is below 90% of the Community average.
32Structural Funds by 15 „Old“ Member States, 2000 – 2006 (billion Euro)
33Structural Funds by 10 “New“ Member States, 2004 – 2006 (billion Euro)
34Results of EU Cohesion Policy (figures from 2000-2006 period) 8400 km of rail built or improved5100 km of road built or improvedAccess to clean drinking water for 20 million more peopleTraining for 10 million people each yearOver 1 million jobs createdGDP/capita up 5 % in newer Member StatesSource: European Commission, General presentation on proposals for Cohesion Policy ,
35Evaluating the Regional and Cohesion Policy Criteria: Beta convergence by a regression analysis (per capita income of achosen period of time is estimated of a function of the initital levelof per capita income)Indicator: Growth of GDP per headProblems: - Causality between growth and regional/cohesion policy measures- Dependency on country/region-specific environment- Evaluation of qualitiative effects (e.g. solidarity)- Defining regions (esp. regions without governmental institutions)- Territorialization of policy measures- Multilevel governance and administrative capacityEU‘s conclusion regarding the first phase: “ Between 1994 and 2001, growth ofGDP per head in objective 1 regions taken together average almost 3%a year in real terms against just over 2% in the rest of the EU.“European Commisison (2004). Third Cohesion Report, p ix.Results : 8 out of 59 objective 1 regions (GDP/capita below 75% of EUaverage) achieved after 8 years a level above 75%: Abruzzo, Molise, Lisbon-Setubal, Cantabria, Corsica, Northern Ireland, Scottish Highlands, major parts of Ireland.
36Evaluating the Regional and Cohesion Policy Beta convergence for Objective 1 and non-Objective 1 regions,(1/T)*log(Yit/Yi0) = α + β*log Yi0 + γ*Xit + uitYit = real per capita income of a country in i at time tYi0 = initial per capita incomeXit = set of structural exogenous variables influencing thegrowth of per capita incomeT = time in which the dynamics of convergence is measureduit = stochastic errorα = constant termOrlik, A (2003). Real Convergence and its differentMeasuresLeonardi, R (2006). Cohesion in the European Union. Regional Studies, 40/2, 162.
37Evaluating the Regional and Cohesion Policy Interpretation of the beta-covergence:- When comparing the performance of the Objective 1 regions,much greater convergence rates are found compared with whathas been reported within nation states.- Overall EU convergence has been driven, to a great extent, bythe convergence of the Objective 1 regions toward the EU meanwhereas the non-Objective 1 regions remained substantiallystable.- Convergence is a fairly slow process.The comparison with convergence before 1988 shows that countriessuch as Ireland, Portugal, Greece, Spain have progressed considerablysince they joined the EU and were in receipt of Cohesion policy funding.These countries’ performance in terms of GDP was consistent with thepositive development of the employment.Low performing regions were Mezzogiorno, Germany’s East Bundesländer,France overseas territories, several regions in Spain (Andalucia, Galicia)
39Structural and Cohesion Funds 2007-2013 The European Regional Development Fund (ERDF)The ERDF aims at encouraging regional development, economic change, enhanced competitiveness and territorial co-operation throughout the EU.• The European Social Fund (ESF)The ESF is meant to focus on employment, social inclusion and tackling discrimination.• The Cohesion FundThis fund applies only to member states with a Gross National Income (GNI) of less than 90% of the EU average, and covers the new member states as well as Greece and Portugal. Spain will be eligible for the Cohesion Fund on a transitional basis. The Cohesion Fund invests in the environment and trans-European transport networks.• These funds, in turn, are meant to meet three different main “objectives”:1) Convergence (previously called Objective One): ERDF; ESF and Cohesion Fund.2) Regional Competitiveness and Employment (previously called Objective Two): ERDF; ESF.3) European Territorial Co-operation (ERDF).• The amount each member state gets is negotiated among the governments for a seven year period. Each fund has a national “managing authority” – i.e. a government department – through which the money is channeled. EU regulations govern how and to whom money can be granted. The grants are first paid out by the managing authorities, and the Commission then reimburses the member states. The Commission audits about five percent of the projects and has the right to withhold funds.• Each project that wants grants from the SCF must find “matching funds” from other sources than the EU, such as the national governments or private actors, usually amounting to around the same amount as that given by the EU.
40Objectives of European Regional Policy 2007-2013 Convergence – solidarity among regionsThe aim is to reduce regional disparities in Europe by helping those regions whose per capita grossdomestic product (GDP) is less than 75% of the EU to catch up with the ones which are better off.Some regions in the EU as constituted before the two most recent enlargements are now above the75% threshold simply because the EU average GDP has fallen with the addition of the newest membercountries. Those regions still need help from the cohesion policy, so they now receive "phasing out"support until 2013.Number of regions concerned: 99 Number of Europeans concerned: 170 million Total amount: €283.3bn (81.5% of total budget) Type of projects funded: improving basic infrastructure, helping businesses, water and waste treatment,high-speed internet connection, training, job creation, etc.Regional Competitiveness and EmploymentThe aim is to create jobs by promoting competitiveness and making the regions concerned more attractive tobusinesses and investors.This objective covers all regions in Europe not covered by the convergence objective. In other words, it isIntended to help the richer regions perform even better with a view to creating an knock-on effect for thewhole of the EU to encourage more balanced development in these regions by eliminating any remainingpockets of poverty. Some regions, which used to be under the 75% threshold that would qualify them forinclusion in the convergence group, receive extra funding to help them "phase in" to their new objective.Number of regions concerned: 172 Number of Europeans concerned: 330 million Total amount: €55bn (16% of total budget) Type of projects funded: development of clean transport, support for research centres, universities, smallbusinesses and start-ups, training, job creation, etc.European territorial cooperationThe aim is to encourage cooperation across borders.40
41Structural Funds 2007 – 2013: Eligible areas in the EU under the Convergence Objective and the European Competitiveness and Employment Objective
45Example: Operational Programme 'Development of Eastern Poland' On 2 October 2007, the European Commission approved the Operational Programme entitled “Development of Eastern Poland” for the period The Operational Programme falls within the framework laid out for the Convergence Objective and has a total budget of around €2.7 billion. Community investment for five Polish regions (Warmińsko-Mazurskie, Podlaskie, Lubelskie, Podkarpackie and Świętokrzyskie) through the European Regional Development Fund (ERDF) amounts to some €2.3 billion. This represents approximately 3.4% of the total EU investment earmarked for Poland under the Cohesion Policy for
46Example: Operational Programme 'Development of Eastern Poland' Breakdown of finances by priority axis (euro):Priority AxisEU ContributionNational Public ContributionTotal Public ContributionModern EconomyInformation Society InfrastructureRegional Growth CentresTransport InfrastructureSustainable Tourism based on Natural AssetsTechnical AssistanceTotal
48Example: Cross-border Cooperation Poland - Germany Project example: Collegium Polonicum, Collegium UniversalumEach morning, with a student card in their hand, they cross the border between Germany and Polandon the Oder River and divide their lives and studies between the two countries. This is the reality thatstudents of the Viadrina European University in Frankfurt-am-Oder have been living since theuniversity's creation in The Union with Poland grew even closer with the opening in 1993 of theCollegium Polonicum in Slubice where German students could sign up for a post-graduateprogramme devoted to Polish law. The idea arose as early as 1991 of creating, in collaboration withthe Adam Mickiewicz University in Poznan, an institute for studies and research on the cultures,languages, economy and society of Eastern Europe. The Collegium Polonicum has, in addition to classrooms and the AMICUS student hall, rooms for tutorialclasses and a library boasting books and 260 periodicals devoted to Eastern Europe: a genuine goldmine for the students and academic researchers. The courses taught there are intended to complement theprogrammes organised by the two founding universities. The students analyse the problems of the borderregions or the impact of economic upheavals on the Central and Eastern European countries, study thedifferent constitutional laws of these countries as well as international law and may also take language courses. This cross-border training programme opens up excellent prospects for employment in internationalorganisations, in corporations, in the media or in the field of city and regional planning. The labour marketproblems on either side of the Oder are also being dealt with by the "Science and Labour World"cooperation centre of the Viadrina European University, nearby. The centre monitors the trends incross-border relations and ensures collaboration between the German and Polish trade unions on theInterregional Trade Union Board. The new school attracts students and teachers, not only from Germany and Poland but also from theCzech Republic, France, Italy and even Russia and many other countries. It is therefore an importantacademic and cultural meeting point and a centre of intellectual and human influence for Europe.Total cost euros EU contribution euros
50Connecting Europe Facility “Ambitious but realistic” proposals issued by the Commission in June 2011 for the Multiannual Financial Framework (MFF)Cohesion Policy33 % (€336 billion)Other policies(agriculture, research, external etc.)63 % (€649 billion)Connecting Europe Facility4 % (€40 billion)
53Cohesion Policy 2013 + Selection of Priorities Integrated approach: “Cohesion policy is aiming at ensuring economic, socialand territorial cohesion across the EU.“Multilevel governance: “Voluntary regions should be able to enter into a three- party agreement/contract with their Member State and the European Union.”New category: “Should transition regions become a full category, it should be named as a 4th objective, in order to keep the architecture clear. The criteria for this objective should therefore be made as fair as possible and straightforward enough to avoid any ambiguity on the status of one region or another.“Additional indicators: “It seems clear however that cohesion policy is about much more than just increasing GDP per head…there is consequently an urgent data gap to fill in order to adequately distribute European funding…Increased effort should be dedicated to researching in the area of measuring the combination of wealth, competitiveness, sustainability and well-being.”
54Cohesion Policy 2013 + Selection of Priorities Principles and rules: Conditionality Rewarding efficient regions with areserve fundPartnership Better participation of regional authoritiesEfficiency Simplifying the management of structuralfundsUncertainty Reducing the room for interpretation by the different authorities amongst others.Evaluation Better assessing the quality of theprogrammes‘ implementationPartnership Simplifying the the involvement of theprivate sectorCoordination Coherence between rural developmentand cohesion policy; stronger integrationbetween ESF and ERDF
55The Future of Cohesion Policy – 2014-2020 Legislative proposals for cohesion policy during the period were adoptedby the European Commission on 6 October These will be discussed by theCouncil and European Parliament during The new Regulations shouldenter into force in 2014.The Fifths Cohesion Report, adopted in November 2010, set out ideas on howcohesion policy might be reformed, including:focusing resources on a few priorities closely linked to the Europe 2020 strategydefining clear and measurable targets,strengthening regulatory and institutional frameworks,conditionality and incentives,increasing the leverage effect of investments,private sector finance,simplification of the management rules,concentrating on the poorest Member States and regions.NEWS:Working paper on “A New regional Competitiveness Index: Theory, Methods and Findings”Brochure “Simplifying Cohesion Policy for ”RegioStars Awards 2013 (http://ec.europa.eu/regional_policy/index_en.htm)
58Source: European Commission (2012), Country Fact Sheet – Polska.
59If convergence will ever happen: WHEN? Result of an OECD report: “..regional disparities are not falling, or at best are declining very slowly. At the current rate of convergence it would take years to half divergence across theregions in the EU.“59OECD (2007). Economic Survey of the European Union Paris.