Foreword - LU

FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION iii

Foreword

«There are many goals which we cannot achieve on our own, but only in concert.

Tasks are shared between the European Union, the Member States and their re-

gions and local authorities». Berlin Declaration, March 2007.

Vjku"ku"vjg"Ýtuv"Eqjgukqp"Tgrqtv"rwdnkujgf"chvgt"vjg"4226"cpf"4229"gpnctigogpvu0"Kv"gxcnwcvgu"vjg"gzvgpv"qh"eqpxgtigpeg"kp"vjg"Wpkqp"qh"49"ogodgtu0"Kv"cnuq"rtqxkfgu"c"rtgnkokpct{"cuuguuogpv"qh"vjg"korcev"qh"vjg"4222Î4228"eqjgukqp"rtqitcoogu"cpf"nqqmu"cv"vjg"Ýtuv"tguwnvu"qh"rtqitcookpi"hqt"vjg"4229Î4235"rgtkqf0"Dwv."oquv"korqtvcpvn{." kv"cpcn{ugu" vjg"pgy"ejcnngpigu" hqt" tgikqpcn"fgxgnqrogpv" kp" vjg"fge-

cfgu"vq"eqog0"

K"co"eqpxkpegf"vjcv"kp"vjg"eqokpi"{gctu"vjgug"ejcnngpigu"yknn"tgftcy"vjg"tgikqpcn"ocr"qh"Gwtqrg"cpf"qxgtujcfqy" vjg" vtcfkvkqpcn" fguetkrvkqpu"yg"ctg"wukpi" vqfc{"Ï"uwej"cu"vjqug"tghgttkpi"vq"pgy"cpf"qnf"Ogodgt"Uvcvgu0"Vjg"korcev"qh"kpetgcukpi"geqpqoke"rtguuwtg"htqo"inqdcn"eqorgvkvqtu."vjg"cigkpi"qh"qwt"uqekgvkgu."vjg"fgxgn-qrogpvu"kp"vjg"octmgv"hqt"gpgti{."enkocvg"ejcpig"cpf"uqekcn"rqnctkucvkqp"yknn"dg"hgnv."ykvj"fkxgtug"kpvgpukv{."kp"cnn"rctvu"qh"vjg"Wpkqp0

Kp"uqog"tgikqpu"vjgug"ejcnngpigu"yknn"korqug"pgy"eqpuvtckpvu"qp"geqpqoke"fgxgn-qrogpv0"Kp"qvjgtu"vjg{"yknn"etgcvg"pgy"qrrqtvwpkvkgu"hqt"gornq{ogpv"cpf"itqyvj0"Dwv"cfftguukpi"dqvj"ejcnngpigu"cpf"qrrqtvwpkvkgu"tgswktgu"c"uqwpf"cpcn{uku."vjkpm-

kpi"cjgcf"cpf"etgcvkxg"rqnke{"tgurqpugu"vcknqtgf"vq"tgikqpcn"pggfu0"Ykvj"vjku"Tg-

rqtv."vjg"Eqookuukqp"ku"vjgtghqtg"ncwpejkpi"vjg"fgdcvg"qp"jqy."kp"vjg"hceg"qh"vjg"hqtvjeqokpi"uqekcn"cpf"geqpqoke"ejcpigu."eqjgukqp"rqnke{"ecp"dguv"eqpvkpwg"vq"hquvgt"tgikqpcn"fgxgnqrogpv"cpf"eqpxgtigpeg0

Dwv"yg"ctg"pqv" uvctvkpi" htqo"uetcvej0"Yg"mpqy."cu"jcu"dgeqog"engct" kp" tgegpv"{gctu."vjcv"tgikqpcn"fgxgnqrogpv"cpf"eqpxgtigpeg"ku"dguv"ftkxgp"vjtqwij"ownvk/ngx-

gn"iqxgtpcpeg."vjtqwij"vjg"eqqtfkpcvgf"cevkqpu"qh"vjg"Wpkqp."vjg"Ogodgt"Uvcvgu"cpf" nqecn"cpf"tgikqpcn"cwvjqtkvkgu0"Ogodgt"Uvcvgu" vjgougnxgu."jcxg"tgeqipkugf"vjku"d{"fgxqnxkpi"cp"kpetgcukpi"coqwpv"qh"tgurqpukdknkv{"hqt"rwdnke"kpxguvogpv"vq"vjg"tgikqpcn"cpf"nqecn"ngxgn"qxgt"vjg"rcuv"fgecfg0"

Vjku"vtgpf"yknn"eqpvkpwg0"Vjg"cpcn{uku"qh"vjg"hcevqtu"yjkej"yknn"ftkxg"geqpqoke"itqyvj"kp"vjg"hwvwtg"ujqyu"vjcv"oqtg"cpf"oqtg"ygkijv"pggfu"vq"dg"ikxgp"vq"tguqwtegu"cv"nq-

ecn"ngxgn."vq"tgugctej"kpuvkvwvkqpu."enwuvgtu"qh"gpvgtrtkugu."kppqxcvkxg"dwukpguugu"cpf"vjg"umknnu"qh"vjg"yqtm"hqteg0"Vjg"tcvkqpcng"nkpmkpi"geqpqoke"ghÝekgpe{"ykvj"uwdukfkctk-v{"cpf"fgegpvtcnkucvkqp."ykvj"vjg"kpxqnxgogpv"qh"nqecn"cpf"tgikqpcn"cevqtu"kp"vjg"fg-

ukip"cpf"korngogpvcvkqp"qh"fgxgnqrogpv"uvtcvgikgu."yknn."vjgtghqtg."dg"tgkphqtegf0"

H q t g y q t f

FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONiv

Kp"qtfgt"vq"ujqy"vjg"korqtvcpeg"qh"vjg"inqdcn"eqpvgzv"kp"yjkej"uqekcn"cpf"geqpqoke"eqjgukqp"ku"vcmkpi"rnceg."vjg"Eqjgukqp"Tgrqtv"hqt"vjg"Ýtuv"vkog"eqpvckpu"eqorctkuqpu"ykvj"qwt"oclqt"eqorgvkvqtu"kp"qvjgt"rctvu"qh"vjg"yqtnf"kp"vgtou"qh"c"pwodgt"qh"kpfkecvqtu0"Uwuvckpcdng"eqpxgtigpeg"ecp"qpn{"dg"cejkgxgf"kh"yg"vcmg"kpvq"ce-

eqwpv" vjg"dtqcfgt" htcogyqtm" kp"yjkej" vjg"GW"geqpqo{"qrgtcvgu0" Kp" vjku"inqdcn"eqpvgzv"ecvejkpi"wr" vcmgu"fkhhgtgpv"hqtou0"Vjg"tqng"qh"eqjgukqp"rqnke{"ku"vq"jgnr"tgikqpcn"geqpqokgu"Ýpf"vjgkt"rnceg"kp"yqtnf"octmgvu."kp"etkvkecn"inqdcn"pgvyqtmu"cpf"enwuvgtu="vq"cnnqy"vjgo"vq"ogcuwtg"vjgkt"uvtgpivju"cpf"ygcmpguugu"cickpuv"inqdcn"ejcnngpigu"cpf"qrrqtvwpkvkgu"cpf"vq"hquvgt"vjgkt"kpvgtpcvkqpcnkucvkqp0"

Nqqmkpi"kpvq"vjg"hwvwtg"tgswktgu"cp"wpfgtuvcpfkpi"qh"vjg"rcuv0"Vjg"6vj"Eqjgukqp"Tgrqtv"rtqxkfgu"uvtqpi"gxk-fgpeg"qp"jqy"vjg"rtqitcoogu"wpfgtvcmgp" kp" vjg"4222Î4228"rgtkqf"jcxg"eqpvtkdwvgf"vq"itgcvgt"eqjgukqp0"Eqjgukqp"rqnke{"jcu"dqquvgf"IFR."etgcvgf"gornq{ogpv"cpf"kortqxgf"vjg"eqorgvkvkxgpguu"qh"GW"tgikqpu0"Tg-

ikqpcn"fkurctkvkgu"kp"geqpqoke"fgxgnqrogpv"cpf"gornq{ogpv"jcxg"pcttqygf"cu"nciikpi"tgikqpu"jcxg"ecwijv"wr."yjkng"cv"vjg"ucog"vkog"vjg"oqtg"rtqurgtqwu"rctvu"qh"vjg"GW"jcxg"dggp"jgnrgf"vq"kpxguv"kp"pgy"umknnu."kp"dwknfkpi"wr"pgy"tgugtxqktu"qh"vcngpv"cpf"kp"guvcdnkujkpi"pgvyqtmu"cpf"enwuvgtu0

Owej"tgockpu"vq"dg"fqpg0"Vjg"gpnctigogpv"qh"vjg"GW"vq"49"Ogodgt"Uvcvgu"kpetgcugf"igqitcrjkecn"fkurctkvkgu"ykvjkp"vjg"Wpkqp."ykvj"ocp{"oqtg"qh"qwt"hgnnqy"ekvk¦gpu"nkxkpi"kp"fkucfxcpvcigf"tgikqpu0"Dtkfikpi"vjgug"icru"yknn"kpgxkvcdn{"dg"c"nqpi/vgto"rtqeguu."yjkej"ku"yj{"vjg"ngcuv/fgxgnqrgf"tgikqpu"ctg"vjg"vqr"rtkqtkv{"hqt"eqjgukqp"rqnke{0"Cv"vjg"ucog"vkog."jqygxgt."xktvwcnn{"cnn"tgikqpu"ctg"eqphtqpvgf"ykvj"vjg"pggf"vq"tguvtwevwtg."oqfgtpkug"cpf"hquvgt"eqpvkpwqwu"mpqyngfig/dcugf"kppqxcvkqp"kp"qtfgt"vq"oggv"vjg"ejcnngpig"qh"inqdcnkucvkqp0"Vjg"rqnke{"ku."vjgtghqtg."dcugf"qp"c"dtqcf"xkukqp."tgeqipkukpi"vjg"pggf"vq"tgkphqteg"vjg"eqorgvkvkxgpguu"qh"cnn"tgikqpu"kp"vjg"Wpkqp"uq"vjcv"vjg{"ecp"eqpvtkdwvg"vq"vjg"Nkudqp"uvtcvgi{"qh"itqyvj"cpf"lqdu0"

Vjku"xkukqp"ku"tgÞgevgf"kp"vjg"hqtvjeqokpi"rgtkqf"4229Î4235."fwtkpi"yjkej"eqjgukqp"rqnke{"yknn"hqewu"kpxguvogpv"qp"T(F"cpf"kppqxcvkqp."kphtcuvtwevwtg."kpfwuvtkcn"eqorgvkvkxgpguu."vtckpkpi."tgpgycdng"gpgti{"uqwtegu"cpf"gp-

gti{"ghÝekgpe{0"Vjg"rtqitcookpi"fqewogpvu"yjkej"vjg"Eqookuukqp"jcu"tgegkxgf"htqo"vjg"Ogodgt"Uvcvgu"ujqy"vjcv"vjg{"jcxg"gzeggfgf"vjg"vctigvu"qh"cnnqecvkpi"oqtg"vjcp"82'"qh"tguqwtegu"wpfgt"eqjgukqp"rqnke{"vq"uwej"kp-

xguvogpv"kp"vjg"ngcuv"fgxgnqrgf"tgikqpu"cpf"97'"kp"qvjgt"tgikqpu0"Vjku"fgoqpuvtcvgu"vjcv"vjg"pgy"ÅgctoctmkpiÇ"crrtqcej"jcu"tgegkxgf"vjg"uwrrqtv"qh"pcvkqpcn"iqxgtpogpvu"cpf"tgikqpcn"cwvjqtkvkgu"cetquu"vjg"Wpkqp0"

Dwv"vjg"xcnwg/cffgf"qh"eqjgukqp"rqnke{"iqgu"ygnn"dg{qpf"vjg"ujggt"uk¦g"qh"vjg"kpxguvogpv"kp"vjg"hwvwtg"yjkej"kv"uwrrqtvu0"Kv"gorqygtu"qwt"ekvk¦gpu"d{"qhhgtkpi"vjgo"cp"qrrqtvwpkv{"dqvj"vq"jcxg"c"uc{"kp"vjgkt"hwvwtg"cpf"vq"eqpvtkdwvg"vq"vjg"hwvwtg"qh"Gwtqrg0"Kv"gpeqwtcigu"cp"kpvgitcvgf"crrtqcej"vq"fgxgnqrogpv"yjkej"kortqxgu"vjg"qxgtcnn"korcev"qh"ugevqtcn"rqnkekgu0"Kv"rtqoqvgu"rctvpgtujkr"cu"c"mg{"gngogpv"qh"iqqf"iqxgtpcpeg0"

Pgy"Gwtqrg."nkxkpi"wr"vq"vjg"gzrgevcvkqpu"qh"qwt"ekvk¦gpu."ecppqv"dg"cejkgxgf"d{"vjg"Wpkqp."kpfkxkfwcn"Ogodgt"Uvcvgu"qt"d{"tgikqpu"cevkpi"cnqpg0"Geqpqoke"uweeguu"tgswktgu"enqug"eqqrgtcvkqp"dgvyggp"cnn"qh"vjgo0"Gwtqrg"ecppqv"itqy"ykvjqwv"uvtqpi"cpf"itqykpi"tgikqpu0"Vjku"ku"vjg"oguucig"qh"vjku"Tgrqtv0

Fcpwvc"J¯dpgt

FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION vii

Summary and conclusions

Article 159 of the Treaty provides that the Commission shall submit a report to

the European Parliament, the Council, the Economic and Social Committee and

the Committee of the Regions every three years on the progress made towards

achieving economic and social cohesion, and on the manner in which the various

means provided in that Article (Member States’ and Community’s policies) have

contributed to it.

Vjku."vjg"Hqwtvj"eqjgukqp"tgrqtv."rtqxkfgu."Ýtuvn{."cp"wrfcvg"qp"vjg"ukvwcvkqp"cpf"outlook with regard to economic, social and territorial cohesion and, secondly, an

analysis of the impact of policy at national and Community level on cohesion in the

Union. Particular emphasis is given to: 1) the preliminary assessment of the impact

of European cohesion policy in the 2000–2006 programming period and 2) to a

Ýtuv"cuuguuogpv"qh"vjg"rtgrctcvkqp"hqt"vjg"pgy"rgtkqf"4229Î4235."dcugf"qp"vjg"national strategies and draft operational programmes submitted to the Commission

d{"Ogodgt"Uvcvgu"wr"vq"vjg"gpf"qh"Crtkn"4229"*ugg"UGE*4229+8;6+1.

The added value of cohesion policy

Vjgtg"ctg"c"tcpig"qh"hcevqtu"yjkej"kpÞwgpeg"vjg"ghhgevkxgpguu"cpf"vjg"korcev"qh"Gw-

ropean cohesion policy. An economic context characterised by price stability and

uqwpf"dwfigv"dcncpegu"yknn"dgpgÝv" htqo"nqygt" kpvgtguv"tcvgu0"Vjku." kp" vwtp."uvkow-

lates investment and capital accumulation, increasing both productivity and em-

ployment. It also helps to increase the rate and diffusion of innovation and reduces

the cost of capital.

Vjg"ghÝekgpe{"cpf"ghhgevkxgpguu"qh"rwdnke"cfokpkuvtcvkqpu"qp"pcvkqpcn."tgikqpcn"cpf"local level is another critical factor. Finally it is often external factors, notably glo-

balisation, that are the main driving factors of structural changes at all levels and

which have a large impact on economic development and job creation.

However, as a result of a rigorous approach, cohesion policy has succeeded in mak-

ing a difference to standards of living and levels of opportunity across the Union.

1 In 2000–2006 5 funds contributed to cohesion policy — ERDF, ESF, Cohesion Fund, EAGGF Guid-

cpeg"cpf"HKHI0"Hqt"vjg"ewttgpv"4229Î4235"rgtkqf"vjg"rtgugpv"tgrqtv"hqewugu"qp"vjg"eqpvtkdwvkqp"vq"Cohesion policy of ERDF, ESF and Cohesion Fund. The former EAGGF guidance section has now

been absorbed in the new Rural Development Fund which also contributes to economic and social

cohesion”.

S u m m a r y a n d c o n c l u s i o n s

FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONviii

Convergence is occurring at national and at regional level

Cu" c" itqwr" vjg" oclqt" Ýpcpekcn" dgpgÝekctkgu" qh" Gwtqrgcp" eqjgukqp" rqnke{" rtq-

grammes during the period 2000–2006 have continued to exhibit impressive growth

rates. At the regional level, strong economic performance in regions with low GDP

per capita over the past decade has meant that, across the EU, regions have been

in a process of convergence measured in terms of GDP per capita.

Estimates suggests that these trends will continue

Hqt"vjg"rgtkqf."4229Î4235."uvwfkgu"uwiiguv"vjcv"vjg"kpxguvogpv"wpfgtvcmgp"wpfgt"vjg"programmes will add some 5–15% to absolute levels of GDP in most of the new Member

States, in comparison with the baseline scenario. In addition, it is estimated that by 2015

around 2 million additional jobs will be generated due to these levels of investment.

Cohesion policy supports growth and job creation

also outside the convergence regions

Growth and development in a market economy inevitably mean that restructuring

takes place, often associated with job losses and creation of new jobs which are

unevenly distributed and can give rise to a territorial concentration of social and

economic problems. Reinforcing the Union’s capacity to adapt to change and to

create new sustainable employment is one of the roles of European cohesion policy,

also in the Union’s more prosperous Member States. Over the period 2000–2005,

guvkocvgu"uwiiguv"vjg"etgcvkqp"qh"qxgt"672.222"itquu"lqdu"kp"ukz"eqwpvtkgu."yjkej"account for some two-thirds of the European assistance allocated to Objective 2.

Cohesion policy supports the innovative capacity of Member States and regions

Cohesion policy made an important contribution to R&D efforts in the 2000–2006

period, and strengthened innovative capacity notably in Objective 1 regions. On

the basis of the programmes available at the moment of adopting this report, the

proportion of cohesion policy resources to be invested in innovation and R&D will

oqtg"vjcp"fqwdng"kp"vjg"rgtkqf"4229Î42350

Cohesion policy investment in people has high returns

Raising the quality of human capital explains more than half of the productivity

ickpu"kp"vjg"ncuv"fgecfg0"Gwtqrgcp"eqjgukqp"rtqitcoogu"eq/Ýpcpeg"vjg"vtckpkpi"qh"some 9 million people annually, with more than half of them women. A high percent-

cig"qh"dgpgÝekctkgu"gkvjgt"*tg+gpvgt"kpvq"gornq{ogpv"chvgt"vtckpkpi"qt"tgrqtv"dgvvgt"employment conditions and higher income.

Cohesion policy leverages public and private capital

in support of productive investment

Between 2000 and 2006 every euro invested by cohesion policy led to further ex-

penditure in Objective 1 regions averaging 0.9 euros. In the Objective 2 regions,


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION ix

vjku"kpfwegf"gzrgpfkvwtg"ecp"iq"cu"jkij"cu"5"vkogu"vjg"coqwpv"kpkvkcnn{" kpxguvgf0"Vjku" ku" cejkgxgf" vjtqwij" rqnke{" twngu" uwej" cu" eq/Ýpcpekpi" cpf" rctvpgtujkr" cpf"through increasing involvement of private capital, including a variety of public-pri-

vate partnerships arrangements.

Oqtg" tgegpvn{." vjg"Eqookuukqp." kp"eqqrgtcvkqp"ykvj" vjg" kpvgtpcvkqpcn"Ýpcpekcn" kp-

uvkvwvkqpu."jcu"fgxgnqrgf"kppqxcvkxg"Ýpcpekcn"kpuvtwogpvu."vq"eqodkpg"ykvj"cpf"vq"eqorngogpv"Gwtqrgcp"itcpv"Ýpcpekpi<"LGTGOKG"hqt"vjg"rtqoqvkqp"qh"UOGu"cpf"oketq/etgfkv"cpf"LGUUKEC"hqt"wtdcp"fgxgnqrogpv0"Vjku"yknn"vtcpuhqto"itcpvu"kpvq"tge{encdng"hqtou"qh"Ýpcpeg"ocmkpi"vjgo"oqtg"uwuvckpcdng"qxgt"vjg"nqpigt"vgto="kv"will increase the leverage effect brought about by using such grants to attract and

eqodkpg"ykvj"rtkxcvg"ecrkvcn="cpf"yknn"kpvtqfweg"uvtqpigt"kpegpvkxgu"vqyctfu"dgvvgt"performance.

Cohesion policy has fostered integrated approaches to development

Cohesion policy helps to foster development, including the impact of complex prob-

lems such as challenges posed by globalisation, climate change, demographic

trends, in an integrated manner which gives coherence to different sectoral policies.

This integrated approach has helped to improve the overall impact of sectoral inter-

ventions by exploiting synergies between policy domains and controlling for their

ukfg"ghhgevu="d{"hcxqwtkpi"fkcnqiwg"dgvyggp"cfokpkuvtcvkqpu="cpf"d{"dgvvgt"cfcrvkpi"interventions to the socio-economic characteristics of regions and localities.

Cohesion policy helps to improve the quality of public investment

Vjg"9/{gct"rtqitcookpi"crrtqcej"qh"vjg"rqnke{."dcugf"qp"c"ugewtg"dwfigv"qxgt"vjku"rgtkqf."jcu"ukipkÝecpvn{"kortqxgf"nqpi/vgto"dwfigvct{"rncppkpi"kp"ocp{"Ogo-

ber States and regions. In addition, cohesion policy helps to identify priorities for

public investment decisions, thereby resulting, notably in cohesion countries, in a

oqtg"ghhgevkxg"cpf"ghÝekgpv"wug"qh"rwdnke"kpxguvogpv"kp"igpgtcn."pqv"qpn{"yjgtg"vjcv"kpxguvogpv"ycu"eq/Ýpcpegf"d{"vjg"Eqoowpkv{0"Kp"vjku"yc{."eqjgukqp"rqnke{"kpÞw-

ences the investment pattern, shifting it towards higher productivity and greater

sustainability.

Cohesion policy has promoted partnership as a key element of good governance

The partnership principle is a fundamental principle underpinning all aspects of co-

hesion policy — programming, implementation, monitoring and evaluation — and

has now been widely accepted as a key element of good governance. The system

of multi-level governance, based on strategic approach and involving Community,

national, regional and local authorities and stakeholders helps to ensure that ac-

tions are adapted to circumstances on the ground and that there is a genuine com-

mitment to success.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONx

Situation and trends in economic, social

and territorial disparities

Economic Cohesion

Convergence is occurring both at national…

Vjg"nctiguv"dgpgÝekctkgu"qh"eqjgukqp"rqnke{"fwtkpi"vjg"rgtkqf"3;;6Î4228"Ï"Itggeg."Spain, Ireland and Portugal — as a group have achieved an impressive growth per-

hqtocpeg0"Dgvyggp"3;;7"cpf"4227."Itggeg"tgfwegf"vjg"icr"ykvj"vjg"tguv"qh"GW/49."oqxkpi"htqo"96'"vq"tgcej"::'"qh"vjg"GW/49"cxgtcig"kp"42270"D{"vjg"ucog"{gct."Spain and Ireland had moved from 91% and 102%, respectively, to reach 102%

cpf"367'"qh" vjg"Wpkqp"cxgtcig0"Cv" vjg"ucog"vkog"itqyvj" kp"Rqtvwicn"jcu"dggp"dgnqy"vjg"GW"cxgtcig"ukpeg"3;;;0"Kp"4227"kvu"IFR"rgt"jgcf"ycu"96'"qh"vjg"GW"average.

It is among the new Member States, especially those with a very low GDP per

capita, where faster growth and more rapid catching up are visible. The GDP of the

three Baltic States has almost doubled over the decade from 1995 to 2005. Poland,

Hungary and Slovakia have also performed well with growth rates more than dou-

ble the EU average.

However, due to very low starting points for GDP per capita, and assuming the cur-

rent growth rates, it seems likely that it will take more than 15 years before Poland

cpf."oquv"gurgekcnn{."Dwnictkc"cpf"Tqocpkc"yknn"tgcej"c"IFR"rgt"jgcf"qh"97'"qh"vjg"GW/49"cxgtcig0

…and at regional level

Relatively strong economic growth in regions with a low GDP per head over the

past decade has meant that, overall, EU regions have been converging. Between

3;;7"cpf"4226."vjg"pwodgt"qh"tgikqpu"ykvj"c"IFR"rgt"jgcf"dgnqy"97'"qh"vjg"GW"cxgtcig"hgnn"htqo"9:"vq"92"cpf"vjg"pwodgt"qh"vjqug"dgnqy"72'"qh"vjg"GW"cxgtcig"fgenkpgf"htqo"5;"vq"540

The lagging regions in the EU-15, which were major recipients of support under co-

jgukqp"rqnke{"fwtkpi"vjg"rgtkqf"4222Î4228."ujqygf"c"ukipkÝecpv"kpetgcug"kp"IFR"rgt"jgcf"tgncvkxg"vq"vjg"tguv"qh"vjg"GW"dgvyggp"3;;7"cpf"42260"Kp"3;;7."72"tgikqpu"ykvj"c"vqvcn"qh"93"oknnkqp"kpjcdkvcpvu"jcf"c"IFR"rgt"jgcf"dgnqy"97'"qh"vjg"GW/37"cxgtcig0"Kp"4226."kp"pgctn{"qpg"kp"hqwt"qh"vjgug"tgikqpu"jqog"vq"cnoquv"32"oknnkqp."IFR"rgt"jgcf"jcf"tkugp"cdqxg"vjg"97'"vjtgujqnf0"

…but disparities remain important

In spite of this progress, absolute disparities remain large. This is partly as a result

of recent enlargement and partly as growth tends to concentrate — during the ini-

tial phases of development — in the most dynamic areas within countries.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION xi

Even some of the most developed regions (those which have GDP level above

97'"qh"vjg"GW/49"cxgtcig+"ctg"uvctvkpi"vq"gzrgtkgpeg"xgt{"nqy"qt"gxgp"pgicvkxg"geqpqoke"itqyvj"tcvgu0"Kp"vjg"rgtkqf"4222Î4226."tgcn"IFR"rgt"jgcf"hgnn"kp"49"tg-

ikqpu"cpf"kp"c"hwtvjgt"46"kv"itgy"d{"nguu"vjcp"207'"c"{gct0"Kp"Ýxg"qh"vjgug"tgikqpu."IFR"rgt"jgcf"unkrrgf"dgnqy"97'"qh"vjg"GW"cxgtcig0"

Increases in employment and productivity are raising growth in the regions

The lagging regions are catching up rapidly in terms of productivity. This is particu-

larly evident in new Member States: in the three Baltic States and in parts of Poland

rtqfwevkxkv{"itgy"hqwt"vkogu"hcuvgt"vjcp"vjg"GW"cxgtcig"dgvyggp"3;;7"cpf"42260"Some of these regions, however, start from very low levels. As the employment in

these regions shifts to higher added-value sectors, regional productivity is likely to

rise even if sectoral productivity remains stable.

Kp"4226"vjg"tgikqpu"kp"Rqtvwicn."Itggeg."Ktgncpf"cpf"Urckp"uvknn"jcf"eqpukfgtcdn{"higher productivity levels than the new Member States. Ireland combined the high-

guv" gornq{ogpv" itqyvj" kp" vjg" GW"ykvj" ukipkÝecpv" kpetgcugu" kp" rtqfwevkxkv{0" Tg-

gional economic growth in Spain, on the other hand, relied almost exclusively on

gornq{ogpv"itqyvj"yjkej"uwiiguvu"vjcv"uwej"itqyvj"okijv"dg"fkhÝewnv"vq"uwuvckp"over the long-term. In Portugal, employment rose substantially up to 2001 but has

tgockpgf"Þcv"ukpeg."yjkng" kp"Itggeg"gornq{ogpv"itqyvj"ycu"nkokvgf"wr"vq"4223."dwv"chvgtyctfu"jcu"kpetgcugf"ukipkÝecpvn{0"

Nine out of ten of the more developed regions have seen their employment in-

crease and almost as many saw their productivity increase. Nevertheless, between

3;;7"cpf"4226."rtqfwevkxkv{"fgenkpgf"kp"4;"tgikqpu"kp"Kvcn{."Htcpeg."Urckp"cpf"Igt-many, while employment declined in 16 regions mostly in Eastern Germany and in

Northern England.

Social Cohesion

Employment rates converged at the EU level and the national level …

Between 2000 and 2005, regional employment rates converged within the EU. Yet

in 2005 employment rates in the lagging regions were still some 11 percentage

points lower than those in the rest of the Union.

Over this period certain countries experienced a consistent and widespread in-

crease of employment, while others — such as Romania and Poland — recorded

a decline in the majority of regions, in some cases by more than two percentage

points.

In order to achieve the Lisbon employment rate targets, the EU needs to generate

uqog"4507"oknnkqp"oqtg"lqdu"qh"yjkej"9"oknnkqp"ujqwnf"dg"vcmgp"d{"yqogp"cpf"9"oknnkqp"d{"rgqrng"cigf"77Î860"Etgcvkpi"lqdu"qp"vjku"uecng"yknn"tgswktg"kpxguvogpv"kp"new activities matched by trained labour to take them up.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONxii

… and disparities in unemployment rates have decreased

Dgvyggp"4222"cpf"4227."wpgornq{ogpv"hgnn"htqo"3506'"vq"3406'"kp"vjg"nciikpi"tg-

ikqpu."vjqwij"kp"39"qh"vjgo"wpgornq{ogpv"kpetgcugf"d{"qxgt"4"rgtegpvcig"rqkpvu0

In the more developed regions, unemployment remained stable between 2000 and

4227"ykvj"c"tcvg" lwuv"dgnqy":'."vjqwij"ykvj"Urcpkuj." Kvcnkcp."Htgpej"cpf"WM"tg-

gions generally experiencing a reduction in the rate and German, Austrian, Dutch

and Belgian regions, some increase.

In 2005, the unemployment rate of women was higher than the one of men in the

EU, but the difference shrank by a third between 2000 and 2005. The gap was big-

gest in Greece, Spain and Italy.

Poverty remains a challenge

The share of the population at risk of poverty remains relatively high in some Mem-

dgt"Uvcvgu0"FgÝpgf"cu"vjqug"jcxkpi"cp"kpeqog"qh"82'"dgnqy"vjg"pcvkqpcn"ogfkcp"kpeqog." kp"4226" vjg"rtqrqtvkqp" hcnnkpi" kpvq" vjku"ecvgiqt{" tgcejgu"ctqwpf"42'" kp"Lithuania, Poland, Ireland, Greece, Spain and Portugal, but only 10% in the Neth-

erlands, the Czech Republic and Sweden. On average, those at risk of poverty in

4226"vqvcnngf"38'"qh"vjg"GW"rqrwncvkqp."qt"ctqwpf"97"oknnkqp"rgqrng0"Vjku"tkum"ku"higher for women, young children, the elderly and the unemployed.

Education levels are increasing but remain low in lagging regions

An important factor in a competitive knowledge economy is an educated and well

swcnkÝgf"yqtmhqteg0"Kortqxgogpvu"qxgt"vkog"ecp"dg"uggp<"vjg"ujctg"qh"{qwpi"rgq-

rng"cigf"47Î56"ykvj"c"wpkxgtukv{"fgitgg"qt"gswkxcngpv" ku" kpetgcukpi"cpf" ku"pqy"cnoquv" vykeg" vjg" rtqrqtvkqp" qh" vjg" qnfgt" igpgtcvkqp" cigf" 77Î860"Jqygxgt." gfw-

cational attainment levels of young people are lagging behind in some Member

States, notably in Romania, the Czech Republic, Italy and Slovakia.

Kp"4227."uqog"45'"qh"rgqrng"cigf"47Î86"kp"vjg"GW"jcf"cp"gfwecvkqp"vq"vgtvkct{"ngxgn."tcpikpi"htqo"57'"kp"Hkpncpf"vq"ctqwpf"32'"kp"Tqocpkc0"Vjg"fkhhgtgpegu"dg-

tween the regions are even bigger and they are not converging. On average, lagging

tgikqpu"jcxg"c"uocnngt"rtqrqtvkqp"qh"rgqrng"cigf"47Î86"ykvj"vgtvkct{"gfwecvkqp0"

Territorial cohesion

Less territorial concentration of EU-27 GDP in the traditional core of Europe…

Evidence suggests that economic prosperity in the EU is becoming less geographi-

cally concentrated: the traditional economic «core» of Europe (the area between Lon-

don, Paris, Milan, Munich and Hamburg) contributed a substantially smaller share of

GW/49"IFR"kp"4226"vjcp"kp"3;;7."yjkng"kvu"ujctg"qh"vjg"rqrwncvkqp"tgockpgf"uvcdng0"This tendency is due to the emergence of new growth centres such as Dublin, Madrid,

Helsinki and Stockholm, but also Warsaw, Prague, Bratislava and Budapest.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION xiii

... but more so at the national level…

Within the Member States, however, economic activity has become more concen-

trated in capital city regions throughout the EU, with the exception of Berlin and

Fwdnkp0"Dgvyggp"3;;7"cpf"4226."qp"cxgtcig"vjg"ecrkvcn"tgikqpÓu"ujctg"qh"pcvkqpcn"GDP increased by 9%, while their population grew by 2%. This trend was particu-

larly strong between 1995 and 2000, especially in Warsaw and Bucharest.

Increasing concentration of population and economic activity in capital city regions

could in the longer term constrain overall economic growth as negative externali-

ties such as increases in housing costs, shortages of business space, congestion

and pollution negatively affect their image and competitiveness. Secondary growth

poles might help to reduce the pressure on the capital city region and promote

higher overall growth potential.

… with a trend towards suburbanisation …

The dominant trend in European cities is towards suburbanisation. Between 1996

and 2001, in 90% of urban agglomerations, population in the suburbs grew at higher

rates than in the core of the city. One third of these urban agglomerations lost popu-

lation over this period, yet most of these cities saw their suburbs grow while the

city centres declined. The suburbanisation of population inevitably places greater

strains on the urban transport system, while the suburbanisation of economic activ-

ity can lead to the economic decline of the traditional city centre.

The concentration of deprivation in urban neighbourhoods remains an issue in many

European cities. Despite the concentration of employment in cities, city dwellers,

gurgekcnn{"vjg"nguu"swcnkÝgf."jcxg"fkhÝewnv{"Ýpfkpi"c"lqd."yjkng"qpg"vjktf"qh"lqdu"ctg"taken by people commuting into the city.

This is combined with the concentration of unemployment in particular city districts.

In these high unemployment districts, other aspects of deprivation are typically

concentrated. This includes low quality housing and inadequate public transport

and other services such as education as well as low income levels and high crime

rates.

… while some rural areas continue to lose population

UkipkÝecpv"qwvyctf"okitcvkqp"htqo"twtcn"ctgcu"ku"uvknn" vjg"rtgxcknkpi"vtgpf"kp"nctig"parts of the EU, notably in the South of Italy, the North of Finland, Sweden and

Scotland, Eastern Germany and in the eastern parts of Poland. The lack of job

prospects outside agriculture and lower living standards drive people, especially

vjg"{qwpi"cpf"swcnkÝgf."vq"uggm"qrrqtvwpkvkgu"gnugyjgtg0"Vjku"jcu"ewowncvkxg"gh-fects on the areas concerned, leaving them with an ageing population and shrink-

ing basic services2.

2 The Rural Development Fund has an important role to play to meet these challenges. See Commu-

nication from the Commission to the Council and the European Parliament on Employment in rural

ctgcu<"enqukpi"vjg"lqd"icr"EQO*4228+:79"Ýpcn"qh"4303404228


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONxiv

… and there is large potential for more cross-border exchanges

Many years of cross-border programmes have improved co-operation between

border regions within the EU-15, especially between the Benelux countries, Ger-

ocp{"cpf"Htcpeg0"Vjg"pgy"kpvgtpcn"dqtfgtu"ctg"pqv"cu"rgtogcdng"{gv"cpf"vtchÝe"Þqyu"ctg"owej"nqygt0"

Increasing the permeability of these borders, both physically and administratively,

yknn"hceknkvcvg"vjg"Þqy"qh"rgqrng"cpf"iqqfu"dgvyggp"vjgug"tgikqpu"cpf"ngcf"vq"vjg"levels of economic exchange matching the economic potential of these regions.

This type of cooperation activity is even more important for the border regions lo-

cated along the external border.

The reform of Cohesion Policy — 2007–2013

The European Spring Council in 2005 indicated that:

“It is essential to re-launch the Lisbon Strategy without delay and re-focus priorities

on growth and employment. Europe must renew the basis of its competitiveness,

increase its growth potential and its productivity and strengthen social cohesion,

placing the main emphasis on knowledge, innovation and the optimisation of hu-

man capital.

To achieve these objectives, the Union must mobilise to a greater degree all appro-

priate national and Community resources — including the cohesion policy — in the

Strategy’s three dimensions (economic, social and environmental) so as better to

tap into their synergies in a general context of sustainable development.”

The bulk of the EU effort to reduce disparities in the EU at the territorial level is

through cohesion policy. This takes the form of a conditional grant, with the condi-

tions attached to the transfers at the level of aims and at the level of the implemen-

tation system. In particular, Member States are required to draw up a medium-term

uvtcvgi{" hqt" vjg"wug"qh" vjg" tguqwtegu." vq" eq/Ýpcpeg"Gwtqrgcp"ckf" htqo"pcvkqpcn"resources, to work in partnership at national, regional and local level, and to re-

spect EU laws and policies. These conditions have resulted in the development of

a shared management system, between the European, national, regional and local

levels: in short, a system of multi-level governance.

Hqnnqykpi"vjg"tghqto"qh"eqjgukqp"rqnke{"kp"4228"hqt"vjg"rgtkqf"4229Î4235."vjg"ockp"aim of cohesion policy remains to reduce disparities between the Member States

and regions through the concentration of resources on the less developed areas.

Hqt"vjg"rgtkqf"4229Î4235."vjg"dwnm"yknn"dg"eqpegpvtcvgf"qp"vjg"rqqtguv"tgikqpu"cpf"eqwpvtkgu<"yjgtgcu"kp"3;:;."78'"qh"cxckncdng"tguqwtegu"ygtg"cnnqecvgf"vq"vjg"nqy-

est income regions, at the end of the new programming period, the proportion will

dg":7'0"Vjg"pgy"Ogodgt"Uvcvgu."yjkej"tgrtgugpv"ctqwpf"43'"qh"vjg"rqrwncvkqp"qh"vjg"GW/49."yknn"tgegkxg"lwuv"qxgt"74'"qh"vjg"vqvcn"qxgt"vjg"rgtkqf0"Jqygxgt."kp"line with the new growth and jobs agenda and in the context of globalisation, cohe-


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION xv

sion policy is putting increasing emphasis on improving the competitive position of

regions in the world economy. Thus, resources are focused on all the regions cop-

ing with structural adjustment and on investment with a particular emphasis on the

cluster of activities around research, innovation, and the information society and

business development.

Vjg"tguwnv"qh"vjgug"ckou"ku"vjcv."kp"vjg"rgtkqf"4229Î4235."eqjgukqp"rqnke{"yknn"rwt-sue everywhere the same growth and jobs agenda, but with the intensity of support

htqo"vjg"Wpkqp"tgÞgevkpi"vjg"pggfu"cpf"cxckncdng"tguqwtegu"qh"Ogodgt"Uvcvgu"cpf"regions. The outcome of the negotiations on the Financial Perspective for the pe-

tkqf"4229Î4235"yjkej"tguwnvgf"kp"c"oclqt"cnnqecvkqp"vq"eqjgukqp"rqnke{"*57'"qh"vjg"total EU budget) suggests that there is a high degree of political consensus around

this system for delivering Community priorities.

Delivering Europe’s new growth and jobs strategy

The generation of growth and jobs has historically been at the centre of EU cohe-

ukqp"rtqitcoogu"cpf"vjg"tghqto"qh"vjg"rqnke{"hqt"4229Î4235"jcu"uqwijv"vq"tgkp-

force this dimension.

A new strategic approach

A more strategic approach based on European priorities will frame the process

of implementation at EU level of cohesion policy, at the national level and then

down to the regional and local level. This should contribute to increased economic

effectiveness, as well as increasing transparency and facilitating political account-

ability. This is the approach set out in the Community Strategic Guidelines, which

tgÞgev"vjg"rtkqtkvkgu"ugv"d{"vjg"tgpgygf"Nkudqp"uvtcvgi{"cpf"yjkej"etgcvg"kp"vwtp"the framework for the preparation of the national strategies under cohesion policy

and programmes.

Earmarking

Member States decided in December 2005 that the authorities responsible for pre-

paring the new generation of cohesion programmes should «earmark» a certain

proportion of the resources for the key investments linked to the renewed strategy

hqt"Itqyvj"cpf"Lqdu"*T(F"cpf"kppqxcvkqp="kphtcuvtwevwtgu"qh"Gwtqrgcp"korqtvcpeg="kpfwuvtkcn"eqorgvkvkxgpguu="tgpgycdng"gpgtikgu."gpgti{"ghÝekgpe{."geq/kppqxcvkqpu="jwocp"tguqwtegu+."cpf"kp"rctvkewnct"82'"kp"vjg"ngcuv"fgxgnqrgf"tgikqpu"cpf"97'"in other regions.

According to the programming documents available for this report, these targets

jcxg"dggp"nctign{"tgcejgf0"Kp"vjg"GW/49"vjg"cxgtcig"rtqrqtvkqp"qh"vjg"tguqwtegu"earmarked for key Lisbon investments is 61.2% under the Convergence objective

cpf"9809'"wpfgt"vjg"tgikqpcn"eqorgvkvkxgpguu"cpf"gornq{ogpv"qdlgevkxg0"Qxgtcnn."ctqwpf"Ú"422"dknnkqp"yknn"dg"cnnqecvgf"vq"vjgug"kpxguvogpvu0"Eqorctgf"vq"vjg"rtgxk-qwu"rgtkqf."vjku"tgrtgugpvu"cp"kpetgcug"qh"oqtg"vjcp"Ú"72"dknnkqp0"


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONxvi

Dgvvgt"tgiwncvkqp<"ukornkÝecvkqp"cpf"rtqrqtvkqpcnkv{

Yjkng"vjg"wug"qh"vjg"tguqwtegu"qh"eqjgukqp"rqnke{"pggfu"vq"hwnÝn"vjg"uvcpfctfu"qh"eqpvtqn"cpf"iqqf"Ýpcpekcn"ocpcigogpv."korqtvcpv"uvgru"jcxg"dggp"vcmgp"vq"uvtgco-

line legislation and simplify rules for managing cohesion policy. In particular:

One set of management rules

Vjgtg"ku"pqy"c"ukping"Eqookuukqp"korngogpvkpi"tgiwncvkqp"hqt"vjg"4229Î4235"rtq-

gramming period, which replaces 10 regulations for the 2000–2006 programming

rgtkqf0"Vjg"twngu"hqt"ocpcigogpv"qh"rtqitcoogu"Ýpcpegf"d{"vjg"Eqjgukqp"Hwpf"have been aligned with those of the Structural Funds. This will make managing the

Funds easier and less costly.

One set of eligibility rules for expenditure

Ogodgt"Uvcvgu"yknn"dg"cdng"vq"wug"pcvkqpcn"gnkikdknkv{"twngu"hqt"eq/Ýpcpegf"rtqlgevu."tcvjgt"vjcp"vyq"ugvu"qh"twngu"cu"kp"vjg"rcuv"*qpg"hqt"Eqoowpkv{"eq/Ýpcpegf"rtqlgevu"cpf"one for nationally-funded projects), thus greatly simplifying project management.

UkornkÝecvkqp"qh"Ýpcpekcn"ocpcigogpv

Vjg"Ýpcpekcn"rncpu."vjg"ugvvkpi"qh"vjg"kpvgtxgpvkqp"tcvg"cpf"GW"tgkodwtugogpvu"yknn"now be made at a higher level (at programme or priority axis level, instead of at meas-

ure level, as before). This will simplify management of the programmes, and limit the

ecugu"yjgtg"Ýpcpekcn"rncpu"pggf"vq"dg"oqfkÝgf."vjwu"ikxkpi"c"ykfgt"cwvqpqo{"vq"vjg"national authorities in charge of the management of operational programmes.

Kpetgcugf"rtqrqtvkqpcnkv{"cpf"ukornkÝecvkqp"hqt"eqpvtqn"u{uvgou

For smaller programmes, a part of the requirements on control arrangements can

be carried out by national bodies established according to national rules, thus re-

ducing the need to comply with certain Community audit requirements.

Clearer rules on information and communication

Ekvk¦gpu"cpf"rqvgpvkcn"dgpgÝekctkgu"qh" vjg"Hwpfu" kp"cnn"Ogodgt"Uvcvgu"yknn"jcxg"the same access to information on funding opportunities and awards from cohe-

ukqp"rqnke{." vjwu"tgfwekpi"vjg"vkog"cpf"ghhqtv" vjg{"jcxg"vq"urgpf"kp"Ýpfkpi"uwej"information.

Electronic government in practice

Hqt"vjg"Ýtuv"vkog."fqewogpv"gzejcpig"dgvyggp"vjg"Ogodgt"Uvcvgu"cpf"vjg"Eqo-

mission will be done only electronically. This marks the beginning of a new era in

terms of electronic data exchange and e-Governance. It will save much time in

running programmes and will reduce the risk of disagreement between the Com-

mission and Member States on the amount and type of information to be provided.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION xvii

Cohesion policy and the projection of EU values and policies

Countries outside the Union have been expressing increasing interest in, and a

desire to learn more about, European cohesion policy as a means of fostering more

balanced regional development. In particular:

On 15 May 2006, a Memorandum of Understanding on regional policy co-

operation was signed between the Commission and China. The Chinese au-

thorities made a balanced regional development one of the key priorities of

their 5 year development plan and are increasingly concerned with widening

regional income gaps. Since 2005 China and India have also agreed joint ac-

tion plans and signed memoranda of understanding in the area of employment

and social policy with the European Commission.

Qp"45"Oc{"4229."c"Ogoqtcpfwo"qh"Wpfgtuvcpfkpi"qp"tgikqpcn"rqnke{"eqqrgtc-

tion was signed with the government of the Russian Federation to exchange

information and best practices on experiences in setting up and implementing

cohesion policy.

Similar approaches are being discussed with countries such as South Africa and

Brazil and with economic integration groupings such as Mercosur. At the same

time European cohesion policy is raising the interest of the United Nations, OECD

and World Bank Committees. A key part of the added value of European cohesion

policy in this context is to underpin European views on such issues as free markets,

gender equality and equal opportunities, sustainable development, and a system

based on participative democracy.

New Challenges

The Berlin declaration on the occasion of the 50th anniversary of the signature of

the Treaties of Rome states:

“There are many goals which we cannot achieve on our own, but only in concert.

Tasks are shared between the European Union, the Member States and their re-

gions and local authorities”.

Growth and employment in Europe require policies which are able to anticipate

and manage new challenges. Some of these challenges are particularly relevant to

cohesion policy since they have an uneven impact on Europe’s territory and may

widen social and economic disparities.

Increasing global pressure to restructure and modernise

Virtually all regions are confronted with the need to restructure, modernise and facil-

itate continuous knowledge-based innovation, in products, management and proc-

esses as well as human capital, to face the challenge of globalisation. Even against

a background of impressive growth rates, regions of the new Member States have

•

•


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONxviii

an economic structure largely concentrated on sectors where competition from the

emerging Asian economies is high. The economic imperative for these regions will

be the anticipation and facilitation of change. This will help minimise the costs of

change and also be an enabling factor for change. For these reasons, anticipative

measures must be taken well in advance to equip and prepare the people and the

regions for change.

Similarly, many regions in the more prosperous Member States have a high share

of employment in traditional sectors, where competitive advantage is largely based

on lower-cost, lower-wage production methods.

Competition based on cost factors alone is not a viable option, and regions need

to modernise and diversify their economic structure into high added-value sectors

by creating the conditions for businesses, and particular SMEs, to adopt and adapt

innovative products and processes, to establish cooperation networks with other

enterprises and with research institutes, to access risk capital, and to internation-

alise their activities.

Leading edge economic activities and talent tend to be geographically highly con-

centrated in a few urban centres that are global players. This is creating opportuni-

ties, but research shows that after a certain size, negative externalities linked to the

concentration of population such as pollution, urban sprawl, and congestion start

to emerge.

There are many regions in the Union which rank among the most competitive and

kppqxcvkxg"tgikqpu" kp" vjg"yqtnf"cpf"yjkej"ctg"dgpgÝvkpi" htqo"inqdcnkucvkqp0"Vjku"has been achieved by investing in new skills, building or attracting new reservoirs

of talent, and favouring networks and clusters. It is by building on these successes

and development strategies that the Union can mobilise all its potential and place

its economy on high-growth, sustainable path.

Climate change

Many regions throughout Europe will be increasingly confronted with the asym-

metric impact of climate change. This will pose serious challenges to agriculture,

Ýujgtkgu"cpf" vjg" vqwtkuo" kpfwuvt{" kp"egtvckp"ctgcu."cpf"yknn" tgswktg"ukipkÝecpv" kp-

xguvogpv"vq"hceg"ftqwijv."Ýtgu."eqcuvcn"gtqukqp"cpf"Þqqfkpi0"Vjgug"ejcpigu"oc{"have disproportionate effects on disadvantaged or low income groups which might

ncem"vjg"ogcpu"vq"cfcrv"vq"vjgo0"UkipkÝecpv"kpxguvogpvu"yknn"cnuq"dg"pgeguuct{"vq"comply with the Community acquis and the emission reduction targets that result

htqo" vjg"Urtkpi"Eqwpekn" qh"Octej"42290"Cnn" cxckncdng"geqpqoke" tgrqtvu" kpfkecvg."however, that the cost of not acting in terms of natural disasters by far exceeds the

costs of reducing greenhouse gas emission to a level that is compatible with the

EU’s objective of limiting climate change to 2 degrees Celsius.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION xix

Vjg"Ýijv"cickpuv"enkocvg"ejcpig"rtqxkfgu"tgikqpcn"geqpqokgu"ykvj"pgy"geqpqoke"incentives and opportunities through eco-innovation, the growth of environmentally

friendly industries and employment in this area.

Increased energy prices

Increased energy prices will affect EU regions in different ways depending on their

gpgti{"okz."geqpqoke"uvtwevwtg"cpf"vjg"gpgti{"ghÝekgpe{"qh"vjgkt"Ýtou0"Kpetgcugf"transport costs tend to hit the geographically peripheral regions, such as the north-

ern parts of Finland and Sweden or the most southern parts of Portugal, Spain and

Kvcn{."cpf"kp"vjg"kuncpfu." kpenwfkpi"Ocnvc"cpf"E{rtwu0"Mg{"ugevqtu"hqt"ocp{"uwej"regions, such as tourism, could be vulnerable to cost increases although this could

dg"qhhugv"kp"vjg"ujqtv/vgto"d{"vjg"ickpu"kp"ghÝekgpe{"htqo"nqy/equv"ckt"ecttkgtu0"Kp-

creases in energy prices have a disproportionate effect on low-income groups and

increase the energy poverty of the disadvantaged.

Fgxgnqrkpi"qt"gzrcpfkpi" tgpgycdng"gpgtikgu"cpf" kpxguvkpi" kp"gpgti{"ghÝekgpe{"provide major opportunities for most regions, with a high local job potential. For

example, it is estimated that the annual revenues of the global solar equipment

industry will increase four-fold in the three years to 2010. Also, increases in energy

prices could encourage growth strategies, especially in the lagging regions, based

on less energy-intensive methods of production.

Emerging demographic imbalances and social tensions

One in three regions in the Union experienced population decline between 2000

cpf"42250"Kp"vjg"oclqtkv{"qh"ecugu."vjku"ycu"fwg"vq"dqvj"pcvwtcn"rqrwncvkqp"fgenkpg"and net outward migration. Projections indicate that natural population growth will

continue to decline, including in many of the lagging regions. These regions will

thus face a double challenge of fostering growth and employment while tackling the

adverse impacts of aging and population decline.

Demographic change and decline puts future employment growth at risk. Until 2011,

vjgtg"ku"uvknn"ueqrg"hqt"ukipkÝecpv"gornq{ogpv"cpf"geqpqoke"itqyvj0"Dgvyggp"4234"cpf"ctqwpf"4239"tkukpi"gornq{ogpv"tcvgu"ecp"dg"gzrgevgf"vq"qhhugv"vjg"fgenkpg"kp"vjg"uk¦g"qh"vjg"yqtmkpi/cig"rqrwncvkqp0"Htqo"4239"qpyctfu."jqygxgt."vjg"ujtkpmkpi"working-age population could lead to stagnation and, subsequently, a reduction in

the absolute level of employment.

In parallel, regions will have to cope with a number of social challenges posed

by skill mismatches (labour market segmentation between high skills/high salaries

and low skills/low salaries, increased immigration) as the economy moves up the

value chain into knowledge based activities, against an environment where tradi-

tional security institutions are eroding.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESIONxx

Pcvkqpcn"rqnkekgu"hceg"kpetgcukpi"fkhÝewnvkgu"kp"mggrkpi"wr"ykvj"the rapid pace of change imposed by these trends.

While public investments are increasingly managed at the sub-national level, the

trend over the past years has been on a declining path as national and sub-national

budgets are confronted with the consequences of an ageing population (reform of

the pension system, more costly systems for health, education and social services)

and economic reform based in part on lower taxation.

In addition, resources which remain available to accompany the modernisation

of the economy are mainly directed towards growth poles. This may create large

diseconomies of agglomeration (congestion, pollution, social segregation, urban

sprawl) on the one hand, and increasing regional disparities on the other.

Next steps

Fwtkpi"4229"cpf"422:"vjg"Eqookuukqp"yknn"fgxgnqr"kvu"crrtqcej"vq"vjg"dwfigvct{"tgxkgy"422:1422;."ugvvkpi"etkvgtkc"hqt"rqnke{"cuuguuogpv."nqqmkpi"cv"hwvwtg"rqnkekgu."testing the viability of different options. Within this framework, and without prejudg-

ing the outcome of the budgetary review, this report indicates a range of challenges

with which cohesion policy may be confronted in the coming years. The Cohesion

Hqtwo."yjkej"yknn"vcmg"rnceg"qp"vjg"4914:"Ugrvgodgt."yknn"rtqxkfg"c"Ýtuv"qrrqtvwpkv{"vq"fkuewuu"vjgo"ykvj"tgngxcpv"uvcmgjqnfgtu0"Oqtg"urgekÝecnn{."vjg"Hqtwo"eqwnf"dg"organized around the following questions.


FOURTH REPORT ON ECONOMIC AND SOCIAL COHESION xxi

Yjcv" nguuqpu"ecp"dg"ftcyp"htqo"vjg"gzrgtkgpeg"qh"rtgrctkpi" vjg"4229Î4235"rtqitcooguA"Kp"vjku"eqpvgzv"cpf"kp"vjg"nkijv"qh"vjg"cpcn{uku"rtqxkfgf"by this report, how far is cohesion policy adapted to the new challenges

Gwtqrgcp"tgikqpu"yknn"hceg"kp"vjg"eqokpi"{gctuA"Hqt"gzcorng<"

How can the regions react to restructuring pressures from dynamic

eqorgvkvqtu"kp"nqy"cpf"ogfkwo"vgej"ugevqtuA"

Ikxgp"ykfg"fkhhgtgpegu"kp"dktvj"tcvgu."fgcvj"tcvgu"cpf"okitcvqt{"Þqyu"at regional level, what is the role of cohesion policy in responding to

fgoqitcrjke"ejcpigA"

Vq"yjcv"gzvgpv"ku"enkocvg"ejcpig"c"ejcnngpig"hqt"eqjgukqp"rqnke{A"

Jqy"ecp"eqjgukqp"rqnke{"hwtvjgt"fgxgnqr"cp"kpvgitcvgf"cpf"oqtg"Þgzkdng"crrtqcej"vq"fgxgnqrogpv1itqyvj"cpf"lqdu"kp"vjku"pgy"eqpvgzvA

How can cohesion policy better promote harmonious, balanced and

sustainable development taking into account the diversity of EU ter-

ritories, such as least favoured areas, islands, rural and coastal areas

but also cities, declining industrial regions, other areas with particular

igqitcrjke"ejctcevgtkuvkeuA

Yjcv"ctg"vjg"korcevu"qh"vjg"ejcnngpigu"kfgpvkÝgf"kp"vjg"tgrqtv"hqt"mg{"elements of social cohesion such as inclusion, integration and oppor-

vwpkv{" hqt" cnnA"Ctg" hwtvjgt"ghhqtvu"pggfgf" vq"cpvkekrcvg"cpf"eqwpvgtcev"vjgug"korcevuA

What are the key future skills that are essential for our citizens in facing

pgy"ejcnngpiguA"

What are the critical competencies that should be developed at the

tgikqpcn"ngxgn"vq"ocmg"tgikqpu"inqdcnn{"eqorgvkvkxgA

Following the appraisal of the previous questions, what is the assessment

qh"vjg"rqnke{"ocpcigogpv"u{uvgo"hqt"vjg"rgtkqf"4229Î4235A

Ikxgp" vjg" pggf" hqt" ghÝekgpv" ocpcigogpv" qh" eqjgukqp" rqnke{" rtq-

grammes, what is the optimum allocation of responsibility between the

Community, national and regional levels within a multi-level governance

u{uvgoA"

How can cohesion policy become more effective in supporting pub-

nke"rqnkekgu" kp"Ogodgt"Uvcvgu"cpf" tgikqpuA"Yjcv"ogejcpkuou"qh"fg-

livery could make the policy more performance-based and more

wugt/htkgpfn{A

How can we further strengthen the relationship between cohesion pol-

icy and other national and Community policies to achieve more and

dgvvgt"u{pgtikgu"cpf"eqorngogpvctkvkguA"

What are the new opportunities for co-operation between regions, both

ykvjkp"cpf"qwvukfg"vjg"GWA

•

-

-

-

•

-

-

-

-

•

-

-

-

-

Pro mille (annual average)

< -5

-5 - -2

-2 - 0

0 - 2

2 - 5

>= 5

EU-27 = 3.3 EU-27 = 0.35 EU-27 = 3.0

Source: Eurostat, DG REGIO

© EuroGeographics Association for the administrative boundaries

Components of population growth, 2000-2003

Total population change Natural population change Net migration

0 1,000 Km

% of total employment

<= 0.50

0.50 - 1.00

1.00 - 2.00

2.00 - 3.00

> 3.00

no data

NACE D-30, 31 and 32Source: Eurostat

NACE D-27Source: Eurostat

NACE D-17, 18 and 19Source: Eurostat


Employment in speci�c manufacturing sectors, 2005

Electrical, audiovisual and ICT equipment Basic metals Textiles, clothing, leather and leather products

0 1,000 Km

Guyane (FR)

Guadeloupe Martinique Réunion

Canarias (ES)

Açores (PT)

Madeira

gRe oi GI Sge oi GI SR

Data from Spain 1991 (Madrid 1996); France 1999; Ireland, the

Netherlands, Poland and Romania 2002. Data partly available

Unemployment disparities in inner city areas

Standard deviation of neighbourhood unemployment rates 2001

annual average 1996-2001, in %

Very small neighbourhood di�erences (StdDev 0.29 - 1.88)

Small neighbourhood di�erences (StdDev 1.89 - 2.78)

Average neighbourhood di�erences (StdDev 2.79 - 3.67)

Large neighbourhood di�erences (StdDev 3.68 - 5.35)

Very large neighbourhood di�erences (StdDev 5.36 - 15.97)

Data not available

Source: Urban Audit Data Base

from Austria, Germany, Italy, the Netherlands and Slovenia.

Data not available from Bulgaria, Estonia, Latvia, Lithuania and

Malta.

0 500 Km


5 000 000

1 000 000500 000100 000

Size of circle is relative

to population in corecity* in 2001

* Greater London and Pariset petite couronne

Average risk (excluding areas below sea level)

Source: JRC

Flood risk analysis


0 500 Km


Guyane (FR)


Canarias (ES)

Açores (PT)

Madeira

0 - 0.35

0.35 - 0.75

0.75 - 1.30

1.30 - 2.20

2.20 - 4.00

no data

% of total population aged 25- 64

< 16.95

16.95 - 25.05

25.05 - 33.15

33.15 - 41.25

>= 41.25

no data

EU-27 = 29.1Standard deviation = 16.12

Source: Eurostat (LFS)


< 36.95

36.95 - 44.65

44.65 - 52.35

52.35 - 60.05

>= 60.05

no data




< 16.10

16.10 - 20.30

20.30 - 24.50

24.50 - 28.70

>= 28.70

no data




Educational attainment levels, 2005

Low Medium High

0 1,000 Km

Guyane (FR)


Canarias (ES)

Açores (PT)

Madeira


0 500 Km


Index, EU-27 = 100

< 50

50 - 75

75 - 90

90 - 100

100 - 125

>= 125

no data

Source: Eurostat

GDP per head (PPS), 2004


Guyane (FR)

Açores (PT)

Madeira

% of total ERDF allocations

0 - 5

5 - 10

10 - 15

15 - 20

20 - 30

30 - 40

40 - 60

> 60

No Data

Expenditure for R&D, innovation and information society at regional level:averages 2000-2006

Sources: Infoview, DG REGIO-GIS


0 500 Km


CZ (excl. Praha), HU, PL, SK (excl. Bratislavský):only national data available

Canarias (ES)


Guyane (FR)

Açores (PT)

Madeira

% of total ERDF allocations

0 - 5

5 - 10

10 - 15

15 - 20

20 - 30

30 - 40

40 - 60

> 60

No Data

Expenditure for R&D, innovation and information society at regional level:averages 2007-2013

Sources: SFC2007 on the basis of programmes receivedas of end of April 2007, DG REGIO-GIS


0 500 Km


BG, RO and SK (excl. Bratislavsky): only national data available

Canarias (ES)

Documents

Foreword - LU