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European Union Economics and International Institutions > Week five - regional and cohesion policy > Flashcards

Week five - regional and cohesion policy Flashcards

1
Q

what are the two main theoretical frameworks for economic activity

A

1) neoclassical model
- effective functioning of the market leads to convergence
- self-correcting in the long-run
- economic policy should eliminate hurdles to factor mobility
2) agglomeration economies
- neoclassical theory of limited value
- development is accumulative
- economic policy should intervene to reduce divergence

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2
Q

the degree of agglomeration in economic activity depends on the magnitude of which two forces

A
  • agglomeration forces: those the promote spatial concentration in economic activity
  • dispersion forces: those that promote spatial dispersion in economic activity
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3
Q

example of something that causes spatial dispersion in economic activity

A
  • transportation costs
  • trade protectionism
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4
Q

what are the two main agglomeration forces

A
  • abundant demand
  • reduction in production costs
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5
Q

what are the implications of a reduction in protectionism and transport costs

A
  • dominance of agglomeration forces
  • divergence between advantaged regions and those less developed
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6
Q

is agglomeration stronger or weaker than dispersion

A

stronger (most developed centres have the advantage)

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7
Q

what are the arguments in favour of regional policy

A
  • equity and solidarity: income redistribution and unemployment reduction
  • political: social, territorial and political cohesion
  • improve the coordination of national regional policies
  • benefits of the economic activity of other regions
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8
Q

what are the main regional disparities in the EU

A
  • less developed rural areas
  • industrial decline: textile, coal, iron…
  • congested areas
  • border areas
  • increase in disparities with the entry of Eastern countries
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9
Q

why has economic development been very uneven throughout the territory

A
  • differences in physical characteristics and factor endowment
  • external shocks
  • government decisions
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10
Q

what are the five main stages of CRP in the EU

A
  • phase 1 (1957-1974): Rome Treaty –> reconsider CRP after first enlargement
  • phase 2 (1975-1987): creation of European Regional Development Fund
  • phase 3 (1988-2006): consolidation of CRP (redistribution and cohesion policy/agenda 2020)
  • phase 4 (2007-2013): relationship with growth and competitiveness objectives - renewed lisbon strategy
  • phase 5 (2014-2020): relationship to 2020 strategy
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11
Q

what was the rome treaty’s relation to the CRP

A
  • recognised that one of the objectives should be the promotion of harmonised economic activity
  • emphasis on the creation of customs union
  • no large inequalities between founding members
  • confidence in the market as a mechanism that self-corrects
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12
Q

what were the two instruments for CRP in the Rome treaty from 1957-1974

A
  • european social fund (ESF): objective to promote employment
  • european investment bank (EIB): investment in less developed regions
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13
Q

what events increased the relevance of CRP between 1957-1974

A
  • enlargement (UK and Ireland joined), economic crisis in 1973
  • increasing concern for CRP
  • thompson report (1973): uneven regional development, more emphasis should be put on reducing disparities, solving problems of rural areas and industrial restructuring
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14
Q

when was the creation of the european regional development fund and what is it

A

1975, to support regional policies of member states and budget instrument to support less developed regions and declining industrial areas

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15
Q

what increased the relevance of the CRP between 1975-1987

A
  • the creation of the european regional development fund
  • 1981: first report of the impact of the policies
  • enlargements: Greece (1981) and Spain and Portugal (1986)
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16
Q

when was the single european act signed and what is the objective of it

A

1986, creation of a single market

17
Q

what happened to the structural funds within the CRP between 1988-1999

A

reformation of the structural funds: ESF + EAGGF-Guidance + ERDF integrated into a global cohesion policy based on:
1) partnerships (between commision/national/local/regional)
2) additionality: european spending must not replace national spending, only complement it
3) programming: multiannual national programs aligned on EU priorities
4) concentration: focussing the interventions on the less developed regions and specific problems

18
Q

what else happened to the CRP between 1988-1999

A
  • the budget allocation doubled in real terms
  • treaty on the EU (Maastricht): new funding (cohesion fund), new institution (committee of the regions
19
Q

what happened to the CRP between 2000-2006

A
  • more enlargement (new countries will be given funding prior to joining)
  • CRP loses weight in the budget as austerity increases on the european level
  • new reform of SF: spending is concentrated on regions that need it the most
  • new reform is linked to the lisbon strategy (agenda 2020)
  • change in priorities towards growth, employment and innovation
20
Q

what happened to the CRP between 2007-2013

A
  • new projects linked to growth and employment objectives (renewed lisbon strategy)
  • more coordination of financial instruments
  • bigger concentration in a more limited number of regions
21
Q

what happened to the CRP between 2014-2020

A
  • simplified rules and focus more on outcomes
  • europe 2020 strategy, growth: smart, sustainable, inclusive
  • more focus on: research/innovation, making SMEs more attractive, moving towards a low- carbon economy, digital agenda
22
Q

what were the five CRP objectives for 2020

A

1) 75% employment for those aged 20-64
2) invest 3% of EU’s GDP in R&D
3) climate:
- 20% reduction in greenhouse gas emissions relative to 1990
- 20% of energy from sustainable sources
- increase energy efficiency by 20%
4) reduce school drop out rate under 10%
5) fight against poverty and social exclusion

23
Q

what are the three structural funds in the CRP up to 2006

A
  • ERDF: infrastructure, innovation and investments
  • ESF (european social fund): skill upgrading and employment promotion
  • EAGGF-Guidance: rural development and improvement of agricultual infrastructure
24
Q

what are the cohesion funds and when were they created

A
  • 1993, to help less developed countries meet the Maastricht convergence criteria, aimed at transport and environmental infrastructure and renewable energy development
  • national, not regional
  • distribution based on population, GDP
25
Q

what is the EIB

A

loans for projects that contribute to growth, employment, regional cohesion and environmental sustainability

26
Q

what are pre-accession funds for

A

funding for countries waiting to join the EU

27
Q

what do the structural funds fund

A

primary objectives and commission initiatives

28
Q

three objectives of the structural funds

A

1) promoting development in less developed regions
2) economic and social restructuring
3) development of human resources (labour market)

29
Q

what did the CRP focus on between 2007-2013

A
  • new regional policy focussed on promoting growth and employment
  • making countries and regions more attractive for investments
  • encouraging innovation
  • increasing employment and its quality
30
Q

between 2007-2013 what three objectives was funding reallocated to

A

1) convergence
- reduce regional disparities
2) regional competitiveness and employment
- create jobs by making areas more attractive
3) european territorial cooperation
- encourage cooperation across borders

31
Q

what were the five structural and investment funds between 2014-2020

A
  • structural: ERDF + ESF
  • cohesion funds
  • european agricultural fund for rural development + european maritime and fisheries fund
32
Q

what is the european solidarity fund and when was it used

A
  • solidarity with the regions affected by natural disasters, 2014-2020
33
Q

when was the CRP created

A

1988

34
Q

assessment of CRP

A
  • difficult to isolate the effects of the CRP
  • positive results in terms of GDP per capita
  • reduction of disparities in rates of unemployment
  • disparities increased with the last enlargements
35
Q

what sources have provides evidence of the effect of cohesion policy on the objectives of the program

A
  • quantitative information (output produced or results)
  • evidence of evaluations of particular programmes
  • evidence from macroeconomic models
  • independent research studies using econometric techniques
36
Q

actual figures (examples) of the effects of the CRP

A
  • for the period of 2000-2006, each euro used in SFs in objective 1 regions supposed:
  • an increase of 1.33 euros in GDP
  • a boomerang effect in the most developed regions: 1/4 of spending benefits other areas in the EU

2007-2013
- 600,000 jobs created, 1/3 in SMEs
- subsidies to around 200,000 SMEs
- access to clean drinking water for 3.2 million citizens

37
Q

which objective regions are the most benefitted

A
  • objective 1 regions

European Union Economics and International Institutions (5 decks)

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