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Lecture VII. ECONOMIC AND SOCIAL

COHESION POLICY

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KEY PROVISIONS ON ECONOMIC , SOCIAL AND TERRITORIAL COHESION POLICY

• Article 174 (ex Article 158)In order to promote its overall harmonious development, the Union

shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion.

In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions.

Among the regions concerned, particular attention shall be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross‑border and

mountain Regions.

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FINANCIAL TOOLS SUPPORTING ECONOMIC , SOCIAL AND TERRITORIAL COHESION POLICY

• Structural instruments:– Structural Funds (European Social Fund;

European Regional Development Fund);– Cohesion Fund

• European Fund for Agriculture and Rural Development

• Cohesion Fund the European Investment Bank and the other existing Financial Instruments.

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COHESION POLICY • NEED FOR PROMOTING BALANCED DEVELOPMENT AND

FOCUS ON BACKWARDNESS OF LESS FAVOURED REGIONS• ECONOMICAL REASONS

– Economists use the term β-convergence (beta-convergence) to describe the catching-up process whereby poor regions (or countries) grow faster than rich ones to approach the “common income level”3. The concept of β-convergence is the empirical counterpart to the neoclassical growth model, for which investment is higher in low-income regions (or countries) given Increasing returns to capital, which explains why – all else being equal – they shall grow faster than high-income regions where investment in fact generates decreasing returns to capital.

– Development of internal market – POLITICAL REASONS – ARE THERE ANY?

• The EU uses about one third of the EU budget to run Cohesion Policy.

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COHESION POLICY

• SOLIDARITY – EMBEDED IN COHESION POLICY • REDISTRIBUTIV POLICY and MORE

– eighty percent of all Structural and CohesionFunds going from rich to poor regions of Europe

– rich regions receive funding too. 16% percent of EU cohesion spending is earmarked for relatively high-income regions to improve their competitiveness and employment conditions

– cohesion policies are aimed at increasing investment to achieve higher growth and are not specifically concerned with expanding consumption directly or with redistribution of income (EC, 2001)

• The EU uses about one third of the EU budget to run Cohesion Policy.

Cohesion policy• Economic and social cohesion – key component of

the further enalergement and deepening of the European Integration

• Economic and social cohesion – redistributive and solidarity

• Economic and social cohesion - normal outcome of the EU integration. MS asked to coordinate their economic policies to ensure balanced sustainable territorial development.

• Focus on economic and social convergence

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Cohesion policy • Lisbon, EU 2020 strategy and Cohesion Guidelines

2007 – 2013 draft the main cohesion policy orientations.

• Cohesion policy aims to support:– Increase atractiveness of regions and Msby improves

services quality and environment protection;– Encourage innovation, entrepreneurship and knowledge

based society;– More and better jobs by increase quality and effectiveness

of investments in human capital. – Territorial approach

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Cohesion policy• Main cohesion policy objectives for 2007-2013:

• Convergence: (economic growth and employment for least developped regions ) – GDP/inh. below 75% of the EU average

– • Regional competitveness and employment (adresses

economic and social adjustments/tranformations, innovation, entrepreneruship, laborforce adaptability, environment protection etc.) – regions not coveres by Convergence objectie

– • European Territorial Cooperation (all EU regions).

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ERDF ESFESF COHESION FUNDConvergence

Regional Competitveness and Employment

European Territorial Cooperation

ERDF

ERDF

ESFESF

Infrastructure, innovation, R&D

etc.

training, education, employment,

social inclusion governance.

MS NGI/inh< EU average

Environment and large transport infrastructures

ALL EU regions

Objectives Tools (structural instruments = structural funds + Cohesion Fund

Cohesion policy

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• Complementarity – EU funded actions complements local and national initiatives.

• Consistency – EU funded actions are consistent with relevant EU and national policies.

• Coordination – EU common objectives – framework for national policy targets. All MS may use EU funding to contribute to the achievement of common objectives

• Adiţionality – EU contribution is additional to MS efforts and does not replace national efforts and spendings for similar actions.

Cohesion policy - principles

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Partenerhip – EU funded actions are developed and programmed by consultation between MS and EU institutions, as well as between MA and relevant stakeholders ant national level.

Programming – EU funded actions are planned on multi annual base – 7 years (National Strategic Reference Framework, Operational Programs - OPs).

Concentration – EU funding should be targeting a limited numaber of areas/specific objectives/sectors (value for money)

Cohesion policy - principles

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◦ EU Commission – MS – shared management ◦ MS – definition and assignment of bodies and structures involved

in management of structural instruments (clear separation of functions and avoidance of overlaps).

◦ MS – definition of procedures for OPs management (sound financial management, clear separation of functions, legality and regularity of expenditures made in projects, sound financial management, value for money, irregularities management, reliable audit trail etc.).

◦ MS will assign for each OP :◦ Management Authority (one MA for each OP – ensures effective OP

management);◦ Intermediate Bodies (optional)◦ Certification Authority (for each OP or for all OPs – certifies the

expenditures declared to the European Commission to be reimbursed)◦ Audit Authority (for each OP or for all OPs – auditing the effective

functioning of the management structures of the OPs)

Cohesion policy – management systems