In its first few years, the ERDF represented approximately 4% of the EU's budget and was managed entirely by the Commission, on the basis of individual projects and annual planning; as of 2007 the Structural Funds will represent close to 40% of the EU's budget, managed jointly by the Commission and the Member States on a multi-annual basis.
The available funds have increased steadily over time to reach 308 billion euros for the 2007-2013 period.
The main aim of cohesion policy is to advance, in a sustainable manner, the growth and long term competitiveness of less-favoured regions thus enabling them to catch up with better developed EU areas.
In this sense, it performs a key allocative function because it contributes towards high levels of investment in physical and human capital in order to improve competitiveness and the long-run growth potential.
The investment done through the cohesion policy had significant macroeconomic effects in the largest assisted countries and regions.
Between 1988 and 2001 Ireland has seen its GDP per head double, from 64 percent in 1988 (the same level as Calabria) to 117 percent in 2001.
Since 1994, GDP growth has been 1 percentage point above the Community average in Spain, Greece and Portugal (until 2001), and four times higher in Ireland.
In terms of regional convergence recent research shows that between 1998 and 2001 Objective 1 regions have converged much faster than the rest of Europe - GDP per inhabitant has grown from 63 to 70% of the average of the EU-15. The greatest catching up took place between 1994 and 2001.
Productivity for all Objective 1 regions experienced an average growth of 1.5% between 1994 and 2001 compared with 1% for the entire EU (1).
Macro-economic studies based on economic models show significant impacts too (2). Between 1989 and 1999, the increase in the level of GDP due to Structural Funds was near 10% in Greece and 8.5% in Portugal above the baseline corresponding to the scenario without cohesion policy intervention.
The impact is less pronounced in Ireland and Spain (3.7 and 3.1%, respectively) due to lower allocations as a percentage of GDP. For 2000-2006, further gains are expected, with a projected increase in the level of GDP of about 6.0% for Greece and Portugal and 2.4% for Spain.
In the German Länder, simulations suggest an increase in the level of GDP (compared with a non-intervention scenario) of 4.0% in 2006. In all cases, long-term improvements are expected, due to supply-side effects that would last after the end of the funding period.
As regards the key factors that determine competitiveness, substantial progress has been made in the area of basic infrastructure (transport, environment, etc.) as well as in other sectors where territorial imbalances are particularly pronounced, such as research and development, access to the information society, and continuing education and training opportunities.
For example, in cohesion countries the density of the motorway network increased from 81% of the EU average in 1991 to 110% in 2001, with gains in journey times of 20-30%. In the same period the population connected to water supply systems in Portugal increased from 50 to 90%.
Apart from the investment in Objective 1 regions, the Structural Funds supported economic development in the wealthier regions facing structural problems of competitiveness.
Evaluations show that Community interventions have helped alleviate the economic decline of industrial and rural regions. It is estimated that nearly 500 000 net jobs were created or safeguarded in the assisted areas (current Objective 2) between 1995 and 2001. As a result, unemployment in these regions decreased in this period by 1% more than for the rest of the Union.
Cohesion policy also contributes to closer economic integration by stimulating trade flows and influencing the location of economic activity through major infrastructure networks in the least developed areas.
Between 1995 and 2005 trade between the cohesion countries and the rest of the EU more than doubled. Estimates suggest that around one-quarter of the expenditure undertaken via the cohesion policy returns to other Member States in the form of increased exports (especially machinery and equipment).
Given that a substantial share of The Structural and Cohesion Funds is invested in transport and environment infrastructure, R&D activities, information society promotion or education and training, cohesion policy increases the attractiveness of regions, affects the location of industry and boosts economic activity, by increasing earnings and real incomes. For example, the combined effect of two motorway projects added an estimated 9 percent to incomes in east Macedonia (3).
1European Commission, 2001, Community Value Addend: Definition and Evaluation Criteria, DG REGIO.
2 European Commission, Second Report on Economic and Social Cohesion, 2001.
3 London School of Economics, 1999, 'The Economic Impact of the Cohesion Fund'
The viewpoint in this issue of Journal of Nordregio has been provided EU Commissioner Ms. Danuta Hübner, head of The Regional Policy Directorate-General, responsible for the EU´s regional development. Originally, the views expressed were a part of a longer speech. The full text can be found at:
http://ec.europa.eu/commission_barroso/hubner/speeches/pdf/080606leuven_rev.pdf