1. EU Regional Policy: an overview
DG Regional Policy
European Commission

2. Outline of today’s presentation
What is it EU regional policy?
Why do we bother with a regional policy?
How much does it cost?
What do we spend the money on?
Is it worth it?

3. What is EU Regional Policy?
Regional policy is the vehicle for delivering regional aid
Biggest slice of the EU budget which helps:
poorer regions catch up
areas undergoing economic change to restructure
with the realisation of most other Community policies

4. In billion of EUR, at 2004 prices
EU Budget
COMMITMENT APPROPRIATIONS
BY HEADING
In billion of EUR, at 2004 prices
In %
1a. Competitiveness for growth and employment (research, innovation, competitiveness)
72.1
8,4%
1b. Cohesion for growth and employment (regional policy)
307.6
35,7%
2. Preservation and management of natural resources
(Common Agricultural Policy, rural development, environment)
371.2
43,1%
of which market-related expenditure (CAP)
293.1
34,0%
3. Citizenship, freedom, security and justice
(internal policies; public health, asylum, immigration)
10.3
1,2%
4. The EU as a global partner (humanitarian and development aid)
50.0
5,8%
5. Total administrative expenditure
50.3
6. Compensations Bulgaria and Romania (after accession expected in 2007)
0.8
0,1%
Total commitments
862.4
100
In % of EU-27 GNI
1.045%

5. What is its purpose?
The EU is one of the world’s most prosperous economic zones
But huge disparities exist among the 271 EU regions – weakens the EU’s dynamism
Hence the political goal of reducing the gaps in development

6. How does it do this? ERDF: European Regional Development Fund
Regional policy interventions to reduce disparities and promote
economic convergence are spread through 3 funds:
ERDF: European Regional Development Fund
ESF: European Social Fund
and…
Cohesion Fund (applies to MS with <90% average GNI and covers the new member states as well as Greece and Portugal. Spain is eligible on a transitional basis)
….financing thousands of project across Europe each year

7. Why do we bother? It is in the treaty
“to promote economic and social cohesion by reducing disparities between the regions”
Leaving disparities in place is not an option
that would wreck two of the policies on which Europe’s growth has been based: the single market and the European Monetary Union (EMU)

8. Differences in development in the EU-27
GDP per head as a % of the community average
<50
³ 125

9. EU 27 Member States GDP per capita in PPS in 2006 Source: Eurostat structural indicators EU 27= 100

10. Disparities across the European UnionHi Lo
Ratio
GDP per cap (% EU27 average)
Luxembourg
251%
Bulgaria
33%
7.6*
Population
Germany
82.5 million
Malta
404,000
204
*In US, this difference is only 2.5 and Japan 2

11. How much does it cost? One third of the EU budget 2007-2013 €347 billion over 7 years

12. What does the EU citizen get for this?
The three funds target:
ERDF (€201 billion): regional development, economic decline in industrial or rural areas, competitiveness and co-operation
(ESF) (€76 billion): employment, social inclusion and tackling discrimination
Cohesion Fund (€70 billion): environment and transport
with overarching aim of “boosting growth and employment”

13. What do we spend the money on?
European Regional Development Fund
and Cohesion Fund (€271 billion)
European Social Fund (€76 billion)
Employment
Environment
Transport
Human capital
Adaptability of workers and firms
Social inclusion
Capacity building
Technical assistance
Research/Innovation
Information society
Tourism
Social infrastructure
Culture
Energy
Institutional capacity

14. Does this fit with other EU priorities?
Boosting growth and employment central to the wider EU agenda – “Lisbon Strategy”
Lisbon is the EU’s blueprint for competiveness and sustainable growth
Prioritises:
increasing levels of innovation to help businesses move up the value chain
Bringing more of Europe’s population into employment

15. Boosting growth and jobs: is regional policy putting this into practice?
Concentration of the effort on competitiveness (21st century activities)
Member States must ‘earmark’ resources on such strategic investments (€230 billion now targeted on Lisbon priorities)
Concentration of resources on least prosperous
Regions with GDP per head below 75% of EU average: over ¼ of population
Member States with GDP per head below 90% of average: 13 MS with 25% of population

16. Who gets what? Convergence 81.9% (regions lagging behind the most)
Competitiveness 15.7%
Territorial co-operation 2.4%
Total budget €347bn, which will unlock up to €700bn
A method based on what works: Programming, Partnership
and Decentralised Management

17. Geographical Eligibility for Structural Funds Support 2007-2013
Objective 'Regional
Competitiveness and Employment'
Convergence objective
(Regions < 75% in EU 25)
Convergence objective
statistically affected regions
Objective 'Regional
Competitiveness and Employment'
Phasing-in regions,
"naturally" above 75%
Index EU 25 = 100
Source: Eurostat

18. Who can apply for funds? Huge range of potential recipients:
Businesses including SMEs
Public bodies
Associations
Voluntary groups
All projects considered if meet selection criteria of managing authority of relevant programme
Compulsory publication of beneficiary lists

19. Is it worth it?
Evidence suggests positive contribution to growth, national convergence and reduction of interregional disparities
Ex-post evaluations demonstrate positive employment effects
Clear benefits in terms of regional governance
Since 2000, investments have created some 600,000 net jobs, 160,000 in new Member States.
Every euro invested led to an average € 0.9 in additional funding from public and private sources. In more developed regions, this induced expenditure can go as high as 3 times the initial investment.

20. Some outputs…..
Increasing per capita GDP in Greece, Spain, Ireland and Portugal – ( Greece increased from 74% of the EU average to 88% between 1995 and 2005)
Helping to reduce income disparities between richest and poorest by roughly a sixth (between 2000 and 2005) through sustained high growth
By 2015, it is estimated that regional policy will have generated an additional 440,000 jobs in Poland, as well as contributing an extra 6% to GDP and 21% to investment
Over 44,000 km of road were built or reconstructed in the period The equivalent figure for rail was nearly 12,000 km
Supporting more than 250,000 small businesses in the UK
Over 25,000 RTD co-operation projects were supported in the period

21. What is the added value? Leverage effect of additional resources
Multi-annual planning, partnership, monitoring and evaluation
Support for other EU objectives such as internal market, sustainable development
Ring-fencing public resources
Interregional cooperation and sharing of best practice
But
Complexity of management and control structures
Reality on ground can be very variable
Unclear in some MS if effects are consistent or attributable to policy
Effectiveness of monitoring and evaluation undermined by poor data
Source: Cohesion Report, Bachtler and Gorzelak

22. A success story? Tram system in Athens

23. Regional incubation centre in Ireland

24. The Guggenheim effect in Bilbao

25. Innovation centre in Czech Republic

26. Motorway near San Sebastian

27. Centre for renewable energies in Burgenland

28. Five things to remember
It has successfully reduced the gaps between regions in Europe and made a major contribution to prosperity and democratic stability.
2. It has improved management and governance in the regions by decentralising management and devolving responsibility: the Commission does not select projects!
3. It is, with research, the EU’s biggest budget heading;
4. It works by investing in infrastructure, training, innovation and research. No hand outs.
5. Its success is recognised by all candidate countries and by many
others (China, S. Africa, Russia, Brazil…)

29. THANK YOU FOR YOUR ATTENTION!
For more information…
THANK YOU FOR YOUR ATTENTION!
Any questions?