The document discusses the evolving objectives and strategies of EU regional policy. It notes that the objectives of regional policy have changed over time based on different development theories, starting from growth pole and center-periphery theories to newer focuses on issues like innovation, human capital, and sustainable growth. The strategies and funds used to achieve regional policy goals have also undergone constant mutation, but have been hampered by a complex system and budget paralysis. National strategies are seen as crucial but often suboptimal in effectively using funds and accountability. Upcoming budget reforms aim to better align regional policy with current priority issues like energy and R&D while improving oversight.

1. 5/24/2011 1 Thinking 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 Ferrer CEPS

2. 5/24/2011 2 Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu GENERAL OBJECTIVES OF THE EU THE 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 Security Present motto: Smart, sustainable and inclusive growth - EUROPE 2020 strategy 3rd attempt to implement the ‘failed’ Lisbon Agenda and Gothenburg declarations 2000-2010

3. 5/24/2011 3 Thinking 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

4. 5/24/2011 4 Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium www.ceps.eu

5. 5/24/2011 5 Thinking 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

6. 5/24/2011 6 Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu Evolving objectives of regional policy Transfers for economic and social cohesion Mainly infrastructures & training Objectives, strategy mainly national – no strong guidelines 80s-90s Increasing focus on growth – search for fundamental growth factors Raising importance of R&D, SMEs Increased importance of strategies National Strategic Reference Frameworks 00-10 2010- 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’

7. 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 5/24/2011 7 Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium www.ceps.eu Regional Policy today

8. 5/24/2011 8 Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium www.ceps.eu 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

9. 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 CONTROL 5/24/2011 9 Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu Budget reform coming

10. 5/24/2011 10 Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium www.ceps.eu 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 acquisand 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

11. 5/24/2011 11 Thinking 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

12. 5/24/2011 12 Centre for European Policy Studies (CEPS) • Place du Congrès 1, 1000 Brussels, Belgium www.ceps.eu

13. Thank you Recommended reading: FAO/World Bank working paper: The evolution and impact of EU regional and rural policy www.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 Development THE EU ADDED VALUE OF AGRICULTURAL EXPENDITURE – FROM MARKET TO MULTIFUNCTIONALITY – GATHERING CRITICISM AND SUCCESS STORIES OF THE CAP Study 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 5/24/2011 13 Thinking ahead for Europe • Centre for European Policy Studies (CEPS) • www.ceps.eu