1 Workshop n°1: A more focused policy concept: territorial/place based approach and policy value-added 22/06/2009 CSM 1 00/SDR 1

2 THE POLICY CONCEPT: THE NEW PARADIGM OF REGIONAL POLICY OR PLACE-BASED POLICY W1. Policy concept and policy value-added Two objectives Unit of intervention Instruments Method reducing persistent underutilization of potential (efficiency objective) reducing persistent social exclusion (equity objective) places or functional regions, set through the policy process supply of bundles of integrated public goods and services triggering institutional change external intervention through conditional grants eliciting and aggregating local information and preferences Three rationales (= market and government failures) 1.appropriate institutions fail to be chosen by the local elite 2.institutions have a strong inertia 3.high uncertainty on efficient agglomeration patterns calls for verifiable public action

3 I.Union sustainability: WHY SHOULD THE EU DO IT? THREE COMPLEMENTARY RATIONALES a place-based strategy is the only policy model compatible with the EUs limited democratic legitimacy: the alternative to cohesion policy of sectorial non pre-allocated funds is un-feasible II.Taking care of over-the-border interdependencies no Union (with unified markets) can do without a development policy: the EU is blamed if expectations of equal access to opportunities created by market unification and of equal chance to cope with its risks are not met common market rules erode national identities and bonds and call for a feeling of community to be built at a supra-national level it is NOT a cost to pay to preserve market and currency unification, BUT a complementary means to achieve the EU's aim of growth and peace III.Credibly keeping its distance from places, more than what Member States and Regions can do place-based strategy objectives are the modern way to interpret the EU Treaty tasks of promoting harmonious development and reducing disparities W1. Policy concept and policy value-added

4 CONSEQUENCES OF THE POLICY CONCEPT MISCONCEPTIONS AND CLARIFICATIONS Cohesion policy should not be: 2.A policy aimed at convergence (of per capita income) 1.A policy for financial redistribution the fallacy of the renationalization critique: the financial redistribution task would call for an Equalisation Fund the need for intervening in all regions: the EU Treaty, EU citizens expectations and the nature of market failures call for action in all Regions the fallacy of self-proclaimed spatially-blind policies W1. Policy concept and policy value-added 3.A policy constraining natural agglomerations not a proxy for greater efficiency not a proxy for greater social inclusion

5 CONSEQUENCES OF THE POLICY CONCEPT: SOME FEATURES OF THE REFORM From Pillar 1: a conservative territorial allocation of resources: the allocation to places (and their definition) is not a task for the EU but for Member States or NUTS2 Regions; NUTS2 Regions are particularly well placed to play this role; there is no compelling reason to change the 75 per cent of EU GDP threshold separating lagging from non-lagging Regions, but a category of transition Regions should be introduced. From Pillar 5: policy additionality contracts between EU and MS (Regions) should commit to policy added value: The capacity of cohesion policy to truly elicit and aggregate knowledge and preferences at place level should be strongly enhanced through: W1. Policy concept and policy value-added in terms of the 3 rationales of EU interventions in terms of place-based policy innovations From Pillar 6: experimentalism contracts with the EU committing MS (Regions) to this task Commission running Innovative territorial actions (0,1 per cent of total resources) developing the Region for Economic change initiative