1. Regional and agricultural policies in the EU budget: working for EU territorial cohesion? Riccardo CrescenziFabio Pierangeli U.R. Università Roma Tre

2. Research questions & Objectives EU funds and the regions Dataset: –Data coverage and availability –Units of analysis Preliminary results OUTLINE

3. Stylised facts The European Community Treaty states that: “(…) the Community shall aim at reducing the disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands, including rural areas”(Article 158). The same objective is included in the EU draft Constitution (article III-220).

4. Research hypotheses The existing literature has observed a lack of upward mobility of Objective 1 regions and the absence of convergence across EU regions (e.g. Boldrin and Canova 2001); suggested the implementation of inappropriate policies as an explanation of the weak impact of the EU funds convergence (Cappelen et al. 2003; Rodriguez-Pose and Fratesi 2004; Schucksmith, Thomson, Roberts 2003) BUT counterfactual scenario hard to construct CONSEQUENTLY We focus our attention upon the à priori structure of policies rather than upon their impact

5. Objectives (1) Investigate two potential explanations for the weak impact of EU policies on territorial cohesion and convergence: à priori bias in the geographical allocation of the funds –undermines the principle of concentration –prevents the intervention from targeting the real sources of competitive disadvantage of EU regions inconsistent\conflicting distribution of resources under different EU policies

6. Why is geographical allocation important? Concentration: Over time the need for an increase in the geographical concentration of the structural funds expenditure has become progressively more apparent and “concentration” has been included, within the “framework for cohesion policy 2007-2013”, among the key leading principles for the new programming period. Intuitively a smaller number of beneficiaries may allow a larger amount of resources to flow in selected regions. Not only is the level of expenditure in the objective region relevant in itself but also that in its neighbouring regions (Dall’Erba, 2005). The spatial externalities produced by the implementation of regional development programmes of whatever nature need to be taken into account An insufficient spatial “concentration” of the funds may decrease their impact by reducing the amount of such externalities “flowing” within the assisted areas.

7. Correlation with disadvantage: The objective of an innovation based growth model for the Union has guided the implementation of the EU structural policies and for the assessment of their results since the year 2000. However, with the drawing up of the draft Community Strategic Guidelines “Cohesion Policy in Support of Growth and Jobs: Community Strategic Guidelines, 2007-2013” which set out a framework for new programmes for the next programming period; “knowledge, innovation and the optimisation of human capital” are explicitly assumed as means for Europe to “renew the basis of its competitiveness, increase its growth potential and its productivity and strengthen social cohesion”. (Presidency conclusions, European Council, March 2005 and incipit of the above-mentioned draft Community Strategic Guidelines).

8. Objectives (2) By looking at the EU expenditure for the CAP and EU Regional Policy (and its evolution over time) the paper will test: Potential inconsistencies\conflicts in the regional allocation of the funds (correlation between regional expenditure under different policy headings) Coherence with the principle of territorial concentration (spatial structure of the funding distribution) Capability to work pro-cohesion (Correlation with structural disadvantage) Influence of political factors (Correlation with proxies for regional bargaining power)

9. Policy areas: CAP: First pillar Second pillar Regional policy Geographical coverage: EU-15 Regional level: NUTS1 (Be, De, UK) NUTS2 (At, Fi, Fr, Gr, It, Nl, Pt, Es, Se) Time span: 1994-1999; 2000-2006; 2007-2013 DATASET: policy areas, spatial scale, time span

11. Potential inconsistencies\conflicts in the regional allocation of the funds (correlation between regional expenditure under different policy headings)

12. First Pillar: Germany

13. Coherence with the principle of territorial concentration (spatial structure of the funding distribution)

14. Capability to work pro-cohesion (Correlation with structural disadvantage)

15. Influence of political factors (Correlation with proxies for regional bargaining power)

16. Influence of political factors (Correlation with proxies for regional bargaining power)

17. Influence of political factors (Correlation with proxies for regional bargaining power)

18. Explaining the ‘bargaining premium” Alternative explanations in the Political Economy literature: –Administrative efficiency and governance –Party Politics –Devolution

20. Agriculture Sectoral indicators Family Farm Income (FADN) Farm Net Value Added/AWU (FADN) Socio-economic conditions Life-Long Learning Rate of involvement in Life-long learning - % of Adults (25-64 years) involved in education and training Education Labour Force % of employed persons with tertiary education (levels 5-6 ISCED 1997). Education Population% of total population with tertiary education (levels 5-6 ISCED 1997). Agricultural Labour Force Agricultural employment as % of total employment Long Term Unemployment Long term unemployed as % of total unemployment. Young PeoplePeople aged 15-24 as % of total population Social Filter Index The index combines, by means of Principal Component Analysis, the variables describing the socio- economic realm of the region (listed above). Infrastructure Motorways (Inhab.)Kms of motorways per thousand inhabitants Δ Motorways (Inhab.)Annual change in Kms of motorways per thousand inhabitants (t-t-1) Peripherality Peripherality Index “Standardised accessibility indicator (Peripherality index – IRPUD 2000) – Accessibility of population by car.