European Economic Integration – 110451-0992 – 2014

1. European Economic Integration – 110451-0992 – 2014 VII Core Policy 3 Cohesion Policy (CP) EU to focus funds for regional development on creating jobs and sustainable growth. Cooperationbetween regions Prof. Dr. Günter S. Heiduk Source: http://ec.europa.eu/regional_policy/index_en.cfm

2. Cohesion Principle: Financial solidarity (to the less prosperous regions and social groups) Cohesion: “The act or state of sticking together tightly” (Merriam-Webster) Cohesion Policy: “…is aiming at ensuring economic, social and territorial cohesion across the EU. Its integrated approach has largely proven to be beneficial to most territories across Europe, taking into account the different parameters that support the development of a region. Even if it is difficult to assess its precise impact, the tremendous contribution that cohesion policy makes to regional development and territorial cohesion in Europe should not be underestimated.” Assembly of European Regions (2010). Cohesion in Europe: Regions Take Up the Challenge, p 3. Transferring resources from wealthier to poorer parts of the EU. “More growth and jobs for all regions and cities in the European Union – this message is in the heart of cohesion policy and its instruments between 2007 and 2013.”EU (2008). Working for the Regions. New development paradigm: Shift of the development strategy from the national level toward the regional/local level (territorialization), thus emphasizing the mobilization of endogenous resources. Leonardi, R. (2006). Cohesion in the EU, 160. New policy design: Multilevel governance Causes of regional inequalities within the EU: Geographic remoteness Enlargement (“shock absorber” for new member states that are exposed to single market competition)

3. Principles • Concentration - of resources on the poorest regions and countries (81.9% of • structural funds) • - of effort (e.g. research and innivation; information society; energy; • environment; transport; health; employment; social inclusion) • - spending (e.g. one programme=one fund; co-financing ceilings) • Programming Multi-annual national programmes; no funding for individual projects • Partnership Collective process (European, regional, local authorities, social • partners, organizations from civil society) • Additionality Financing from the European structural funds may not replace • national spending by a member country. • The Commission agrees with each country upon the level of eligible • public (or equivalent) spending to be maintained throughout the • programming period, and checks on compliance in the middle of the • programming period (2011), and at the end (2016).

4. A brief history of European Regional Policy

5. Structural and Cohesion Funds 1975-2013 5 http://www.openeurope.org.uk/research/regional.pdf

6. Building regions in the EU Eurostat (2010). Regional Yearbook, p 12.

7. NUTS 1 - 3 • The NUTS classification (Nomenclature of territorial units for statistics) is a hierarchical system for dividing up the economic territory of the EU for the purpose of : • The collection, development and harmonisation of EU regional statistics. • Socio-economic analyses of the region • NUTS 1: major socio-economic regions • NUTS 2: basic regions for the application of regional policies • NUTS 3: small regions for specific diagnoses • Framing ofEU regional policies. • Regions eligible for aid from the Structural Funds(Objective 1) have been classified at NUTS 2 level. • Areas eligible under the other priority objectives have mainly been classified at NUTS 3 level. • The Cohesion report has so far mainly been prepared at NUTS 2 level

8. NUTS 1 Regions

9. NUTS 2 Regions

10. NUTS 3 Regions

11. NUTS 1-3 Regions: Examples Germany: NUTS 3 regions (districts) (yellow: urban; white: rural) Italy: NUTS 2 + 3 regions

16. GDP per inhabitants in PPS by NUTS 2 regions, 2010 (% of EU average, EU-27 = 100) Range of the highest to lowest region; capital city market in greenin a country

17. Dispersion of Regional GDP per inhabitant, in PPS, NUTS level 2, 2000 and 2009

18. Employment rate, persons aged 20-64 year sby NUTS 2 regions, 2010

19. Dispersion of regional employment rates (persons aged 15 to 64 years) at NUTS 2 level (%)

20. Unemployment rate, persons aged 15 to 74 year, by NUTS 2 regions, 2011 (%)

21. Dispersion of unemployment rates (persons aged 15 to 74 years) at NUTS 2 level (%)

22. GDP per Inhabitant, in Purchasing Power Standard (PPS), Highest and Lowest NUTS 2 Regions within Each Country, 2008 Source: EUROSTAT, news release, 46/2013.

24. Disposable Income of private households per inhabitant (in PPCS), highest and lowest NUTS 2 regions within each country, 2008

26. Degree of Regional Specialisation by Activity, EU-27 and Norway, by NUTS 2 Regions, 2008 (%, share of non-financial business economic employment)

27. At-risk-of-poverty or social exclusion rate, 2011 and 2012 Source: EUROSTAT, ilc_peps01

28. Regional policy in the past Annual resources of the Structural Funds and the Cohesion Fund, 1988-2006 Regional Policy 2000 – 2006: European Regional Policy is conducted through two main types of funds. On the one hand, there are the European Structural Funds (€ 195 bn), which account for the main share (91.55 %) of Regional Policy expenditure. The Cohesion Fund resources amount to about €2.5 billion per year from 2000 to 2006, (a total of €18 billion at 1999 prices), or 8.45% of Regional Policy expenditure.

29. The Structural Funds 2000-2006 European Regional Development Funds(ERDF), whose principal objective is to promote economic and social cohesion within the European Union through the reduction of imbalances between regions or social groups European Social Fund(ESF), the main financial instrument allowing the Union to realise the strategic objectives of its employment policy European Agricultural Guidance and Guarantee Fund(EAGGF - Guidance Section), which contributes to the structural reform of the agriculture sector and to the development of rural areas Financial Instrument for Fisheries Guidance(FIFG), the specific Fund for the structural reform of the fisheries sector

30. The Structural Funds 2000-2006 Leader achievements: a diversity of territorial experience EQUAL

31. Regional Policy, 2000 – 2006, 213 billion Euro European Structural Funds: 195 billion Euro ·Objective 1:70% of the funding goes to regions whose development is lagging behind (GDP per capita < 75% of EU-Average). They are home to 22%of the population of the Union. Objective 2: 11.5% of the funding assists economic and social conversion in areas experiencing structuraldifficulties. 18% of the population of the Union lives in such areas. Objective 3: 12.3% of the funding promotes the modernization of training systems and the creation of employment outside the Objective 1 regions. Community initiatives:5.35% of the funding is spent on Community Initiatives seeking common solutions to specific problems, such as: ·        cross-border, transnational and interregional cooperation (Interreg III); ·        sustainable development of cities and declining urban areas (Urban II); ·        rural development through local initiatives (Leader +); ·        combating inequalities and discrimination in access to the labor market (Equal). Fisheries: 0.5% are allocated to the adjustment of fisheries structures outside Objective 1 regions. Innovation: 0.51% of funds are spent as provisions for innovative actions to promote and experiment with new ideas on development. Cohesion Fund: 18 billion Euro - improving the environment and developing the transport infrastructure in Member States whoseper capita GNP is below 90% of the Community average.

32. Structural Funds by 15 „Old“ Member States, 2000 – 2006 (billion Euro)

33. Structural Funds by 10 “New“ Member States, 2004 – 2006 (billion Euro)

34. Results of EU Cohesion Policy(figures from 2000-2006 period) • 8400 km of rail built or improved • 5100 km of road built or improved • Access to clean drinking water for 20 million more people • Training for 10 million people each year • Over 1 million jobs created • GDP/capita up 5 % in newer Member States Source: European Commission, General presentation on proposals for Cohesion Policy 2014-2020,

35. Evaluating the Regional and Cohesion Policy Criteria: Beta convergence by a regression analysis (per capita income of a chosen period of time is estimated of a function of the initital level of per capita income) Indicator: Growth of GDP per head Problems: - Causality between growth and regional/cohesion policy measures - Dependency on country/region-specific environment - Evaluation of qualitiative effects (e.g. solidarity) - Defining regions (esp. regions without governmental institutions) - Territorialization of policy measures - Multilevel governance and administrative capacity EU‘s conclusion regarding the first phase: “ Between 1994 and 2001, growth of GDP per head in objective 1 regions taken together average almost 3% a year in real terms against just over 2% in the rest of the EU.“ European Commisison (2004). Third Cohesion Report, p ix. Results 1988-1999: 8 out of 59 objective 1 regions (GDP/capita below 75% of EU average) achieved after 8 years a level above 75%: Abruzzo, Molise, Lisbon-Setubal, Cantabria, Corsica, Northern Ireland, Scottish Highlands, major parts of Ireland.

36. Evaluating the Regional and Cohesion Policy Beta convergence for Objective 1 and non-Objective 1 regions, 1988-1999 (1/T)*log(Yit/Yi0) = α + β*log Yi0 + γ*Xit + uit Yit = real per capita income of a country in i at time t Yi0 = initial per capita income Xit = set of structural exogenous variables influencing the growth of per capita income T = time in which the dynamics of convergence is measured uit = stochastic error α = constant term Orlik, A (2003). Real Convergence and its differentMeasures Leonardi, R (2006). Cohesion in the European Union. Regional Studies, 40/2, 162.

37. Evaluating the Regional and Cohesion Policy Interpretation of the beta-covergence: - When comparing the performance of the Objective 1 regions, much greater convergence rates are found compared with what has been reported within nation states. - Overall EU convergence has been driven, to a great extent, by the convergence of the Objective 1 regions toward the EU mean whereas the non-Objective 1 regions remained substantially stable. - Convergence is a fairly slow process. The comparison with convergence before 1988 shows that countries such as Ireland, Portugal, Greece, Spain have progressed considerably since they joined the EU and were in receipt of Cohesion policy funding. These countries’ performance in terms of GDP was consistent with the positive development of the employment. Low performing regions were Mezzogiorno, Germany’s East Bundesländer, France overseas territories, several regions in Spain (Andalucia, Galicia)

39. Structural and Cohesion Funds 2007-2013 • The European Regional Development Fund (ERDF) • The ERDF aims at encouraging regional development, economic change, enhanced competitiveness and territorial co-operation throughout the EU. • • The European Social Fund (ESF) • The ESF is meant to focus on employment, social inclusion and tackling discrimination. • • The Cohesion Fund • This fund applies only to member states with a Gross National Income (GNI) of less than 90% of the EU average, and covers the new member states as well as Greece and Portugal. Spain will be eligible for the Cohesion Fund on a transitional basis. The Cohesion Fund invests in the environment and trans-European transport networks. • • These funds, in turn, are meant to meet three different main “objectives”: • 1) Convergence (previously called Objective One): ERDF; ESF and Cohesion Fund. • 2) Regional Competitiveness and Employment (previously called Objective Two): ERDF; ESF. • 3) European Territorial Co-operation (ERDF). • • The amount each member state gets is negotiated among the governments for a seven year period. Each fund has a national “managing authority” – i.e. a government department – through which the money is channeled. EU regulations govern how and to whom money can be granted. The grants are first paid out by the managing authorities, and the Commission then reimburses the member states. The Commission audits about five percent of the projects and has the right to withhold funds. • • Each project that wants grants from the SCF must find “matching funds” from other sources than the EU, such as the national governments or private actors, usually amounting to around the same amount as that given by the EU. http://www.openeurope.org.uk/research/regional.pdf

40. Objectives of European Regional Policy 2007-2013 • Convergence – solidarity among regions • The aim is to reduce regional disparities in Europe by helping those regions whose per capita gross • domestic product (GDP) is less than 75% of the EU to catch up with the ones which are better off. • Some regions in the EU as constituted before the two most recent enlargements are now above the • 75% threshold simply because the EU average GDP has fallen with the addition of the newest member • countries. Those regions still need help from the cohesion policy, so they now receive "phasing out" • support until 2013. • Number of regions concerned: 99Number of Europeans concerned: 170 millionTotal amount: €283.3bn (81.5% of total budget)Type of projects funded: improving basic infrastructure, helping businesses, water and waste treatment, • high-speed internet connection, training, job creation, etc. • Regional Competitiveness and Employment • The aim is to create jobs by promoting competitiveness and making the regions concerned more attractive to • businesses and investors. • This objective covers all regions in Europe not covered by the convergence objective. In other words, it is • Intended to help the richer regions perform even better with a view to creating an knock-on effect for the • whole of the EU to encourage more balanced development in these regions by eliminating any remaining • pockets of poverty. Some regions, which used to be under the 75% threshold that would qualify them for • inclusion in the convergence group, receive extra funding to help them "phase in" to their new objective. • Number of regions concerned: 172Number of Europeans concerned: 330 millionTotal amount: €55bn (16% of total budget)Type of projects funded: development of clean transport, support for research centres, universities, small • businesses and start-ups, training, job creation, etc. • European territorial cooperation • The aim is to encourage cooperation across borders. 40

41. Structural Funds 2007 – 2013: Eligible areas in the EU under the Convergence Objectiveand the European Competitiveness and Employment Objective

42. Structural and Cohesion Funds 2007-2013 http://www.openeurope.org.uk/research/regional.pdf

43. Cross-border programmes under the European Territorial Cooperation Objective

45. Operational Programme 'Development of Eastern Poland' Example: Operational Programme 'Development of Eastern Poland'

46. Example: Operational Programme 'Development of Eastern Poland' Breakdown of finances by priority axis (euro):

48. Example: Cross-border Cooperation Poland - Germany Project example: Collegium Polonicum, Collegium Universalum Each morning, with a student card in their hand, they cross the border between Germany and Poland on the Oder River and divide their lives and studies between the two countries. This is the reality that students of the Viadrina European University in Frankfurt-am-Oder have been living since the university's creation in 1991. The Union with Poland grew even closer with the opening in 1993 of the Collegium Polonicum in Slubice where German students could sign up for a post-graduate programme devoted to Polish law. The idea arose as early as 1991 of creating, in collaboration with the Adam Mickiewicz University in Poznan, an institute for studies and research on the cultures, languages, economy and society of Eastern Europe. The Collegium Polonicum has, in addition to classrooms and the AMICUS student hall, rooms for tutorial classes and a library boasting 6 000 books and 260 periodicals devoted to Eastern Europe: a genuine gold mine for the students and academic researchers. The courses taught there are intended to complement the programmes organised by the two founding universities. The students analyse the problems of the border regions or the impact of economic upheavals on the Central and Eastern European countries, study the different constitutional laws of these countries as well as international law and may also take language courses.This cross-border training programme opens up excellent prospects for employment in international organisations, in corporations, in the media or in the field of city and regional planning. The labour market problems on either side of the Oder are also being dealt with by the "Science and Labour World" cooperation centre of the Viadrina European University, nearby. The centre monitors the trends in cross-border relations and ensures collaboration between the German and Polish trade unions on the Interregional Trade Union Board.The new school attracts students and teachers, not only from Germany and Poland but also from the Czech Republic, France, Italy and even Russia and many other countries. It is therefore an important academic and cultural meeting point and a centre of intellectual and human influence for Europe. Total cost 48 000 000 euros EU contribution 8 850 000 euros

49. EU Cohesion Policy 2014-2020 Source: European Commission

50. “Ambitious but realistic” proposals issued by the Commissionin June 2011 for the Multiannual Financial Framework (MFF) 2014-2020 Cohesion Policy 33 % (€336 billion) Other policies (agriculture, research, external etc.) 63 % (€649 billion) ConnectingEurope Facility 4 % (€40 billion)