Regional Policy

Posted: January 4th, 2023

Regional Policy

Student’s Name

Institutional Affiliation

Regional Policy

The regional policy of the EU often referred to as Cohesion Policy has the objective of advancing the economic stability of the regions in the European Union and to prevent regional disparities. The Cohesion Policy target all cities and regions in the EU with the  motive of supporting job formation, competitiveness in the business sector, economic advancement, improving the citizens’ quality of life, and enhancing sustainable development (UNESCO, 2020). At least one third of EU’s budget is committed to making the policy successful with the stakeholders knowing very well the importance of restructuring declining industrial sectors, territorial, and social divisions across the EU, and improving agricultural activities in the rural areas (Bischof, 2014). In doing so, the policy seeks to make the regions increasingly competitive and offer more job opportunities. Furthermore, the policy aspires to come up with effective solutions to future constraints, encompassing energy supply, globalisation, and climate change (Bischof, 2014). The study pays attention to the core features of the EU Regional Policy, while focusing on the formation of the ERDF and the subsequent transformations of the 1980s, Agenda 2000, EU Cohesion Policy 2014-2020, EU Cohesion Policy 2021-2027, and the funding aspect. The analysis holds that the EU Regional Policy is a fundamental guide for economic and social growth for Member States that continues to foster development and competitiveness.

Regional Policy in the 80’s and Reforms

The EU Regional Policy has encountered numerous obstacles from the day it was enacted. Since its introduction, the criticism it has encountered has been relentless. The European Regional Development Fund (ERDF) came into existence in 1975 with one of the commissioners responsible for its creation, George Thomson, being one of the United Kingdom’s initial commissioners (Manzella & Mendez, 2009). The formation of the ERDF did not stop the mocking with Helmut Schmidt, the German Chancellor, arguing that the policy did not address much of the community’s needs, and that the policy was largely regulated by state officials (Manzella & Mendez, 2009). Academic scholars and commentators were also dismissive during the formation of the ERDF, blaming the initiative for its limited scale and scope.

The early 1980s continued to witness more problems for the Cohesion Policy, which called for reforms the stakeholders saw as being effective. There was need for the formation of a more robust Community regional policy that would promote allocation of resources, and one that is better prepared to deal with the issues the European economies faced (Manzella & Mendez, 2009). There was widespread need for a regional policy that is more focused on attaining Community goals, equipped with better instruments, and one that would help areas with the greatest needs (Manzella & Mendez, 2009). The opportunities for reformation, however, started to show in the late 1970s when the Guidelines on Community Regional Policy were formulated. The group suggested a 50% yearly increase in the ERDF. Further, the stakeholders transformed the policies by introducing the non-quota section to address community issues emanating conflict of common interest (Manzella & Mendez, 2009). The non-quota section, thanks to the provision from 5% of the ERDF budget, permitted the Commission to assist areas beyond those stipulated by the Member States (Manzella & Mendez, 2009). Other changes that occurred during the early years of the 1980s included an advanced obligation for regional development initiatives, and the mandating of the Commission to prepare occasional reports on the economic and social situation of the Member States, within which it could suggest Community guidelines and preferences (Durova, 2017). Changes in the Community’s regional policy were more influential from 1984, particularly aimed at improving the Community’s familiarity with the policy. Some of these transformations included the increasing of financial allocation to the ERDF, and the distribution to Member States based on a new structure of indicative features rather than of fixed quotas (Durova, 2017). The other reforms during the mid-1980s included the enlarging of the Commission’s powers in the selection of projects, the increasing of eligible expenditure to encompass intangible investments, and the reinforcing of the programme approach by growing the amount of funding to be disbursed through various initiatives to 20% of the budget (Manzella & Mendez, 2009). The transformations during the 1980s are attributed to have played instrumental roles in the development of the Regional Policy that now has significant effects on the European community.

Agenda 2000

The European Union adopted Agenda 2000 as an action programme with the key objective of reforming the Regional Policy and the Common Agricultural Policy. The Agenda formed a new financial structure for the years 2000-2006 with the goal of enlarging the EU. The chief objectives of the Agenda were to improve agricultural practices in the EU, and to honour the priorities of Member States through the increased budgetary allocation (EUR-Lex, 2019). Regarding the improvement of agriculture, for example, considerable structural and policy changes were introduced in the in milk, beef, arable crops, and wine production. The milk and arable crops sectors, for example, saw considerable reduction in commodity price, same in the production and selling of beef and veal (EUR-Lex, 2019). The reductions will be facilitated by offering financial support to farmers, generated on the basis of the yearly production of the agricultural commodities in question. The structural policy reforms also took center stage in the Agenda 2000 (EUR-Lex, 2019). The stakeholders during the Berlin European Council agreed that advancing the efficiency of the Cohesion Fund and the Structural Funds is the foundation of the Agenda 2000 changes (EUR-Lex, 2019). The identifications meant making sure the structural aid is more focused both in terms of object of aid and geographic terms, and it implies advancing the management of the money (Funds), while still pursuing the goals of social and economic cohesion in an escalating broad Union (EUR-Lex, 2019). Academic commentators believe the Agenda 2000 is a critical aspect of the Regional Policy, which continues to offer valuable insight.

EU Cohesion Policy 2014-2020

Proposals for a new strategy to EU regional policy were introduced by the European Commission on October 6, 2011. The primary objectives for the 2014-2020 plan is to improve the operations of cohesion policy funds, and to strongly align the distribution of resources to creating jobs, and fostering inclusive, sustainable, and smart growth, goals that are enshrined in the Europe 2020 strategy (Government of Malta, 2016). The allocated budget for the programmes stipulated to be accomplished from 2014-2020 is about EUR 335 billion compared with the EUR 350 billion for the period 2007-2013 (Government of Malta, 2016). It is projected that investment in regions that are not so much developed will consume up to half of the entire amount, which is more than EUR 161 billion. About EUR 84 billion will be acquired from the European Social Fund (ESF) to foster employment and to encourage social inclusion and lifelong learning (European Union, 2019). Furthermore, a new initiative, Connecting Europe Facility’ (CEF), will be formed to facilitate the creation of infrastructure in the areas of information technologies, energy, and transportation (European Union, 2019). The CEF has suggested a budget of about EUR 40 billion, with another EUR 10 billion put in the Cohesion kitty.

EU Cohesion Policy 2021-2027

For the next EU budget spanning 2021-2027, the Commission suggests to improve the Cohesion Policy, investment policy, and foster solidarity. Entrepreneurs and businesses are part of the major beneficiaries for the provision of the Cohesion Policy 2021-2027 because they will encounter little constraints in securing financial aid (European Court of Auditors, 2019). The new structure outlines a yearly performance review, in the nature of a policy interaction between the Commission and the programme authorities (European Court of Auditors, 2019). The plan further acknowledges that grants only cannot deal with the investment gaps that disturbs so many investors, and suggests the use of financial instruments that have leverage effects and are nearer to the market (Eyes on Europe, 2018). More essentially, the Cohesion Policy 2021-2027 advocates for more open communication efforts to advance the visibility of the Policy.

Funding

The primary source of European Union’s territorial regional policy is the structural funds that are distributed to various regions, particularly to the underdeveloped places. Two forms of structural funds are often dispensed; the ESF and the European Regional Development Fund (ERDF). The primary purpose of the ESF facilitate the training of people who later secure employment position in various sectors, while the ERDF is used for the improvement of infrastructure, although some portion is invested in creating jobs (Williams & Williams, 2016). Money is dispensed differently between areas that are perceived to be more advanced with a GDP per capita surpassing 90% of the European Union average, transition economy with a GDP per capita falling between 74% and 91% of the EU’s average, and less developed regions with less than 74% GDP per capita (Williams & Williams, 2016). The areas the Policy considers as being less developed include Bulgaria, Latvia, Croatia, Estonia, and Romania among others, while transition regions comprise of Germany, Italy, Bulgaria, Denmark, Malta, France, and Belgium among several others (Williams & Williams, 2016). The Policy, however, regards some areas of Austria, France, Denmark, Cyprus, and the whole of Netherlands, Luxembourg, Ireland, Finland, and Sweden among others as being developed. The Policy also considers the whole of London, Warwickshire, Eastern Scotland, Manchester, Leicester, and Wiltshire, all in the UK, as being developed (Williams & Williams, 2016). Additional funds are put aside for Member States with gross national income per capita below 90% of the EU’s average in the Cohesion Policy fund (Williams & Williams, 2016).

Conclusion

The study pays close attention to the primary features and components of the EU’s regional policy that majorly seeks to provide more job opportunities, encourage competitiveness, foster economic development, improve the quality of life for EU citizens, and enhance sustainable growth. The study pays attention to the developments in the 1980s when the ERDF was in effect, and illustrates how the Agenda 2000 improved agricultural practices in the region. The report also shows how the cohesion policy, 2014-2020 and 2021-2027, improve allocations for different initiatives, all aimed at improving the wellbeing of people in the Member States.

References

Bischof, G. (2014). Regional economic development compared: EU-Europe and the American South. Innsbruck: Innsbruck University Press.

Durova, K. (2017). Cohesion policy of the European Union: Evolution, challenges and prospects. Economic Archive, 2, 50-62.

European Court of Auditors. (2019). Rapid case review allocation of Cohesion Policy funding to Member States for 2021-2027. Luxembourg: European Court of Auditors.

EUR-Lex. (2019). Agenda 2000: For a stronger and wider Union. Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Al60001

European Union. (2019). Regional policy. Retrieved from https://europa.eu/european-union/topics/regional-policy_en

Eyes on Europe. (2018). Cohesion Policy and ESI Funds in 2021-2027: A policy debate Cohesion Policy and ESI Funds in 2021-2027: A policy debate. Retrieved from https://www.eyes-on-europe.eu/cohesion-policy-and-esi-funds-in-2021-2027-a-policy-debate-cohesion-policy-and-esi-funds-in-2021-2027-a-policy-debate/

Government of Malta. (2016). Cohesion policy 2014-2020. Retrieved from https://eufunds.gov.mt/en/Operational%20Programmes/Publicity/Pages/Cohesion-Policy-2014-2020.aspx

Manzella, G., & Mendez, C. (2009). The turning point of EU Cohesion Policy. Report Working Paper, 1-28.

UNESCO. (2020). EU Cohesion Policy (Regional Policy). Retrieved from https://en.unesco.org/creativity/policy-monitoring-platform/eu-cohesion-policy-regional

Williams, D., & Williams, R. (2016). European Union spatial policy and planning. Thousand Oaks: SAGE Publications.