Regional policy of the European Union

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The regional policy of the European Union (EU), also referred as Cohesion Policy, is a policy with the stated aim of improving the economic well-being of regions in the European Union and also to avoid regional disparities. More than one third of the EU's budget is devoted to this policy, which aims to remove economic, social and territorial disparities across the EU, restructure declining industrial areas and diversify rural areas which have declining agriculture. In doing so, EU regional policy is geared towards making regions more competitive, fostering economic growth and creating new jobs. The policy also has a role to play in wider challenges for the future, including climate change, energy supply and globalisation.

The EU's regional policy covers all European regions, although regions across the EU fall in different categories (so-called objectives), depending mostly on their economic situation. Between 2007 and 2013, EU regional policy consisted of three objectives: Convergence, Regional competitiveness and employment, and European territorial cooperation; the previous three objectives (from 2000 to 2006) were simply known as Objectives 1, 2 and 3.

The policy constitutes the main investment policy of the EU, and is due to account for around of third of its budget, or EUR 392 billion over the period of 2021-2027.^[1] In its long-term budget, the EU's Cohesion policy gives particular attention to regions where economic development is below the EU average.^[2]^[3]

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Where, is the European Union? Obviously here somewhere, but much like the the European continent itself, which has an unclear boundary, the European Union also has some fuzzy edges to it. To start, the official members of the European Union are, in decreasing order of population: * Germany * France * The United Kingdom * Italy * Spain * Poland * Romania * The Kingdom of the Netherlands * Greece * Belgium * Portugal * The Czech Republic * Hungary * Sweden * Austria * Bulgaria * Denmark * Slovakia * Finland * Ireland * Croatia * Lithuania * Latvia * Slovenia * Estonia * Cyprus * Luxembourg * Malta The edges of the EU will probably continue to expand further out as there are other countries in various stages of trying to become a member. How exactly the European Union works is hideously complicated and a story for another time, but for this video you need know only three things: 1. Countries pay membership dues and 2. Vote on laws they all must follow and 3. Citizens of member countries are automatically European Union citizens as well This last means that if you're a citizen of any of these countries you are free to live and work or retire in any of the others. Which is nice especially if you think your country is too big or too small or too hot or too cold. The European Union gives you options. By the way, did you notice how all three of these statements have asterisks attached to this unhelpful footnote? Well, get used to it: Europe loves asterisks that add exceptions to complicated agreements. These three, for example, point us toward the first bit of border fuzziness with Norway, Iceland and little Liechtenstein. None of which are in the European Union but if you're a EU citizen you can live in these countries and Norwegians, Icelanders, or Liechtensteiner(in)s can can live in yours. Why? In exchange for the freedom of movement of people they have to pay membership fees to the European Union -- even though they aren't a part of it and thus don't get a say its laws that they still have to follow. This arrangement is the European Economic Area and it sounds like a terrible deal, were it not for that asterisk which grants EEA but not EU members a pass on some areas of law notably farming and fishing -- something a country like Iceland might care quite a lot about running their own way. Between the European Union and the European Economic Area the continent looks mostly covered, with the notable exception of Switzerland who remains neutral and fiercely independent, except for her participation in the Schengen Area. If you're from a country that keeps her borders extremely clean and / or well-patrolled, the Schengen Area is a bit mind-blowing because it's an agreement between countries to take a 'meh' approach to borders. In the Schengen Area international boundaries look like this: no border officers or passport checks of any kind. You can walk from Lisbon to Tallinn without identification or need to answer the question: "business or pleasure?". For Switzerland being part of Schengen but not part of the European Union means that non-swiss can check in any time they like, but they can never stay. This koombaya approach to borders isn't appreciated by everyone in the EU: most loudly, the United Kingdom and Ireland who argue that islands are different. Thus to get onto these fair isles, you'll need a passport and a good reason. Britannia's reluctance to get fully involved with the EU brings us to the next topic: money. The European Union has its own fancy currency, the Euro used by the majority, but not all of the European Union members. This economic union is called the Eurozone and to join a country must first reach certain financial goals -- and lying about reaching those goals is certainly not something anyone would do. Most of the non-Eurozone members when they meet the goals, will ditch their local currency in favor of the Euro but three of them Denmark, Sweden and, of course, the United Kingdom, have asterisks attracted to the Euro sections of the treaty giving them a permanent out-out. And weirdly, four tiny European countries Andorra, San Marino, Monaco & Vatican City have an asterisk giving them the reverse: the right print and use Euros as their money, despite not being in the European Union at all. So that's the big picture: there's the EU, which makes all the rules, the Eurozone inside it with a common currency, the European Economic Area outside of it where people can move freely and the selective Schengen, for countries who think borders just aren't worth the hassle. As you can see, there's some strange overlaps with these borders, but we're not done talking about complications by a long shot one again, because empire. So Portugal and Spain have islands from their colonial days that they've never parted with: these are the Madeira and Canary Islands are off the coast of Africa and the Azores well into the Atlantic. Because these islands are Spanish and Portuguese they're part of the European Union as well. Adding a few islands to the EU's borders isn't a big deal until you consider France: the queen of not-letting go. She still holds onto a bunch of islands in the Caribbean, Reunion off the coast of Madagascar and French Guiana in South America. As far as France is concerned, these are France too, which single handedly extends the edge-to-edge distance of the European Union across a third of Earth's circumference. Collectively, these bits of France, Spain and Portugal are called the Outermost Regions -- and they're the result of the simple answer to empire: just keep it. On the other hand, there's the United Kingdom, the master of maintaining complicated relationships with her quasi-former lands -- and she's by no means alone in this on such an empire-happy continent. The Netherlands and Denmark and France (again) all have what the European Union calls Overseas Territories: they're not part of the European Union, instead they're a bottomless well of asterisks due to their complicated relationships with both with the European Union and their associated countries which makes it hard to say anything meaningful about them as a group but... in general European Union law doesn't apply to these places, though in general the people who live there are European Union citizens because in general they have the citizenship of their associated country, so in general they can live anywhere in the EU they want but in general other European Union citizens can't freely move to these territories. Which makes these places a weird, semipermeable membrane of the European Union proper and the final part we're going to talk about in detail even though there are still many, more one-off asterisks you might stumble upon, such as: the Isle of Man or those Spanish Cities in North Africa or Gibraltar, who pretends to be part of Southwest England sometimes, or that region in Greece where it's totally legal to ban women, or Saba & friends who are part of the Netherlands and so should be part of the EU, but aren't, or the Faeroe Islands upon which while citizens of Denmark live they lose their EU citizenship, and on and on it goes. These asterisks almost never end, but this video must.

Notion of territorial cohesion

Territorial cohesion is a European Union concept which builds on the European Spatial Development Perspective (ESDP).^[4]^[5] The main idea of territorial cohesion is to contribute to European sustainable development and competitiveness. It is intended to strengthen the European regions, promote territorial integration and produce coherence of European Union (EU) policies so as to contribute to the sustainable development and global competitiveness of the EU. Sustainable development is defined as development that "meets the needs of the present without compromising the ability of future generations to meet their own needs".

The main aim of the territorial cohesion policy is to contribute to a balanced distribution of economic and social resources among the European regions with the priority on the territorial dimension. This means that resources and opportunities should be equally distributed among the regions and their populations. In order to achieve the goal of territorial cohesion, an integrative approach to other EU policies is required.

Objectives

Less developed regions

By far the largest amount of regional policy funding is dedicated to the regions designated as less developed. This covers Europe's poorest regions whose per capita gross domestic product (GDP) is less than 75% of the EU average. This includes nearly all the regions of the new member states, most of Southern Italy, Greece and Portugal, and some parts of the United Kingdom and Spain.

With the addition of the newest member countries in 2004 and 2007, the EU average GDP fell. As a result, some regions in the EU's "old" member states, which used to be eligible for funding under the Convergence objective, became above the 75% threshold. These regions received transitional, "phasing out" support during the previous funding period of 2007–13. Regions that used to be covered under the convergence criteria but got above the 75% threshold even within the EU-15 received "phasing-in" support through the Regional competitiveness and employment objective.^[6] ^[7] Despite the large investment requirements of the EU, cohesion areas continue to have lower investment rates. Only 77% of businesses in transitional regions and 75% of those in less developed regions invested, compared to 79% of businesses in more developed regions.^[8]

Financial limitations are more common in less developed areas, especially for small and medium-sized enterprises (SMEs). SMEs in these regions are more than twice as likely (11%) than their counterparts in transition (5%) and non-cohesion zones (5%) to report having financial difficulties.^[9]^[10] Less developed regions also have the lowest percentage of businesses who have made investments to combat climate change or reduce their carbon emissions, at 46%.^[8] In 2022, lending from the EIB Group under the SME/mid-cap financing policy reached €3.5 billion.^[11]^[12]

In less developed regions, bank loans account for 49% of finance. Grants make up a larger portion of the financing in less developed areas, accounting for 13% of external financing.^[13]

Areas designated as less developed

Bulgaria – all (except Southwestern region)
Croatia - all
Czech Republic – all (except Prague)
Estonia – all
France – French Guiana, Guadeloupe, Martinique, Réunion
Greece – Anatoliki Makedonia Thraki, Dytiki Ellada, Ipeiros, Kentriki Makedonia, Thessalia
Hungary – all (except Central Hungary)
Italy – Basilicata, Calabria, Campania, Apulia, Sicily
Latvia – all
Lithuania – all
Poland – all (except the Warsaw Metro NUTS2 Unit carved out of Masovian Voivodeship)
Portugal – Alentejo, Azores, Centro, Norte
Romania – all (except Bucharest)
Slovakia – all (except Bratislava)
Slovenia – Vzhodna Slovenija
Spain – Extremadura
United Kingdom – Cornwall and the Isles of Scilly, West Wales and the Valleys

Transition regions

These are regions whose GDP per capita falls between 75 and 90 percent of the EU average. As such, they receive less funding than the less developed regions but more funding than the more developed regions.

In transition regions, bank loans account for 69% of finance.^[14]^[13] Particularly transitional regions appear to profit from investments in more developed regions. There is a 34% of the impact on GDP and 47% of the impact on employment in some circumstances.^[15]

In the green transition, 19% of firms in transition regions claim that climate change is significantly affecting their business, while 43% believe climate change has a minor effect.^[16] 25% of businesses in transition regions can also be categorized as "green and digital".

Areas designated as transition regions

Austria – Burgenland
Belgium – all of Wallonia (except Walloon Brabant)
Denmark – Sjælland
France – Auvergne, Corsica, Franche-Comté, Languedoc-Roussillon, Limousin, Lorraine, Lower Normandy, Nord-Pas-de-Calais, Picardy, Poitou-Charentes
Germany – Lüneburg, all of the former East Germany sans Berlin (except Leipzig)
Greece – Dytiki Makedonia, Ionia Nisia, Kriti, Peloponnisos, Sterea Ellada, Voreio Aigaio
Italy – Abruzzo, Molise, Sardinia
Malta – all
Poland - none
Portugal – Algarve
Spain – Andalucía, Canarias, Castilla-La Mancha, Melilla, Murcia
United Kingdom – Cumbria, Devon, East Yorkshire and Northern Lincolnshire, Highlands and Islands, Lancashire, Lincolnshire, Merseyside, Northern Ireland, Shropshire and Staffordshire, South Yorkshire, Tees Valley and Durham
Bulgaria – Southwestern region

More developed regions

This covers all European regions that are not covered elsewhere, namely those which have a GDP per capita above 90 percent of the EU average. The main aim of funding for these regions is to create jobs by promoting competitiveness and making the regions concerned more attractive to businesses and investors. Possible projects include developing clean transport, supporting research centres, universities, small businesses and start-ups, providing training, and creating jobs. Funding is managed through either the ERDF or the ESF.

In all regions, bank loans are the most prevalent type of external financing. In more developed regions, they account for 58% of finance.^[14]^[13]

Areas currently eligible

Austria – all (except Burgenland)
Belgium – all of Flanders, Brussels, Walloon Brabant
Cyprus – all
Czech Republic – Prague
Denmark – all (except Sjælland)
Finland – all
France – Alsace, Aquitaine, Burgundy, Brittany, Centre, Champagne-Ardenne, Île-de-France, Midi-Pyrénées, Pays de la Loire, Provence-Alpes-Côte d'Azur, Rhône-Alpes, Upper Normandy
Germany – Berlin, Leipzig, all of the former West Germany (except Lüneburg)
Greece – Attiki, Notio Aigaio
Hungary – Közép-Magyarország
Ireland – all
Italy – Emilia-Romagna, Friuli-Venezia Giulia, Lazio, Liguria, Lombardy, Marche, Piedmont, South Tyrol, Trentino, Tuscany, Umbria, Valle d'Aosta, Veneto
Luxembourg – all
Netherlands – all
Poland – the Warsaw Metro NUTS2 Unit carved out of Masovian Voivodeship
Portugal – Lisbon region, Madeira
Romania – Bucharest
Slovakia – Bratislava
Slovenia - Zahodna Slovenija
Spain – Aragon, Asturias, Balearic Islands, Basque Country, Cantabria, Castilla y León, Catalonia, Ceuta, Galicia, La Rioja, Madrid Region, Navarre, Valencian Community
Sweden – all
United Kingdom – all of London, South East England, and the East of England, plus Dorset, Somerset, Gloucestershire, Wiltshire, Herefordshire, Worcestershire, Warwickshire, West Midlands, Leicestershire, Rutland, Northamptonshire, Derbyshire, Nottinghamshire, Cheshire, Greater Manchester, West Yorkshire, North Yorkshire, Tyne and Wear, Northumberland, South Western Scotland, Eastern Scotland, North Eastern Scotland and East Wales

European territorial cooperation

This objective aims to reduce the importance of borders within Europe – both between and within countries – by improving regional cooperation. It allows for three different types of cooperation: cross-border, transnational and interregional cooperation. The objective is currently by far the least important in pure financial terms, accounting for only 2.5% of the EU's regional policy budget. It is funded exclusively through the ERDF.

Instruments and funding

The cohesion policy accounts for almost one third of the EU's budget, equivalent to almost EUR 352 billion over seven years in 2014-2020,^[17] and EUR 392 billion in 2021-2027,^[1] dedicated to the promotion of economic development and job creation, and for helping communities and nations get ready for the European Union's transition to a more sustainable and digital economy.^[18]^[19] Cohesion lending had a large percentage of contributions to climate and environmental goals in 2021 and 2022.^[20]

The main resource of EU's territorial cohesion policy is EU's structural funds. There are two structural funds available to all EU regions: the European Regional Development Fund (ERDF)^[21] and the European Social Fund (ESF).^[22] The ERDF is intended to be used for the creation of infrastructure and productive job-creating investment and it is mainly for the businesses, while the ESF is meant to contribute to the integration of the unemployed populations into the work life via training measurements. The funds are managed and delivered in partnership between the European Commission, the Member States and stakeholders at the local and regional level. In the 2014–2020 funding period, money is allocated differently between regions that are deemed to be "more developed" (with GDP per capita over 90% of the EU average), "transition" (between 75% and 90%), and "less developed" (less than 75%), and additional funds are set aside for member states with GNI per capita under 90 percent of the EU average in the Cohesion Fund.^[23] Funding for less developed regions, like the Convergence objective before it, aims to allow the regions affected to catch up with the EU's more prosperous regions, thereby reducing economic disparity within the European Union. Examples of types of projects funded under this objective include improving basic infrastructure, helping businesses, building or modernising waste and water treatment facilities, and improving access to high-speed Internet connections. Regional policy projects in less developed regions are supported by three European funds: the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.

The European Investment Bank (EIB) has pledged to increasing its support for certain regions in its Cohesion Orientation for 2021–2027.^[24] Between 2023 and 2024, the Bank plans to allocate at least 40% of the overall finance it provides to projects in cohesion regions, increasing to at least 45% starting in 2025. The less developed areas of Europe will get at least half of this allocation, and increasing regions that receive its climate action and environmental loans.^[25]^[26]

The European Investment Bank has given €44.7 billion to projects in cohesion areas for the European Union since 2021. Included in this is €24.8 billion in 2022 alone, or 46% of all EU signatures. From 2014 - 2020, they contributed a total of €123.8 billion to projects in cohesion areas.^[27]^[28] Financial instruments from the Bank have so far helped around 6,600 projects in Greece, Italy, Poland, Spain, Portugal, Lithuania, Romania, and Cyprus.^[29] In 2022, the EIB Group contributed €28.4 billion to initiatives in cohesion areas and €16.2 billion in climate action and environmental sustainability.^[30] 44% of the EIB Group's overall loan in the European Union in 2022—or €28.4 billion—went to projects in cohesion areas. In the same year, projects with a combined investment cost of €146 billion were backed by EIB loans across the EU.^[31]^[32] For the EU as a whole, the European Investment Bank invested €16.2 billion in climate action and environmental sustainability in 2022 in cohesion areas. This is over half of the EU's total EIB funding for climate change and environmental sustainability.^[33]^[34]

References

^ ^a ^b "The EU's main investment policy". European Commission. Retrieved 28 October 2022.
^ Bank, European Investment (4 July 2023). EIB Group activities in EU cohesion regions 2022. European Investment Bank. ISBN 978-92-861-5581-9.
^ "Press corner". European Commission - European Commission. Retrieved 28 July 2023.
^ "European Spatial Development Perspective". Archived 21 January 2007 at the Wayback Machine. Retrieved 7 April 2009.
^ "European Spatial Planning Observation Network". Retrieved 7 April 2009.
^ Is my region covered?, European Commission Regional Policy. Accessed 11 June 2011
^ Santos, E., Lisboa, I., Moreira, J., & Ribeiro, N. (2020, October). Regional Competitiveness and the Productivity Performance of Gazelles in Cultural Tourism. In International Conference on Tourism, Technology and Systems (pp. 114-124). Springer, Singapore.[1]
^ ^a ^b "Regional Cohesion in Europe 2021-2022". EIB.org. Retrieved 9 August 2022.
^ "Inforegio-Newsroom". ec.europa.eu. Retrieved 9 August 2022.
^ "Coronavirus (COVID-19): SME policy responses". OECD. Retrieved 9 August 2022.
^ Bank, European Investment (4 July 2023). EIB Group activities in EU cohesion regions 2022. European Investment Bank. ISBN 978-92-861-5581-9.
^ NEFI. "News". NEFI - Network of European Financial Institutions for SMEs. Retrieved 28 July 2023.
^ ^a ^b ^c "European Small Business Finance Outlook" (PDF). EIF. Archived (PDF) from the original on 19 December 2016.
^ ^a ^b "Regional Cohesion in Europe 2021-2022". EIB.org. Retrieved 9 August 2022.
^ "EIB Group Activities in EU cohesion regions in 2021". www.eib.org. Retrieved 15 September 2022.
^ "Regional Cohesion in Europe 2021-2022". EIB.org. Retrieved 9 August 2022.
^ "Cohesion policy". European Commission Glossary.
^ Bank, European Investment (12 July 2022). Regional Cohesion in Europe 2021-2022: Evidence from the EIB Investment Survey. European Investment Bank. ISBN 978-92-861-5367-9.
^ "Cohesion Policy 2021-2027". ec.europa.eu. Retrieved 8 August 2022.
^ "Special report: Climate spending in the 2014-2020 EU budget". op.europa.eu. Retrieved 15 June 2023.
^ "The European Regional Development Fund" Archived 1 February 2009 at the Wayback Machine
^ "The European Social Fund" Archived 28 February 2009 at the Wayback Machine
^ Cohesion policy
^ "2021-2027: Cohesion policy EU budget initial allocations". cohesiondata.ec.europa.eu. Retrieved 15 June 2023.
^ Bank, European Investment (17 May 2023). "Cohesion and regional development Overview 2023". {{cite journal}}: Cite journal requires |journal= (help)
^ "Regions and cities team up with Commission and EIB in the race against clock to boost cohesion investment and recovery efforts for all citizens". cor.europa.eu. Retrieved 15 June 2023.
^ Bank, European Investment (17 May 2023). "Cohesion and regional development Overview 2023". {{cite journal}}: Cite journal requires |journal= (help)
^ "Inforegio - Cohesion Fund". ec.europa.eu. Retrieved 15 June 2023.
^ Bank, European Investment (17 May 2023). "Cohesion and regional development Overview 2023". {{cite journal}}: Cite journal requires |journal= (help)
^ Bank, European Investment (4 July 2023). EIB Group activities in EU cohesion regions 2022. European Investment Bank. ISBN 978-92-861-5581-9.
^ "EIB Group activities in EU cohesion regions 2022". European Investment Bank. Retrieved 28 July 2023.
^ "Regions and cities team up with Commission and EIB in the race against clock to boost cohesion investment and recovery efforts for all citizens". cor.europa.eu. Retrieved 31 July 2023.
^ Bank, European Investment (4 July 2023). EIB Group activities in EU cohesion regions 2022. European Investment Bank. ISBN 978-92-861-5581-9.
^ "Eighth National Communication and Fifth Biennial Report from the European Union under the UNFCCC" (PDF). unfccc.int. Retrieved 28 August 2023.

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Law	Acquis Charter of Fundamental Rights Citizenship passports identity card (list) Driving licence Competition law Copyright law Directive Citizens' Rights Mechanism for Cooperation and Verification Official Journal Legislative procedure Citizens' Initiative Regulation Treaties opt-outs LGBT rights
Foreign relations	Potential superpower status Neighbourhood Policy European Economic Area Economic Partnership Agreements European Union Association Agreement Stabilisation and Association Process Eastern Partnership Euronest Parliamentary Assembly EU Strategy for the South Caucasus Northern Dimension Union for the Mediterranean Global Strategy Free trade agreements EU/ESA Framework Agreement Enlargement Current agenda Statistics