European Union Regional, Urban and Cooperation Policy: aims, methods and reform

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1 Regional European Union Regional, Urban and Cooperation : aims, methods and reform Ronald Hall Principal Advisor, International Relations Directorate General for Regional and Urban European Commission Brussels 8 November

2 700 staff in total Director General Walter Deffaa Deputy Director General Nicholas Martyn Deputy Director General Normunds Popens 1 Chief Adviser 3 directorates addressing budgetary, audit and policy 5 directorates dealing with implementation in the Member States 5 units: Budgets, outermost regions 4 units: and research, territorial development, evaluation, legal affairs 4 units: Audit 23 units: programme management in 27 Member States and accession States Regional 2

3 () issues for discussion The turning points in EU regional policy over time: major developments Main elements of the current policy model A few words on regional and urban policy as a theme of international cooperation (policy dialogues with non-eu countries) Regional 3

4 turning points: a short history (1) Following the Treaty of Rome, reports by the Commission and the Assembly (now Parliament) in the 1960s and 1970s raised the question of economic and social disparities between the regions. The early laissez faire, free-trade zone approach gave way to an acceptance of interventionism (role of UK entry in 1973) In 1973, George Thomson the first UK Commissioner said: Regional is in the general European interest it is as much in the interests of the richer regions of Europe as it is in the interests of the poorer regions of Europe. On 18 March 1975, the ERDF was introduced Regional 4

5 turning points: a short history (2) (Supporting national regional policy): Project-based; different EU funds with separate aims and rules; supporting national priorities (developing a European vision): Strategic, mediumterm, integrated investment programming: Combining all funds behind 5 common priorities; concentration on the poorest Standardising administration rules Developing a multi-level governance model: concepts of partnership and 'additionality' Increasing the resources available to 14 EUR bn euros pa, or 20% of EU-Budget (and 0.27% of GDP) 5 Regional

6 turning points: a short history (3) (the era of "value-for-money"): Additional focus on the labour market Addressing the needs of (2/3 of) the new Member States: introduction of a new priority for Nordic regions with very low population density Multiple sectoral-regional "initiatives" introduced Emphasis on policy evaluation Creating a new Cohesion Fund (aid to budgetary discipline) and a Fisheries investment fund Further increase in resources: budget raised to 32 bn euro p.a. (ca. 30% of EU budget and 0.45% of GDP) Regional 6

7 turning-points (4) (preparing for "big-bang" enlargement): Financial preparation in new EUR10: "phasing-in" Financial preparation in old EUR15 "phasing-out" arrangement for some formerly aided regions Reduction to 3 priorities and drastic reduction of multiple initiatives First seven-year programmes Emphasis on performance, financial management and control Budget reaches 'cruising speed': 34bn, 0.46% of GDP (including enlargement) Regional 7

8 Regional turning-points (5) (consolidating the regional model; managing further enlargement): Three generic principles confirmed: The concentration of resources on the least prosperous regions A strategic approach to using resources: a concentration of the effort on competitiveness (initially the Lisbon Agenda, now Europe 2020) Promotion of good governance

9 Regional turning-points (6) (consolidating the regional model; managing further enlargement): Two-plus-one additional (less prosperous) Member States added in 2007 and 2013 Emphasis on regional innovation systems Earmarking resources to concentrate on competitiveness Further reinforcement of financial control capability Attempt at simplification: "contracts of confidence" Maintenance of seven-year programmes

10 : A new global framework Regional 10

11 Regional Budget ("MFF"), COMPARISON MFF / Billion in 2011 prices Difference (in %) 1. Smart and Inclusive Growth % Of which Cohesion % Of which infrastructure (Connecting Europe Facility) % Of which Competitiveness (CSF research & innovation; Education; Galileo etc) % 2. Sustainable Growth: natural resources % Of which Market related expenditure and direct payments in agriculture % 3. Security and Citizenship % 4. Global Europe % 5. Administration (including pensions and European schools) % 6. Compensations Total commitment appropriations % In % of EU-27 GNI 1.12% 1.00%

12 Public expenditure in the EU in 2011 (% de PIB)

13 The internal policies,

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15 Cohesion policy,

16 : implementing the three principles of the EU regional and cooperation policy model Concentration Strategic approach Good governance Regional 16

17 Concentration of resources on the least prosperous regions Regional 17

18 Regional Concentration on the poorest regions: today's policy targets Less developed regions, whose GDP per capita is less than 75 % of the average GDP of the EU; transition regions, whose GDP per capita is between 75 % and 90 % of the average GDP of the EU; more developed regions, whose GDP per capita is above 90 % of the average GDP of the EU; border regions 18

19 Regional policy: financial outcome by priority area Tipo de región % Population EU % Of resources (ERDF, ESF, CF ex ETC, YEI) Intensity of aid (EUR per capita p.a.) est. Less developed regions Regions in transition More developed regions Regional polícy Cohesion Fund (national) 24 52, ,5 10, ,5 15, ,5-25,8 18,2 62 Regional 19

20 The map of regional aid support, Regional 20

21 The map of regional aid support, Convergence objective (Regions > 75% in EU25) Convergence objective statistically affected regions Objective 'Regional Competitiveness and Employment' Phasing-in regions, "naturally" above 75% Objective 'Regional Competitiveness and Employment' Index EU 25 = 100 Source: Eurostat Regional 21

22 Regional Territorial cohesion through cooperation A key objective of the EU: achieving economic, social and territorial cohesion Cooperation has three strands: Cross-border: collaboration between two or more adjacent local and regional entities situated in different but neighbouring states (75% of resources) Inter-regional: collaboration between non-adjacent local and regional authorities (5%) Transnational: multi-lateral cooperation is linked to a specific geographic area aiming at an integrated and jointly planned spatial development (20%)

23 Map of cross-border cooperation programmes

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25 New concepts: "Macro-regions", example of the Baltic Sea Regional

26 A strategic approach (the Lisbon agenda" and "Europe 2020 ) Regional 26

27 Regional Competitiveness: meeting the challenge of globalisation (2013 data) Pop mill. Surface area km² GDP billion pps GDP/capita pps Unempl. % EU mill USA mill

28 The Europe 2020 strategy, 3 March 2010 Successor to the Lisbon Agenda (2000 and 2005) A strategy from the European Commission for smart, sustainable and inclusive growth Smart agenda: innovation; education; digital society Sustainability agenda: climate, energy, and mobility Inclusive agenda: employment and skills; fighting poverty Regional 28

29 The Europe 2020 strategy (March 2010) Principal quantified targets: 75% of year-olds in employment (69% today) 3% of EU GDP invested in RDT (no change on Lisbon target; today 1.8%) 20/20/20 climate/energy targets (emissions/ renewables/effciency) 10% maximum for early school leavers (drop-out rate; 15% today); 40% minimum for year-olds possessing a degree (31%) 20 million less at risk of poverty (80 million precrisis) 29 Regional

30 Europe 2020 EUR2020 in the programmes: 11 thematic priorities Inclusive Sustainable Smart Research and innovation Information and communication Competitiveness of Small and Medium Enterprises Transition to a low CO2 emissions economy Adaptation to climate change and risk management and prevention Environmental protection and rational utilisation of resources Sustainable transport Employment and promotion of labour mobility Social Inclusion and fight against poverty Education, skills and life-long learning Strengthening institutional capacities and efficiency in public administrations Cohesion Poicy

31 Promoting Good Governance Regional 31

32 Multi-level governance COHESION POLICY Common EU Strategic Framework (1) Partners Partnership Agreements (28) National and Regional programmes (297 in REGIO) Regional 32

33 No. of programmes and Type of programa (est.) Regional Cross-border Transnational Inter-regional 4 4 Total Regional 33

34 Methodology for regional and crossborder programmes A geographical strategic approach : 297 programmes (in REGIO) at national and regional level for , including cooperation programmes Therefore NOT a system of fiscal transfers support for 7-year, integrated, strategic investment programmes, but with individual approval of major projects. Fiscal equalisation systems exist inside the Member States Note: assumes the existence of advanced statistical sytems Regional 34

35 A better coordination of EU instruments: "The European Structural and Investment Funds" (FEIE)

36 Respecting (enforcing) other priorities and rules of the European Union (also known as "general conditionalities") Competition rules/state aid to enterprise Public procurement rules Environmental priorities and legislation Equal opportunities priorities and legislation Regional 36

37 Promoting best practice in managing public resources A managing authority (a national, regional or local public authority or public/private body to oversee the operational programme, and a monitoring committee to run it); A certification body (a national, regional or local public authority or body to certify the statement of expenditure and the payment applications before their transmission to the Commission); An auditing body (a national, regional or local public authority or body for each operational programme to enure sound and efficient financial management Regional 37

38 Promoting the evaluation culture (some results from ) At least 1 million gross jobs created in companies supported R&D investment was 2.5 times higher in assisted companies than in non-assisted companies (East Germany) Additional 20.5 million inhabitants served by waste water projects according to EU standards Additional 14 million inhabitants served by water supply projects 2,000 km of motorways (i.e. 24% of all motorway development in the period) and 4,000 km of rail Regional The ESF supports each year 5.3 million women; 3.3 million young; 1.6 million vulnerable; 1 million long-term unemployed; 5 million low-skilled It is a profitable investment: 40% of the unemployed trained find a job One out of four jobs created in the EU between 2000 and 2006 has been filled by an ESF participant Over one third of the Active Labour Market expenditure was provided by ESF and corresponding national co-funding 38

39 Convergence: the record Regional

40 Regional Reinforcing the decentralization principle: stronger conditionalities Problem: how to achieve EU priority aims in a decentralised, multi-level governance system Solutions: continuing efforts in capacity building, improving institutional and administrative capacity introducing greater conditionality of aid: putting in place the apparatus required to achieve certain desired outcomes

41 Regional Reinforcing conditionalities : earmarking Earmarking resources: In the poorest regions: 50% of resources transferred for energy efficiency, renewable energy, innovation, SMEs In the other regions: 80% for these priorities, of which minimum 20% for energy efficiency

42 Regional Reinforcing conditionalities : thematic conditions Not a new concept but applied in the past essentially to general themes derived from EU Directives, regulations and rules and policy priorities (equality of opportunity, sustainable development, etc) Post 2014: more specific, ex-ante conditionalities covering EU priority areas.

43 Reinforcing conditionalities : thematic conditions.example: Research and Innovation Ex-ante conditionality: Before approval of the programme, a national or regional research and innovation strategy for smart specialisation is required in line with the EUR2020 strategy. Should also indicate how private research and innovation expenditure will be attracted Proposals will be examined in the light of the following criteria: The national or regional research and innovation strategy for smart specialisation should include: a SWOT analysis to concentrate resources on a limited set of research and innovation priorities; A description of measures to stimulate private RTD investment; a monitoring and review system. Regional

44 The international dialogue on regional policy: context and policy framework Broadly-based policy dialogues on a variety of policy fields exist between the EU and third countries (including neighbouring countries and EU strategic partners) Increasing concern in emerging countries to combine rapid growth and more balanced territorial development Formalized agreements on regional policy cooperation: China, Russia, Brazil, Ukraine, Moldova, Georgia, Chile, Argentina (draft), Peru, Japan (in prospect: Mexico, SICA, India) A specific European Parliament mandate in this field renewed annually Regional 44

45 Ratio GDP/head in top/bottom regions each with 25% of population EU 2.7 Brazil 3.6 China 3.2 Russia 4.9 USA 1.5 India 3.4 Mexico 3.5 Japan 1.8 Regional 45

46 7% live in agglomerations over 5 million Regional 46

47 14.4% live in agglomerations 39% live in agglomerations over 3 million (EU: over 19%) 5 million Regional 47

48 25% live in agglomerations over 5 million Regional 48

49 USA and EU: territorial disparities in development Regional

50 EU policy dialogue agreements: some examples China: Communication EU Strategy towards China" (2001) Action point: Establish an exchange of experience between both sides' authorities responsible for regional policy, with the objective of contributing to the establishment of a policy for reducing regional disparities in China. Partner: National Development and Reform Regional Commission 50

51 10 formalized agreements so far: (example below: the Chile-UE Letter of Intent)

52 The attraction for the EU of international policy dialogues? Pools international responses and experience to the benefit of EU regions and cities; networking opportunities to engage in broader cooperation (Emilia- Romagna/Baden-Württemberg-Cordoba/Sta Katarina; Stockholm-Kitakyushu; Torino-Kanazawa;Leipzig- Kumamoto; Azores-Santa Katarina) Promotes international image and reputation of the EU and its institutions Regional 52

53 The attraction for the EU of international policy dialogues Promotes commercial opportunities for EU public and private sector (consultancy, export of know-how, goods and services) Projects the EU model of regional and urban development: Working with the market (competition rules, public procurement) equal opportunities sustainable development participative democracy Regional 53

54 Some illustrations of actions supported since 2009 OECD Territorial Reviews of Brazil and Ukraine ( ) CETREGIO project: over 120 Chinese decision-makers from all 31 Provinces and autonomous regions/cities have visited 40 regions in 15 Member States URBELAC project (with IDB): 13 LATAM cities and 9 EU cities exchanging on urban policy Chile: RED project to develop regional innovation strategies, build capacities and share experieince with Europe Cross-border cooperation in LATAM: 6 workshops in different border areas African Conference "The contribution of regional and local authorities to economic development" (Ouagadougou, 2009) Regional 54

55 Following international cooperation in EU regional policy General: International cooperation: nal/index_en.cfm Regional 55