Download A quick Guide to Regional Policy - John Birchall

A quick Guide to Regional
Policy
Its origins and purpose
What is regional policy?

Article 158 of the Treaty states that:
"in order to strengthen its economic and social
cohesion, the Community shall aim at reducing
disparities between the levels of development of
the various regions and the backwardness of the
least favoured regions or islands, including rural
areas"
also called:

cohesion policy

structural policy

refers to the Structural Funds

or "EU money"!
Origins
Treaty of Rome set up:
 CAP
 European Social Fund
 No specific provision for regional policy
or regional fund
Why?
 Common market thought to be enough
 Strong economic growth in 1950s and
1960s
Why change?


Recession of 1970s highlighted
development gaps
Regional disparities increased with
accession of:
 1973: UK, Ireland and Denmark
 1981: Greece
 1986: Spain and Portugal
Why is regional policy
important?
Socio-economic cohesion considered to be a
priority for the European Union
Second most heavily funded sector in the Union
after the Common Agricultural Policy.
From less than 5% of 1975 budget to 35% of 1999
budget
€ 233 billion. (approximately £ 160 billion)
Visible sign of the EU
Promotes convergence (helping poorer regions
develop)
Economic Rationale




Effects of single market on
regional disparities
Migration to rich areas not poor
Less mobility in Europe
Social costs
Political rationale



need to legitimize the new
economic and political order
fiscal and monetary policy seen as
not being enough
"sweetener" for Member State
accession
Slow economic growth:
since the mid-1990s, EU growth has averaged just over
2% per year
Greater differences between regions and
Member States:
regional disparity levels are higher than national
disparities but are also falling
Over ¼ of EU-25 population lives in regions below
75% of EU average GDP
13 Member States of EU-25 have GDP below 90% of
average – 21% of population
Regional Disparities in EU27
GDP per head in % in PPP (2002)
<50
50 - 75
75 - 90
90 - 100
100 - 125
 125
Index, EUR-27 = 100
EU Regional Policy
2000-06
40% to 49,9%
of EU population
(155→224 Mio.) in
eligible areas (Obj. 1 &
2)
233 bn. Euro
(one third of the EU
budget)
400 to 480
Structural Funds
programmes
211 to 264
Regions
How does it work?
Objective 1:

funding for regions with average per capital GDP less
than 75% of EU average remote regions, e.g. French
overseas départements, the Azores, Madeira and the
Canary Islands

in the UK: Cornwall, Merseyside, South Yorkshire

approximately 2/3 (69.7% )of total fund or € 135.9
billion;

20% of total EU population benefit
How does it work?
Objective 2:





for regions with structural difficulties or in need of
economic diversification
e.g. declining rural areas, regeneration of urban areas
in the UK: North Yorkshire, NW and NE England, West
Midlands, Tower Hamlets in London, etc.
11.5% of total fund or € 22.5 billion
18% of total EU population
2007-2013 - New Budget Structure: Regional Policy
gains
2006 vs. 2013 in %
50
47.4
45
2006
2013
40.4
40
35.7
32.1
35
30
25
20
15
10
9.9
6.6
6.5
5
0.9
6.4
5.6
6.1
1.5
0
1A Competitiveness
1B Cohesion
2 Natural resources
3 Justice
4 Global role
5 Administration
Convergence-Objective:
Regions below 75% of
EU25 GDP
Average 2000-2002
86 Regions
124 million inhabitants
27.3%of EU population
Allocation: EUR 177.8 bn
Conclusions

Does it work?



What will enlargement do (Poland 40
million, Spain 40 million)




across Member States yes
within Member States less
from 15 to 25 Member States
new Member States are much poorer
pressure on budget
Causes friction between member-states



Poor vs. rich
South vs. North
East vs. West