Download Regional policy – Outline

Regional policy – Outline
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Economic and legal framework
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Coordination of national and Community policies
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problem regions
reasons for European action
first steps of a policy
economic and social cohesion
transparency of regional aid
coordination instruments for national policies
coordination of Community policies
Coordination of Community financial instruments
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reform of the Structural Funds
method of structural operations
Community Initiatives
ERDF
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Why is there a regional policy?
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Localization conditions for economic activities
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The relation between national and Community regional
policies
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natural endowments
deliberate policy to change conditions (eg. infrastructure)
it is the Member States who have to solve regional problems
the Community coordinates in order to avoid competition for
assistance between Member States
The main objectives:
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to reduce existing regional disparities by
transferring Community resources in order to achieve
economic and social cohesion
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Economic & legal framework
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With the advent of industrial revolution new
localization factors came to the fore:
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Infrastructures acquired importance
“External economies”
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energy sources
raw materials
waterways, harbour sites
advantages that do not impose specific costs on
undertakings
Concentration of economic activities
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can lead to disadvantages:
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pollution
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Economic & legal framework – 2
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The importance of given localization factors
change over time
The phenomenon of globalization
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international competitiveness is based much less
on static comparative advantages (territorial
concentration, natural endowments) but on
qualitative dynamic parameters
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factor mobility
social consensus
information
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I. Problem regions
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Three types of problem regions:
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whose development is lagging behind
where declining industrial activities are dominant
where agriculture dominates
What is common in these three types?
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Excessive dependence on a limited range of traditional economic
activities which cannot provide sufficient
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productivity
employment and
income
Common consequences:
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relatively low per capita GDP
high and prolonged unemployment
continuous outward flow of population
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I. Problem regions
“Regions whose development is lagging behind”
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Definition: where p.c. GDP is < 75% of Community average
A combination of handicaps:
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insufficient or run-down infrastructure
weak or outdated industrial structures
agriculture where archaic structures prevail
population outflow combined with urban decay
unemployment (especially of the young and uneducated)
Usually situated at the periphery of their country or the
European Union
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I. Problem regions
Declining industrial areas
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A large part of the population employed in declining
industrial sectors:
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coal-mining, steel, shipbuilding, textiles
cause:
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exhaustion of natural resources
competition from substitutes
competition of low-wage countries
Very high population density
Pollution
Lasting unemployment
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I. Problem regions
Rural areas
 20% of the territory but only 9% of the population
 low population density
 poor diversification of industry and services
 lack of employment possibilities
 outflow of population
 adverse geographic factors
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remoteness
insularity
mountainous situation
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I. Reasons for European action
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The effects of market mechanisms on regional differences
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What do MSs do to decrease regional differences?
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increasing differences
concentration
improve the infrastructure and social & educational development
of backward regions
grant tax incentives and subsidies to investors in poor regions
A Community cannot tolerate wide disparities across the
regions
The Community’s regional policy can
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canalize more funds into underdeveloped/declining regions
prevent unhealthy competition of subsidies
formulate guidelines and set priorities at European level
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I. First steps of a policy
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Article 2 of the EEC Treaty: The Community shall have as its
task, i.a., to promote throughout its territory a harmonious
development of economic activities.
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the EIB should help regions in need in catching up
derogation in Art. 87 (state aid): national aid to regions where the
standard of living is abnormally low may be considered to be in
compliance with the common market.
Regional policy efforts appeared in the mid-1960s
1971: resolution (in the framework of the Werner Plan)
1975: European Regional Development Fund
1975: creation of a Regional Policy Committee
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I. Economic and social cohesion
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Swift development in the wake of the internal market plan
1986/87: SEA
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introduction of regional policy
acknowledging its role in economic and social cohesion
1988: Delors I Package (CAP reform, reform of Community
financing and of Structural Funds)
1989: new regional policy, ECU 64 bn for 1989–1993
1992: Maastricht Treaty: strengthening of economic and
social cohesion is a fundamental objective of the Union
1992: Delors II Package – roughly doubling the resources
devoted to regional development in the 1994- 1999 period
(ECU 13 bn in 1988–1994 25 bn p.a.)
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I. Economic and social cohesion
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EMU and regional disparities
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Cohesion Fund
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budgetary discipline affecting the possibilities of state investments
to contribute to environment and transport infrastructure projects
in MSs with a p.c. GDP < 90% of the Community average
(Greece, Spain, Portugal, Ireland)
which are implementing a programme to comply with the conditions
of economic convergence (Maastricht criteria)
Agenda 2000
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assistance has to be maintained in the period 2000–2006
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230 bn for the actual Member States
45 bn for the six prospective Member States
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II. Coordination of national and
Community policies
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Economic and social cohesion is more than just giving subsidy to poor
regions:
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coherent action through coordinating national and Community
economic policies
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Community policy complements national efforts
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economic and social cohesion has multiple ties with other Community
policies
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agriculture
fisheries
environment
trans-European networks
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II. National and Community policies – 2
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The Treaty of Rome gave Commission the right to monitor
the regional policies of the Member States
Art. 87: any aid which distorts or threatens to distort
competition by favouring certain undertakings or the
production of certain goods shall, in so far as it affects trade
between Member States, be incompatible with the common
market.
Exemptions:
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“aid to promote the economic development of areas where the
standard of living is abnormally low or where there is serious
underemployment”
“aid to facilitate the development of certain economic activities or of
certain economic areas, where such aid does not adversely affect
trading conditions to an extent contrary to the common interest”
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II. Transparency of regional aid
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Art. 88: the Commission shall, in cooperation with the
Member States, keep under constant review all systems of aid
existing in those states
C. has to be notified by all plans to grant or alter aid
Commission can either approve or amend these plans
Non-complying MSs can be taken to the Court of Justice
SEA: even rich countries can pursue regional policies
The Commission’s aim:
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ensuring the concentration of aid in the poorest regions
maintaining a differential in aid intensity between regions
Eligible regions and ceilings (30–75%) are determined
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II. Coordination instruments for
national policies
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Commission determines
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Framework for structural fund aid:
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priority areas
possible resource levels
brings “European value added” by proposing adjustments in the
measures being implemented by MSs
Community Support Frameworks (CSF)  NSRF (2007–2013)
Single Programming Documents (SPD)
Reg. Policy Comm. (1975) gives opinion of CSF & SPD
Committee of the Regions (1993) – coordination of regional
policies in the fields of:
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education, culture, public health, trans-European networks, cohesion
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II. Coordination instruments for
national policies
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Commission has a databank on regional development
programmes and aid systems
Commission compiles every three years a progress report on
the situation and socio-economic evolution of the
Community’s regions
Innovative measures & pilot projects  experiments
1994–1999
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interregional cooperation inside and outside the Community (ECOS
and Ouverture)
planning of the Community territory
innovation in regional economic development
development of urban policies
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II. Coordination of Community policies
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Several Community policies have regional impacts
agriculture, social policy, research programmes, Single
Market Programme
1979: Regional impact assessment (AIR)
Structural Funds: attention is devoted to environment,
competition and public procurement
Business and Innovation Centres (BICs) (>100) multi-service
assistance to innovative SMEs
Community initiatives
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contribute to resolving problems directly related to other Community
policies
promote the application of C policies at the level of the regions
solving of problems common to certain categories of regions
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III. Coordination of Community
financial instruments
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European Social Fund (ESF)
European Agricultural Guarantee and Guidance Fund
(FEOGA) Guidance Section changed since 2007
European Regional Development Fund (ERDF)
Financial Instruments for Fisheries Guidance (FIFG) 
Cohesion Fund
ECSC and Euratom loans
European Investment Bank (EIB)
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prior to the foundation of ERDF the EIB was responsible for most of
regional development financing
after that, 75% of its loans serves regional policy, transport, energy,
telecommunications
the Maastricht Treaty confirms its importance and cooperation with
the Structural Funds and other Community financing
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III. Reforms of the Structural Funds
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1988: Council Regulation (with an eye to the
Single Market) on the tasks of Structural
Funds + EIB + other
1992: Edinburgh European Council
determined the financing arrangements up to
the end of the century
Delors II Package: 1/3 of the General Budget
allocated for structural policy (ECU 141,471
mn)
coordination of the consequences &
requirements of TEU, Cohesion Fund, FIFG –
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III. Reforms of the Structural Funds
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Definition of the NUTS system (1988)
Nomenclature des unités territoriales
statistiques
(Nomenclature of Units of Territorial
Statistics)
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NUTS 1: 77 (B: régions)
NUTS 2: 206 (B: provinces)
NUTS 3: 1031 (B: arrondissements)
NUTS 4+5: local level
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III. Reform of the Structural Funds
Number of NUTS 2 regions of the Member States (1998)
38
40
35
35
30
26
25
20
15
20
18
13
11
12
9
10
5
1
1
7
6
P
SF
8
1
0
B
DK
D
EL
E
FR
IR
I
L
NL
AT
S
UK
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III. Reform of the Structural Funds
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Priority objectives for the period 1994–1999
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Objective 1: promote development and structural adjustment
of regions whose development is lagging behind (ERDF,
ESF and EAGGF-Guidance)
Objective 2: conversion of regions, frontier-zone regions or
parts of regions seriously affected by industrial decline
(ERDF and ESF)
Objective 3: combat long-term unemployment, facilitate
the occupational integration of young people and the
integration into the employment of the socially excluded
(ESF)
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III. Reform of the Structural Funds
Priority objectives for the period 1994–1999
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Objective 4: facilitate the adaptation of workers to industrial
change and the evolution of production systems
Objective 5a: speeding up the adaptation of agricultural
structures (EAGGF) and fisheries structures (FIFG)
Objective 5b: facilitate the structural adjustment of rural
areas (EAGGF, ESF, ERDF and FIFG)
Objective 6: promote the development of regions with
extremely low population density and harsh climate of the
Nordic countries
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III. Reform of the Structural Funds
Beneficiaries of EU regional policy, as per cent of population
120
100
100
100
100
82,9
80
60
47,6
55,8
41,6
39,1
40 31,3
53,6
50,6
41,9
40,6
24,2
24,6
15,8
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To
ta
l
U
K
S
F
S
P
T
A
N
L
L
I
IR
L
F
E
L
E
D
D
K
B
0
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III. Reform of the Structural Funds
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Sources:
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European Spatial Development Perspectives (ESDP)
Berlin European Council (24-26 March 1999)
Regulation (EC) No 1260/99
Objective 1: to promote the development and structural
adjustment of regions whose development is lagging behind
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Average per capita GDP < 75% of EU average
Also covers most remote regions: French overseas territories, Azores,
Madeira, Canary Islands
Previous Objective 6 regions
2/3 of Structural Funds Operations come under Objective 1
Almost 20% of the EU’s total population have to benefit
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III. Reform of the Structural Funds
Objective 2: to contribute to the economic and social conversion
of regions in structural difficulties (other than those eligible
for the new Objective 1)
 Former Objective 2 and 5b regions
 Eligible regions:
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Areas undergoing economic change
Declining rural areas
Depressed areas dependent on fisheries
Urban areas in difficulty
No more than 18% of the EU’s population will be covered
Share of industry: max 10%, share of agriculture: max 5%.
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III. Reform of the Structural Funds
Objective 3: all measures for human resource development
outside the regions eligible for Objective 1.
 Former Objective 3 and 4
 Framework for all the measures to be taken under the new
title on employment and under the European Employment
Strategy
 Art. 215: “Each Member State and the Community shall ...
work towards developing a coordinated strategy for
employment and particularly promoting a skilled, trained and
adaptable work- force and labour markets responsive to
economic change ...”
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III. Method of structural operations
Four principles of operation:
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concentration
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programming
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additionality
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multi-annual development plans (instead of
projects)
Community actions complement national
measures
partnership in
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preparing the programmes (including research)
financing the action
follow-up
impact assessment
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III. Method of structural operations
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Single Programming Document (SPD)
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the Member State can request for this form (simplier)
its content:
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aid granted
The form of financing:
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strategic priorities
programming procedures
co-financing operational programmes
the Commission appoints an intermediary which tackles the global
subsidy
The Community's share:
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Obj. 1: 75% of the real costs, at least 50% of public expenditure
Other: 50% of the total costs, at least 25% of public expenditure
CF: 80-85%
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Community Initiatives 2000-2006
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INTERREG (cross-border, transnational and
interregional cooperation)
EQUAL (transnational cooperation to combat
all forms of discrimination and inequalities in
the labour market)
LEADER (rural development)
URBAN* (regeneration of crisis-struck areas
in medium-sized and large towns)
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III. European Regional Development Fund
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Activities redefined in 1988, 1993, 2000 and 2007
The Fund participates in the financing of
productive investment to permit the creation or maintenance of permanent
jobs
investment in infrastructure in Objective 1, 2, and 5b regions
the development of indigenous potential (SME, services for enterprises,
transfer of technology, direct aid to investment)
investment in education and health (Objective 1 regions)
research and technological development
productive investment + investment in infrastructure
regional development operations, in particular in frontier regions
preparatory, appraisal, monitoring and evaluation measures
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Cohesion Policy
Is 34% of EU budget (€ 336 billion for the
period 2007-2013, at 2004 prices)
 Is about 0.41% of Union GDP (with rural
Context
development
and fisheries: 0.46%)
Proportions
of
expenditure
 About 50-50 between current and new
Member States
 More than ¾ of the budget for regions and
Member States lagging behind in
development
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Observations
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Significant convergence of cohesion countries
Positive trend in Obj. 1 regions overall
GDP, employment and productivity growth
above European average
Modernisation of economic structures and
management methods
Better governance at regional level
Greater regional co-operation at European
level
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18/02/2004
EN
EUROPEAN
COMMISSION
Regional Policy
EN
GDP Growth in Cohesion Countries
GDP per head growth in Spain, Portugal and Greece between 1998 and 2002
compared to average GDP growth in EU15
Third
Cohesion
report
Spain
Portugal
Greece
Cohesion 3
4,0
4,0
3,0
3,0
2,0
2,0
1,0
1,0
0,0
0,0
-1,0
-1,0
-2,0
-2,0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
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Impact of enlargement
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Population in the convergence objective goes
from 84 million to 123 million
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Development gap between regions doubles:
average GDP in Obj. 1 is 69%: new MS 46%
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Employment rate in EU 15 grew from 60% to
64% (1996 – 2002). In NMS 10 it was 56%:
(59% in 1999)
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