regional policy | Course Paper

Regional policy

THE EUROPEAN

UNION

EXPLAINED

Regional policy is a strategic

investment policy targeting all EU

regions and cities in order to boost

their economic growth and improve

people’s quality of life. It is also an

expression of solidarity, focusing

support on the less developed regions.

Making Europe’s

regions and

cities more

competitive,

fostering growth

and creating jobs

CONTENTS

Why does the EU need

a regional policy?

Europe’s main investment policy

for growth and jobs………………..3

How does regional policy work?

A range of funds for growing regions

and cities ……………………….6

Maximising the impact of

EU investment

Targeted investment for growth

and jobs until 2020 …………….. 10

Outlook

EU regional policy 2014–20:

a new era of strategic spending …… 15

Find out more ……………….16

The European Union explained:

Regional policy

European Commission

Directorate-General for Communication

Citizens information

1049 Brussels

BELGIUM

Manuscript updated in November 2014

Cover and page 2 picture:

16 pp. — 21 × 29.7 cm

ISBN 978-92-79-41288-2

doi:10.2775/74781

Luxembourg: Publications Office

of the European Union, 2014

Reproduction is authorised. For any use or reproduction

of individual photos, permission must be sought directly

from the copyright holders.

This publication is a part of a series that explains

what the EU does in different policy areas,

why the EU is involved and what the results are.

You can find the publications online:

http://europa.eu/pol/index_en.htm

http://europa.eu/!bY34KD

THE EUROPEAN UNION

EXPLAINED

How the EU works

Europe in 12 lessons

Europe 2020: Europe’s growth strategy

The founding fathers of the EU

Agriculture

Banking and finance

Borders and security

Budget

Climate action

Competition

Consumers

Culture and audiovisual

Customs

Digital agenda

Economic and monetary union and the euro

Education, training, youth and sport

Employment and social affairs

Energy

Enlargement

Enterprise

Environment

Fight against fraud

Food safety

Foreign affairs and security policy

Humanitarian aid and civil protection

Internal market

International cooperation and development

Justice, fundamental rights and equality

Maritime affairs and fisheries

Migration and asylum

Public health

Regional policy

Research and innovation

Taxation

Trade

Transport

3

REGIONAL POLICY

Investing in the EU’s less developed

regions

EU regional policy accounts for the single largest chunk

of the EU budget for 2014–20 (€351.8 billion out of a

total €1 082 billion) and is therefore the Union’s main

investment arm.

These resources are used to finance strategic transport

and communication infrastructures, to favour a

transition to a more environmentally friendly economy,

to support small and medium-sized enterprises (SMEs)

in becoming more innovative and more competitive, to

create new and lasting job opportunities, to reinforce

and modernise education systems and to build a more

inclusive society.

In so doing, regional policy serves as a catalyst for

further public and private funding, not only because it

obliges EU countries to co-finance projects from their

respective national budgets but also because it creates

investor confidence. Taking into account this national

contribution, and the leverage effect of financial

instruments, the overall impact of EU investment for

2014–20 is likely to be more than €500 billion.

Regional policy is also an expression of solidarity

between EU countries as it dedicates the bulk of its

funding to the EU’s less developed regions. It helps

these regions to fulfil their economic potential, in the

light of regional disparities both across the EU and

within member countries. By way of example, figures

from 2011 (the latest available) show that the gross

domestic product (GDP) of EU regions ranged from

29 % of the then EU-27 average in Severozapaden

(Bulgaria) and Nord-Est (Romania) to 321 % of the

average in Inner London (United Kingdom). This

highlights the need for a strategic and targeted

investment policy which tailors EU investment to

individual regions.

Thousands of projects across the EU

EU regional policy funding has financed tens of

thousands of projects over the years, benefiting all

EU countries individually and the EU as a whole in

terms of economic growth and jobs. Between 1989 and

2013, over €800 billion was allocated from the EU

budget to co-fund projects targeting regional growth.

Why does the EU need a regional policy?

Europe’s main investment policy for growth and jobs

The EU’s 274 regions as covered by regional policy, 2014–20,

and categories of eligibility for Structural Funds (the European

Regional Development Fund (ERDF) and the European Social

Fund (ESF)).

Canary Islands

Guadeloupe,

Martinique

Azores

Madeira

French

Guiana

Mayotte Réunion

ALL EU REGIONS BENEFIT

Category

Less developed regions

(GDP/head < 75 % of EU-27 average): €182.2 billion

Transition regions

(GDP/head between > = 75 % and < 90 % of EU-27 average):

€35.4 billion

More developed regions (GDP/head > = 90 % of EU-27 average):

€54.3 billion

Other sources of funding under regional policy during the same

period include the Cohesion Fund (€65.3 billion), European territorial

cooperation (€10.2 billion), the ‘Youth employment initiative’

(€3.2 billion) and specific allocations for the outermost and sparsely

populated regions (€1.6 billion).

4THE EUROPEAN UNION EXPLAINED

• funded 61 000 research projects;

• provided almost 5 million more EU citizens with

broadband coverage;

• financed the construction of 1 208 km of roads and

1 495 km of rail to help establish an efficient

trans-European transport network (TEN-T);

• enhanced the quality of life for citizens in urban areas

through a modernised water supply, benefiting

3.2 million citizens, and sustainable transport.

These resources have helped to improve the quality of

life of EU citizens, to create jobs and to promote

research, development and innovation. For example,

between 2007 and 2012 alone, EU regional policy:

• created an estimated 594 000 jobs (262 000 in

SMEs);

• invested directly in 198 000 SMEs;

• supported 77 800 start-ups;

Origins and evolution of regional policy

1957 — First mention in the Treaty of Rome.

1958 — Creation of the European Social Fund

(ESF).

1975 — Creation of the European Regional

Development Fund (ERDF).

1986 — Legal basis for regional policy established

in the Single European Act.

1988 — To adapt to the arrival of Greece (1981)

and Spain and Portugal (1986), the Structural

Funds are integrated into an overarching cohesion

policy. Budget: ECU 64 billion (NB: ECUs later

became the euro).

1993 — The Maastricht Treaty introduces the

Cohesion Fund, the Committee of the Regions

and the principle of subsidiarity (whereby

decision-making must always be made at the least

centralised/most local level able to address the

matter appropriately).

1994–99 — Doubling of the resources for regional

funds, now equal to a third of the EU budget.

1995 — Special objective added to support the

sparsely populated regions of Finland and Sweden.

Overall budget:

ECU 168 billion.

2000–04 — Pre-accession instruments make

funding and know-how available to countries

engaged in the process of joining the EU.

2004 — Ten new countries join the EU (increasing

its population by 20 %, but its GDP by only 5 %).

Budget: €213 billion for the 15 existing members;

€22 billion for the new member countries (2004–

06).

2007–13 — Budget: €347 billion (of which 25 % is

earmarked for research and innovation and 30 %

for environmental infrastructure and measures to

combat climate change).

2014–20 — Budget: €351.8 billion, with a

particular focus on four key investment priorities:

research and innovation, the digital agenda, support

for SMEs and the low-carbon economy. Around

€100 billion will be dedicated to these sectors, of

which €26.7 billion will support the shift to a

low-carbon economy (energy efficiency and

renewable energies).

5

REGIONAL POLICY

During the same period, the value of selected projects

in urban areas amounted to at least €100 billion.

Almost 20 % of that amount was allocated to

integrated projects for urban and rural regeneration and

to education, health, childcare, housing and other social

infrastructure. In particular, funding for integrated

projects for urban regeneration accounted for

€6.8 billion, while investment in social infrastructure

amounted to €11.4 billion.

In other words, regional policy has a strong impact in

many fields and on many different levels. It therefore

greatly complements other policies such as those

dealing with education, employment, energy, the

environment, the single market and research and

innovation.

Estimates show that regional policy investment has

also contributed to increasing income in the poorest

regions: their GDP per capita grew from 60.5 % of the

EU-27 average in 2007 to 62.7 % in 2010.

Furthermore, GDP in the 13 EU countries that entered

the Union in or after 2004 (1) is expected to increase by

around 2.4 % per year between 2007 and 2025.

EXAMPLES OF THE DIVERSITY OF PROJECTS SUPPORTED BY EU

REGIONAL POLICY FUNDS

BEACON, United Kingdom

— Developing eco-friendly

products for a low carbon

economy

Infection research and

monitoring centre

in Lyon, France.

Gdynia trolley bus

network, Poland —

Improving quality of life

through sustainable public

transport

Art on Chairs, Portugal —

Boosting the region’s

competitiveness through

innovation in SMEs

Economic, social and territorial cohesion

Regional policy is also referred to in broader terms

as cohesion policy as its overall goal is to

strengthen what is known as ‘economic, social and

territorial cohesion’ in regions qualifying for support.

In practice that means:

— economic and social cohesion: boosting

competitiveness and green economic growth in

regional economies and providing people with

better services, more job opportunities and a

better quality of life;

— territorial cohesion: connecting regions so that

they capitalise on their respective strengths and

work together in new, innovative configurations

to tackle common challenges (such as climate

change), thus benefiting and reinforcing the EU