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1Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

The role of regional policy in the EU and its mutating objectives

Jorge Nuñez FerrerCEPS

04/10/2023

2Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

GENERAL OBJECTIVES OF THE EUTHE TREATY OF THE EUROPEAN UNION• Economic Growth: “economic progress”• Sustainable Growth: “balanced and sustainable

development”, “employment” and “social progress”• Cohesion or convergence: “economic and social

cohesion” + External Security and Internal SecurityPresent motto: Smart, sustainable and inclusive

growth - EUROPE 2020 strategy3rd attempt to implement the ‘failed’ Lisbon Agenda and

Gothenburg declarations 2000-2010

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3Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

2007-2013 instruments• Structural and Cohesion Funds• Common Agricultural Policy (mainly direct payments)

+ Rural Development Funds (mainly agriculture)• Competitiveness for growth and employment (new):– Support innovation (R&D) and growth – SMEs, ICT, energy– TENs

• Each has a different role at different territorial level+ External, i.e. Neighbourhood - IPA

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04/10/2023

5Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

Evolving strategy and philosophy• EU system of support in constant mutation within a policy

paralysis over 30 years – complex, imperfect & difficult• Philosophy of structural (and other) funds based on

changing development theories: – Growth pole and centre-periphery theories (60s – 70s)– Infrastructure endowments (80s)– Endogenous growth theories & human capital

(endogenous technical growth, i.e. Lisbon agenda (90s)– + PPPs, blending, mission oriented Europe 2020 (2010-)

• Philosophy of rural development funds – Sectoral agricultural lobby dominated still today– Unclear future

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6Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

Evolving objectives of regional policyTransfers for economic and social cohesion

Mainly infrastructures & trainingObjectives, strategy mainly national – no strong guidelines

Increasing focus on growth – search for fundamental growth factorsRaising importance of R&D, SMEs

Increased importance of strategiesNational Strategic Reference Frameworks

Budget Review / CAP and ‘old Structural Funding dominate’Stronger ‘Mission oriented’ sought budget: R&D, climate, energy

Funding needs far above budget – increased need for extra budgetary funding and ‘blending’

80s-90s

00-10

2010-

• Convergence:• 99 regions with per capita <75% of EU GDP AV.• € 283bn• Cohesion Fund for countries with <90% of av GDP• Competitiveness & employment:• 172 regions - €55 bn• Territorial cooperation

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Regional Policy today

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8Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium

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Achievements and failures of regional policy

• Difficult to attribute impacts to policy, but:– Most supported regions have seen a real GDP rise per capita– Declines have been rare– Improved governance and administrative capacity– Improved infrastructures

• However: – Sub-optimal use of funds– Weak strategies– Weak accountability– Weak evaluations, no efficient performance monitoring– Weak ex-post evaluations and integration of lessons

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• Big tensions on scope and size of structural policies and new objectives: e.g. – Energy grids– Innovation, R&D, Demonstration

• Should wealthier regions be supported?• The Commission seeks extra budgetary solutions out

of the budget:– Blending instruments (EIB blending RSFF, LGTT, etc.)– External blending (NIF, ITF, WBIF, LAIF, FEMIP, etc.)– Bond issue

• Seeks BETTER STRATEGIES AND CONTROLThinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

Budget reform coming

04/10/2023

10Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium

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Challenges for territorial development• Incorporating growing number of EU objectives in

strategies in a blocked budget• Redistributing the funds – large West –East imbalances,

specially the CAP• EU objectives costly: funds are more to help implement

EU acquis and objectives than to focus on own development

• Increasing the quality of NATIONAL STRATEGIES and better accountability of recipients

• Increasing value added & value for money• Increasing public and private leverage• Promoting innovative funding and increasing leverage

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11Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu

National strategies are crucial• 1st problem: Administrations do not really grasp what

this is all about! (Including Commission officials)• Performance of funds highly connected to national

macro policy & quality of strategy and implementation– Strategy (NSRF, RDP, etc.) should be based on local needs,

built on incentives – setting direction. – These are not fund application formularies – these are

strategies for the countries not the Commission. These are implementation documents. Others do applications.

– Successful countries usually have implemented clear and sometimes unpleasant strategies

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Thank you

Recommended reading:FAO/World Bank working paper: The evolution and impact of

EU regional and rural policywww.fao.org/docrep/011/aj280e/aj280e00.htm

For external finance – new blending mechanisms and aid coordination:Innovative Approaches to EU Blending Mechanisms for Development Finance

CEPS special Report (published 18 May)www.ceps.eu/books

On Agriculture and Rural DevelopmentTHE EU ADDED VALUE OF AGRICULTURAL EXPENDITURE – FROM MARKET TO MULTIFUNCTIONALITY –

GATHERING CRITICISM AND SUCCESS STORIES OF THE CAPStudy for the European Parliament`

http://www.europarl.europa.eu/activities/committees/studies/download.do?language=en&file=20293#search=%20THE%20EU%20ADDED%20VALUE%20OF%20AGRICULTURAL%20EXPENDITURE%20–%20FROM%20MARKET%20TO%20MULTIFUNCTIONALITY%20–%20GATHERING%20CRITICISM%20AND%20SUCCESS%20STORIES%20OF%20THE%20CAP%20%20

Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu