EU Regional Policy

Question 1

NUTS 1, 2, 3 regions

Answer 1

• Nomenclature of Territorial Units for Statistics with the purpose of dividing up the EU territory for analyses and statistics
• NUTS-2 includes the EU’s basic regions which are also relevant for regional policies

Question 2

Objective 1, 2, 3 regions

Answer 2

Objective 1: less-developed regions, whose GDP per capita is less than 75% of the average of the EU
Objective 2: transition regions, whose GDP per capita is between 75 and 90% of the average of the EU
Objective 3: more developed regions, whose GDP per capita is above 90% of the average of the EU

Question 3

Reasons for EU Regional Policy

Answer 3

• enhance growth, create new job opportunities (in particular sectors)
• solidarity mechanism to reduce gaps between European regions

Question 4

Origins and evolution of Regional Policy

Answer 4

1957: First mention in the Treaty of Rome
1958: Creation of the European Social Fund (ESF)
1975: Creation of the European Regional Development Fund (ERDF)
from 1988 on: adapting to the arrival of Greece (1981), Spain and Portugal (1986), the Structural Funds were integrated into an overarching cohesion policy
1993: Maastricht Treaty introduces the Cohesion Fund, the Committee of the Regions and the principle of subsidiarity
1994–99: Doubling of the resources for regional funds, now equal to a third of the EU budget

Question 5

Constituents of the European Structural and Investment Fund (ESIF)

Answer 5

Addressing gaps:

• ERDF
• ESF

Transport & environment:
- Cohesion Fund

Particular sectors:

• EAFRD (European Agricultural Fund for Rural Development)
• EMFF (European Maritime and Fisheries Fund)
• EUSF (EU Solidarity Fund): natural disasters

Question 6

Differing funding priorities of various EU RP funding cycles over time

Answer 6

e. g.:
- Making enlargement a success
- Focus on growth and jobs
- Smart, sustainable and inclusive growth in the EU

• 2021-2027: Regional development investments will strongly focus on objectives 1 and 2; smarter, greener, carbon-free EU, connected & social EU, EU closer to citizens

Question 7

Determinants of fund allocation

Answer 7

• largely based on GDP per capita, new criteria are added(youth unemployment, low education level, climate change, and the reception and integration of migrants)
• > less red tape, simpler ways to claim payments is aimed for

Question 8

Effectiveness of EU RP on Regional Level: Sala-i-Martin (1996)

Answer 8

• RQ: Compare EU with other federations without a cohesion programme: is EU growth and convergence pattern different?
• Answer: no

Question 9

Effectiveness of EU RP on Regional Level: Boldrin & Canova (2001)

Answer 9

• RQ: Compare EU recipient and non-recipient regions: is growth and convergence pattern different?
• Answer: no

Question 10

Problems of Sala-i-Martin and Boldrin & Canova

Answer 10

• problem with data availability: aggregated NUTS1 and NUTS2 data were used as NUTS3 data were not yet available
• both papers looked at the combined Structural Funds Programme and not specifically at the Objective 1 scheme, which primarily aims at closing the gap in per capita income

Question 11

Effectiveness of EU RP on Regional Level: Cappelen et al. (2003), Ederveen et al. (2002) and Gallo (2008)

Answer 11

Cappelen, Castellacci, Fagerberg and Verspagen (2003), Ederveen, Gorter, de Mooij and Nahuis (2002):
- significant positive impact of structural funds on regional growth

Gallo (2008):
- no positive impact

BUT: potential problems due to (i) data availability, (ii) methods applied

Question 12

Studies on the effectiveness of EU RP on National Level

Answer 12

Midelfart and Overman (1996):
- positive impact of the Structural Funds Programme on industry location and agglomeration

Beugelsdijk and Eijffinger (2005); Ederveen, de Groot and Nahuis (2006):
- positive relationship between Structural Funds Programme spending and GDP-per-capita growth (at least in countries with favourable institutions)

Question 13

Studies on the effectiveness of EU Regional Policy: Becker (2010)

Answer 13

• Investigate structural funds to Objective 1 regions
• 3 periods: 1989-1993, 1994-1999, 2000-2006
• NUTS 2 regions
• RQ: did regions that obtain funding witnessed a growth in their (i) per capita GDP (ii) employment?
• Answers: (i) yes, a growth in per capita GDP,
  (ii) no, no growth in employment (maybe these effects take longer)

Question 14

Studies on the effectiveness of EU Regional Policy: Becker (2012)

Answer 14

• Investigate structural funds and cohesion fund
• 2 periods: 1994-1999, 2000-2006
• NUTS 3 regions
• RQ: did some regions receive too much funding and others too little to be optimal?
• Answers: yes, a reallocation of EU transfers would appear optimal

Question 15

Studies on the effectiveness of EU Regional Policy: Becker (2018)

Answer 15

• Investigate structural funds and cohesion fund
• 4 periods: 1989-1993, 1994-1999, 2000-2006, 2007-2013
• NUTS 2 regions
• RQ:
  (i) did regions that obtain funding witness a growth in their per capita GDP?
  (ii) was the impact smaller (if positive)/negative during the financial crisis?
  (iii) what happens to growth (gains) if the Objective 1 status is lost?
• Answers:
  (i) yes
  (ii) yes, still positive but smaller
  (iii) previous growth gains seem to be largely undone when the Objective 1 status is lost

Question 16

Studies on the effectiveness of European Regional Policy in ‘guaranteeing support’ for the European integration process

Answer 16

Gross et al (2018):
RQ: Does EU regional policy increase regional parties’ support for European integration?
(i) Do regions that get more support are more favourable of EU integration?
(ii) Is there a ‘signalling’ game? Do regional parties become more sceptical on European integration once their region receives less funding?

Answers:

(i) Yes
(ii) No (very important for future!!)