The Common Regional Policy
and
Regional Development
within the EU
Barry Brunt
Geography Department
University College Cork
Purpose of Paper
To review evolving nature of EU Common
Regional Policy over the last 50 years.
1.
2.
3.
4.
Introduction
Reasons for introducing/strengthening of CRP
Changes within CRP and consequences
Conclusions
Introduction

March 25th, 1957, Treaty of Rome signed
between 6 countries to form EEC

Focus of EEC on market/economic principle
 Free trade
 Enlarged market
 Economies of scale
 Comparative advantage

Under economic principles cores benefit
more than peripheries

Although EEC aspired to ‘harmonious
development’ no policy to counteract free
market forces

By 1970s, recognised spatial inequalities
were a threat to unity

Common Regional Policy (CRP) in 1975
Five reasons for CRP
1.
Enlargement

The accession of new member states (6-27)
Increases the scale/complexity of problem
regions
Each enlargement (except 1995) added the
least prosperous member state
2004 enlargement most difficult







10 new member states
Most were former Communist states
All had GDP/ca well below EU (15) average
2004 and 2007 enlargement added a large new
eastern periphery to the EU (27).
Five reasons for CRP
1.
Enlargement

The accession of new member states (6-27)
Increases the scale/complexity of problem
regions
Each enlargement (except 1995) added the
least prosperous member state
2004 enlargement most difficult







10 new member states
Most were former Communist states
All had GDP/ca well below EU (15) average
2004 and 2007 enlargement added a large new
eastern periphery to the EU (27).
Selected Data for the Enlarging EU
European Union
% Increase in
population
% Increase in
GDP
% Change in
GDP per
person
32
29
-3
EU 9 to EU 12
(Second and third
enlargements)
22
15
-6
EU 12 to EU 15
(Fourth enlargement)
11
8
-3
29
9
- 16
EU 6 to EU 9
(first enlargement)
EU 15 to EU 27
GDP per head
(pps), 2004
2.
Deepening

The introduction of additional/stronger policies to
promote EU development
Initially – only 3 policies (agriculture, competition,
transport)


Enlargement and Single European Act demanded
additional/more effective policies

Reformed CRP (1988)
Lisbon Agenda (2000) set goal for making EU



“the most competitive and dynamic knowledge-based economy
in the world, capable of sustainable economic growth with more
and better jobs and greater social cohesion”
CRP/Cohesion Policy now recognised as pivotal for
future development of EU
3.
Globalisation
Two key influences:
(a) MNCs and fdi

EU largest host region for global fdi (45%)

MNCs attracted strongly to cores; branch plants relocated to low
cost peripheries

No longer sustainable option – cheaper alternative locations
available (eg. E. Europe, S. Asia)
(b) WTO

Objective to liberalise world trade and open up developed market
economies to LDC exports

Significant implications for EU peripheries – disproportionate
depending on low value products

Both influences demand reformed CRP to emphasise improving
competitiveness and diversifying economies of peripheral regions.
4.
Demographic Concerns

Demographic profile of EU changed
significantly – approaching 5th stage DTM
Major consequences – dependency, declining and
‘greying’ population, less enterprising culture
Lisbon Agenda calls for more effective use of
human resources and family-friendly policies
Regional/Cohesion Policy key role to meet Lisbon
objectives





Peripheries possess underutilised human resources
eg. unemployment, low productivity rates
Release potential via directing funds to create an
enterprise culture rather than a dependency culture.
Demographic Trends in an Evolving EU
Total
Population
(million)
Birth
Rate
o/
oo
Death Fertility
Rate
Rate*
o/
oo
% Population
over 65
EU (16) 1960
170
18.2
10.7
2.6
10.3
EU (6) 1970
189
15.8
10.7
2.4
12.3
EU (9) 1980
261
12.6
10.6
1.8
14.4
EU (12) 1990
345
11.6
10.1
1.6
14.5
EU (15) 2000
377
11.0
9.9
1.5
15.7
EU (25) 2005
460
10.5
9.5
1.5
16.5
*Fertility Rate is number of children per female of child-bearing age.
Source: European Community (various years). Eurostat Yearbooks: Europe in
Figures: Luxembourg.
4.
Demographic Concerns

Demographic profile of EU changed significantly –
approaching 5th stage DTM
Major consequences – dependency, declining and
‘greying’ population, less enterprising culture
Lisbon Agenda calls for more effective use of
human resources and family-friendly policies
Regional/Cohesion Policy key role to meet Lisbon
objectives





Peripheries possess underutilised human resources
eg. unemployment, low productivity rates
Release potential via directing funds to create an
enterprise culture rather than a dependency culture.
5.
Environment and Sustainable Development

Since late 1980s, concern with environmental
issues and sustainability increased eg. Brundtland
Report (1987), SEA (1987), TEU (1993), Lisbon (2000)

Peripheral EU has diverse range of high quality
physical and cultural environments

If environments managed sustainably – good
prospects for development

Effective CRP is vital for effective management
and promotion of peripheral EU (coordinate
development)
CRP Changes and Consequences

Introduction and evolution of CRP involve four
phases
1.
Absence of CRP, 1958-74
Emergence of CRP, 1975-88
Modernisation of CRP, 1989-2006
Current CRP, 2007-13
2.
3.
4.
Phase 1: Absence of
CRP, 1958-1974

Market principle
anticipated economic
growth would ‘trickle
down’ from core to
periphery

National governments
promoted strong
regional policies to
decentralise
development


Buoyant economies encouraged fdi (branch plants)
in peripheries
Signs of convergence in prosperity between
member states
National Disparities
In per capita GDP
by Member state *
Phase 2: Emergence of CRP, 1975-1988

Enlargement (1973) and oil crisis (1973-4) result in a CRP
(1975) and ERDF to fund designated regions

Designated regions




Despite benefits:




receive: 17.5B Ecu
benefit from: 765000 jobs
and: modernised infrastructure
Financial resources limited (average 7% Budget)
Covers too large an area – lacks focus
Short –term, one-off projects dominate
Result:


By 1987, problem regions remain same with addition of Mediterranean
regions
Divergence replaces convergent trends in prosperity levels between
member state
Regions qualifying for
Support under EU
Regional Policy in 1975
Phase 2: Emergence of CRP, 1975-1988

Enlargement (1973) and oil crisis (1973-4) result in a CRP (1975)
and ERDF to fund designated regions

Designated regions




Despite benefits:




receive: 17.5B Ecu
benefit from: 765000 jobs
and: modernised infrastructure
Financial resources limited (average 7% Budget)
Covers too large an area – lacks focus
Short –term, one-off projects dominate
Result:


By 1987, problem regions remain same with addition of Mediterranean
regions
Divergence replaces convergent trends in prosperity levels between
member state
Regions eligible under
Objectives of the
Structural Funds
1989 - 99
Phase 2: Emergence of CRP, 1975-1988

Enlargement (1973) and oil crisis (1973-4) result in a CRP (1975)
and ERDF to fund designated regions

Designated regions




Despite benefits:




receive: 17.5B Ecu
benefit from: 765000 jobs
and: modernised infrastructure
Financial resources limited (average 7% Budget)
Covers too large an area – lacks focus
Short –term, one-off projects dominate
Result:


By 1987, problem regions remain same with addition of Mediterranean
regions
Divergence replaces convergent trends in prosperity levels
between member state
Phase 3: Modernising the CRP, 1989- 2006
CRP reformed in 1988 (enlargement, SEA, divergence,
Euroschlerosis)
3 key elements
1. Funding
 ERDF combined with ESF, Guidance Fund, FIFG to form
Structural Funds (SF)
 Significant increase in SFs
 Cohesion Funds (1993) provided for four weakest
national economies – Cohesion Four
 More realistic resource base to address scale and
complexity of spatial inequalities
2.
Programmes

Multiannual, integrated programmes
replace one-off projects

Encourages bottom-up planning

Programmes – vital component of
national plans to secure SFs (eg.
Ireland’s NDPs)
3. Concentration on EU
Objectives





Problem regions defined
according to EU not national
criteria
SFs to focus on EU objectives
1989-93 5 objectives (3 spatial)
1994-99 6 objectives (4 spatial)
2000-06 3 objectives (2 spatial)
Structural Funds 2004-2006
Areas eligible under
Objectives 1 and 2
Implications of Modernised CRP
Some successes but on-going problems
Successes
 Convergence
replaces
divergence in
prosperity levels
between
member states

Success emphasised by above average
economic performance of Cohesion Four
Issues remain

Most 1989-93
problem regions
remain

Enlargement
adds to scale of
problem regions

Divergence, rather than convergence, highlights trends
in prosperity levels between EU regions
Contrasts between top and bottom two countries and regions
measured in GDP per capita (EU-27=100)
Country
Index
Region
Index
Luxembourg
230
Inner London
303
Ireland
138
Luxembourg
230
…………….. …..
………………..
……..
Romania
33
Severozapaden
(Bul)
26
Bulgaria
32
Nord-Est (Rom)
24
Source: European Communities (2006) Regions: Statistical
Yearbook, 2006. Luxembourg.
4. Current CRP, 2007-13

CRP reformed in 2006





SFs increased to €347B (more than one-third
budget)
SFs reformed

ERDF & ESF & CF
FIFG and Guidance Fund removed
(emphasises urban focus)
3 new objectives


Reality of enlargement in CEE
EU focuses all policies/resources to meet Lisbon
objectives of growth and competitiveness
Limited progress to harmonious development
Structural Funds 2007 – 2013:
Convergence and Regional
Competitiveness Objectives
Implications of Reformed CRP (?)
1.Increased competition for SFs

Only 4 regions in CEE above 75% EU
GDP/ca

New Eastern periphery to receive 57% of
SFs

Traditional problem regions in EU (15)
lose dominance
2.
Fewer
Convergence
Regions in EU (15)

Strong economic
performance of
some regions eg. S
& E in Ireland

‘Statistical Effect’ of
enlargement

16 regions to be
phased out by 2013

Most convergent
objective regions in
CEE
3. Emphasis on Lisbon objectives
means:



Promoting a region’s indigenous resource
base/infrastructure rather than
dependency on ‘hand-outs’
Changing basis of development in problem
regions from low cost sites to competitive
locations
A longer-term perspective and sustainable
development
4. Above average growth of new member
states

Large transfer of SFs

Modernised infrastructure

Low costs and underdeveloped resources

High market potential

Expect convergent trend in prosperity
between member states to continue eg.
Baltic Circle
5. Lisbon objectives favour core regions

Attributes of urban cores attract
investment more than rural peripheries

Divergent trends between regions likely to
continue

National policy/intervention vital to
redistribute development opportunities
within countries e.g. NSS in Ireland
Conclusions

Macro-economic forces are powerful and favour
core/urban regions

CRP has been /remains vital to redistribute
resources from core to periphery

Some successes achieved (Ireland), but large
problem regions remain (CEE)

Focus of Lisbon Agenda on growth and
competitiveness makes CRP even more
essential

The goal of ‘harmonious development’ is likely to
remain elusive – at least at regional level