1. Second Cohesion Report 6PRFR 1 Regional Policy The Maastricht treaty calls for a report every 3 years analysing disparities in the EU. This 2nd report goes further than before in being a first analysis of the situation in a Union of 27. Three parts : ­ Situation and trends ­ Contribution of community policies to economic and social cohesion ­ Economic and social cohesion policy - the results Plus : ­ Conclusions and Recommendations Introduction

2. Second Cohesion Report 6PRFR 2 Regional Policy An EU of 27: a bigger challenge The disparities will increase... 1. 1. Situation and trends surface area 34% population 28% GDP 5% average GDP/head 18% of the 105 million inhabitants of candidate countries, more than 98 million will live in regions with a GDP per head less than 75% of the average

3. Second Cohesion Report 6PRFR 3 Regional Policy In EU 27, more than 1/3 of the population will live in countries below 90% of the EU average per capita GDP, as against 1/6 in EU15 10% of the EU15 population, living in the richest regions, have an income 161% of the average (UE15); the 10% in the least prosperous regions are at 61% In an enlarged EU, the 10% living in the richest regions will have 177% of the average: the 10% in the poorest regions just 31% An EU of 27: a bigger challenge Disparities will increase... 1. 1. Situation and trends

4. Second Cohesion Report 6PRFR 4 Regional Policy The richest and least prosperous regions in the EU Source: Eurostat, DGREGIO calculations * 10% + et 25% + : the regions with the highest GDP/head (PPS), representing 10%, resp. 25% of the total EU population * 10% - and 25% - : the regions with the lowest GDP/head (PPS), representing 10%, resp. 25% of the total EU population 1998 1988 3.42.0 Ratio 44.368.366.625 % - 152.0137.1134.125 % + 5.72.62.8Ratio 31.161.055.110 % - 176.9160.9155.310 % + UE27 UE15Regions

5. Second Cohesion Report 6PRFR 5 Regional Policy < 30 30-50 50-75 75-100 GDP per head by region (PPS) 1998 100-125 >=125 No data

6. Second Cohesion Report 6PRFR 6 Regional Policy An EU of 27: a bigger challenge Three groups of Member States... GDP per head (compared with the enlarged EU average): first group: (16% of the EU population) : 40% of average (3 Baltic States, Poland, Hungary, Roumania, Bulgaria, Slovakia) second group: (13% of the EU pop.) : 80% of average (ES, GR, PT plus Cyprus, Malta, Slovenia, Czech Republic) third group: (71% of EU pop.) 120% of average (remaining Member States) The average GDP/head will drop by 18.5% 1. 1. Situation and trends

7. Second Cohesion Report 6PRFR 7 Regional Policy GDP per head (PPS) 1999 average EUR-26 average group 1 average group 2 average group 3

8. Second Cohesion Report 6PRFR 8 Regional Policy EU15: disparities in development have been reduced in GR, ES, PT: GDP per head has increased from 68% of the EU15 average (1988) to 79% (1999) = a convergence of one-third …between regions somewhat less: nearly one-sixth infrastructure in Obj1 regions closer to the average on the other hand…... other factors of competitiveness remain weak 1. 1. Situation and trends

9. Second Cohesion Report 6PRFR 9 Regional Policy Employment : employment rate: in 4 Member States is more than 70%; EU15 average is 62% 10% of EU pop. in regions having 44% one woman in three in EU works part-time womens employment rate 19 percentage points below mens EU15: ……a long way to go 1. 1. Situation and trends

10. Second Cohesion Report 6PRFR 10 Regional Policy Social cohesion: unemployment: small reduction in regional disparities (though rate is more than 20% in some southern regions); long term unemployment at 46% in EU15 youth/women - umemployment but increase in precarious forms of work poverty: 18% below the income threshold (which is 60% of the median income in each Member State) EU15: ……a long way to go 1. 1. Situation and trends

11. Second Cohesion Report 6PRFR 11 Regional Policy zone Yorkshire/Franche Comté/ Hamburg: 14% of EU territory, 33% of population, 47% of EU15 GDP….. in the US: 4 distinct poles of international significance productivity 2-4 times greater than in peripheral areas a new, eastern periphery greater environmental pressures Economic activity in the Union is heavily concentrated... 1. 1. Situation and trends

12. Second Cohesion Report 6PRFR 12 Regional Policy Core and Peripheral Regions Core Regions Peripheral Regions Other Regions Source : IRPUD - DG REGIO

13. Second Cohesion Report 6PRFR 13 Regional Policy Spatial divides: urban areas –regional development poles –more evident social divide rural areas –more influenced by cities –the population is abandoning cities and employment is diversifying the border regions of the EU15 (25% of population) have improved their average; 60% of pop. in candidate countries live in border regions cohesion for ultraperipheral regions, islands, and mountainous zones Greater territorial imbalance... 1. 1. Situation and trends

14. Second Cohesion Report 6PRFR 14 Regional Policy The labour market in the candidate countries unemployment is 10.2% (9.3% in EU15) employment rates close; higher for women even if more are leaving the job market rate of employment high in traditional industries even after losing 20-50% of jobs 22% of employment in agriculture (4.5% in EU15) productivity remains low employment in service industries - high in the capital cities 1. 1. Situation and trends

15. Second Cohesion Report 6PRFR 15 Regional Policy < 5.55 5.55 – 8.25 8.25 – 10.95 10.95 – 13.65 >=13.65 Unemployment rate by region, 1999 1999

16. Second Cohesion Report 6PRFR 16 Regional Policy <9 9-39 GDP per person (EUR) employed in Agriculture, 1998 69-99 >=99 No data 39-69

17. Second Cohesion Report 6PRFR 17 Regional Policy Demographic changes and the labour market Declining population growth rates in EU15 and absolute natural decline from 2008; population is already declining in many candidate countries population ageing; and decline in working age population (by 19 million between 2010 and 2025) questions of migration to EU15 and changes in labour force participation rates in EU 1. 1. Situation and trends

18. Second Cohesion Report 6PRFR 18 Regional Policy Not before 2025 Between 2015 and 2025 Between 2005 and 2015 Between 1995 and 2005 Forecast decline of the labour force

19. Second Cohesion Report 6PRFR 19 Regional Policy 2. Contribution of community policies How they contribute to cohesion... Providing the best framework for cohesion -economic and monetary union means macro-economic stability -achieving the internal market fairer competition CAP: rural development funding RTD policy: still too concentrated in the core and more competitive regions TENs: a tool for balanced spatial development Environment : sustainable development

20. Second Cohesion Report 6PRFR 20 Regional Policy The EU s financial effort: 0.27% of GDP in 1989 up to 0.46% in 1999 1.5% of GDP in Spain 2.4% of GDP in Portugal (10% of investment) 3.5% of GDP in Greece (10% of investment) concentration: 41% of the population eligible for Obj. 1&2 (was 50%) 3. Cohesion Policy: the Results The contribution of structural policy

21. Second Cohesion Report 6PRFR 21 Regional Policy 6th PR: «1/3 of the convergence would not have taken place without the Structural Funds» in Obj. 1, GDP per head from 63% to 70% of EU average (1988-1998): Increase in GDP due to structural interventions – 9.9% in Greece – 8.5% in Portugal – 3.7% in Ireland – 3.1% in Spain in Obj. 2 regions: a reduction in the unemployment gap vis à vis the rest of EU infrastructure: support for SME s (300,000 jobs created net);RDT; training; education 3. Cohesion Policy: the Results The impact of structural policy

22. Second Cohesion Report 6PRFR 22 Regional Policy Cross-border and transnational cooperation Partnership Multiannual programming more effective management of regional development policies in Member States Evaluation, a stronger link between grants and results Effective way to mobilise private capital Dissemination of best practice into programmes (mainstreaming) 3. Cohesion Policy: the Results Added value of the Structural Funds

23. Second Cohesion Report 6PRFR 23 Regional Policy The Challenge of a wider EU The disparities will double Greater development gap between the regions A more unbalanced territory Globalisation Knowledge-based economy Demographic structure 4. Conclusions and recommendations

24. Second Cohesion Report 6PRFR 24 Regional Policy 4. Conclusions and recommendations Cohesion Policy: Who is it for? Top priority: regions lagging behind in development The GDP per head criterion? At 75%, the pop. in MS covered by Objective 1 will drop by one half Other regions in difficulty

25. Second Cohesion Report 6PRFR 25 Regional Policy Territorial Priorities The less-developed regions The urban question Diversification in rural areas Cross-border, transnational, and interregional cooperation Areas undergoing industrial restructuring Areas suffering severe geographical or natural handicaps 4. Conclusions and recommendations

26. Second Cohesion Report 6PRFR 26 Regional Policy Economic and Social Priorities More, better quality jobs Support for the new economy and the knowledge-based society Promote social inclusion Equal opportunities 4. Conclusions and recommendations recommendations

27. Second Cohesion Report 6PRFR 27 Regional Policy How do we implement Cohesion Policy ? Targetting Zoning The amounts –4% GDP limit Special cases Type of support - financial engineering 4. Conclusions and recommendations

28. Second Cohesion Report 6PRFR 28 Regional Policy Productivity – towards high value-added sectors – qualifications Infrastructure Sustainable development – management of water resources – limit damage to the environment Technological Research/Development and Innovation 4. Conclusions and recommendations Factors determining real convergence at the regional and national level

29. Second Cohesion Report 6PRFR 29 Regional Policy The challenge of preparing for enlargement Administrative capacity Programming Additionality Evaluation ISPA/PHARE/SAPARD Other policies 4. Conclusions and recommendations

30. Second Cohesion Report 6PRFR 30 Regional Policy 17-19 billion Euros a year for the next 10 years in environment and transport Balance between Cohesion and Structural Funds? Cohesion Fund currently 18% of structural policy expenditure Convergence: a long term process (it could take at least two generations for the poorest regions to catch-up) 4. Conclusions and recommendations The needs of the Candidate countries

31. Second Cohesion Report 6PRFR 31 Regional Policy 10 questions for the debate 4. Conclusions and recommendations 1. What will be the role of cohesion policy in an enlarged Union of 30 Member States? How is it possible to further economic convergence and preserve the European model of society? 2. How should Community policies be made more coherent? How should the contribution of other Community policies to the pursuit of cohesion be improved? 3. How should cohesion policy be modified in preparation for an unprecedented expansion of the Union? Should cohesion policy also address territorial cohesion in order to take better account of the major spatial imbalances in the Union?

32. Second Cohesion Report 6PRFR 32 Regional Policy 10 questions for the debate 4. How can cohesion policy be focused on measures which have a high Community added value? 5. What should be the priorities to bring about balanced and sustainable territorial development in the Union? 6. How should the economic convergence of lagging regions of the Union be encouraged? 7. What kind of Community intervention is required for other regions? 4. Conclusions and recommendations recommendations

33. Second Cohesion Report 6PRFR 33 Regional Policy 10 questions for the debate 8. What methods should be used to determine the division of funds between Member States and between regions? 9. What principles should govern the implementation of Community intervention? 10.What should be the response to increased needs with regard to the economic, social and territorial dimensions of cohesion? 4. Conclusionsand recommendations