EU Regional and Structural Policies

1
EU Regional and Structural Policies

• Objectives of the lecture
• to analyse the case for and approaches to
  regional policy
• to review the historical development of EU
  regional and structural policies
• to develop an understanding of current EU
  regional and structural policies

2
Case for Regional Policy

• It is widely recognised that regional economic
  disparities (e.g. in unemployment rates and per
  capita incomes) which persist for long periods of
  time have harmful effects on the efficient
  operation of the national economy. In addition,
  such disparities may have harmful political and
  social consequences. (Armstrong and Taylor,
  2000 206)

3
Free Market Approach to Regional Policy (1)

• Political ideology
• - neoclassical economics
• - popular capitalism
• - deregulation, privatisation
• - small state sector
• - enterprise culture
• Causes of regional economic disparities
• - regional labour market rigidities
• - lack of entrepreneurial culture
• - excessive state intervention

4
Free Market Approach to Regional Policy (2)

• Approach to reviving disadvantaged regions
• - deregulation of regional labour markets
• - tax incentives to improve efficiency
• Regional policy
• - minimal expenditure
• - selective assistance
• (Martin, 1989)

5
Interventionist Approach to Regional Policy (1)

• Political ideology
• - reconstructed Keynesianism
• - supply-side support for industry and commerce
• - state intervention
• Causes of regional economic disparities
• - structural weaknesses
• - drain of financial capital to rich regions
• - inadequate government participation in
  regional development

6
Interventionist Approach to Regional Policy (2)

• Approach to reviving disadvantaged regions
• - proactive policies at regional and local
  levels
• - public investment in infrastructure
• Regional policy
• - extensive regional aid
• - decentralisation of regional regeneration
  powers
• (Martin, 1989)

7
Early Moves

• no commitment to regional policy in Treaty of
  Rome
• until 1970s, regional policy a domestic matter
• three factors made EC regional policy likely in
  the 1970s
• - economic and monetary union
• - proposed enlargement to include Britain and
  Ireland
• - policies on member states aids to industry

8
Creation of European Regional Policy

• Paris Summit agreed to set up European Regional
  Development Fund (ERDF) (1972)
• Thomson Report (1973) linked regional policy to
  European integration as a whole
• deal reached at Paris Summit (1974)
• initial ERDF allocations disappointing

9
1988 Reform of Structural Funds

• after 1975, ERDF criticised as inadequate
• national governments dominated the policy process
  
• enlargement and single market led to major reform
  (1988)
• allocations doubled and partnership principle
  introduced

10
1993 Reform of Structural Funds

• maintained guiding principles of 1988 reform
• some reassertion of control by governments of
  member states
• Cohesion Fund established

11
1999 Reform of the Structural Funds

• context proposed enlargement and completion of
  EMU
• allocations held level, key principles maintained

12
New Policy 2007-2013 (1)

• the main criterion for a region to be eligible
  for funding is to have a regional GDP of less
  than 75 of the EU average
• funding will be allocated according to two
  objectives, the convergence objective and the
  competitiveness and employment objective

13
New Policy 2007-2013 (2)

• convergence objective 80 of total spending
  will go to the poorest member states and regions
  to assist them in developing their
  infrastructures and economic and human potential
• competitiveness and employment objective all
  member states will be eligible for funding to
  support innovation and research, sustainable
  development and job training in their less
  developed regions

14
New Policy 2007-2013 (3)

• 3 key funds
• ERDF assists regional investment and
  infrastructure improvements
• European Social Fund assists human resource
  development
• Cohesion Fund assists transport and
  environmental projects
• NB see http//europa.eu for details