European Cohesion Policy

Willem Molle

• Publisher: Routledge
• Year: 2007
• Print ISBN: 9780415438117
• eBook ISBN: 9781134071999
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The only comprehensive text available for advanced study and professional reference, this book brings much needed clarity to both the theoretical and practical aspects of EU intervention.

Integrating both theoretical and practical research in a clear and accessible structure, covering economic, social and territorial issues European Cohesion Policy provides a systematic view of the various stages of the whole policy cycle, looking in detail at:

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• the evolution of the problems
• the design of the policy system
• the implementation in practice
• the evaluation of effects.

An authoritative analysis of the problems and debates involved, European Cohesion Policy is essential reading for students, policy makers, development workers and researchers working in all aspects of European policy.

1 Introduction

Introducing the policy cycle

1.1 Why, what and for whom?

1.1.1 Why was this book written; what are its specific characteristics?

Much has been written about both the anatomy of the cohesion problems and about the best ways to attack them with adequate policies. In recent years the results of an increasing number of studies on EU cohesion issues have been published. So the question, ‘What can a new book add to this?’ is warranted. The answer is to take away some of the major shortcomings in the existing literature. The contributions of this book (its ‘value added’) are:

• Comprehensive scope. Much of the literature is about either regional economics, social policy, or about specific problems such as economic convergence or social deprivation. Another part is about the shaping of multi-level policy making. Some of this literature is only descriptive; other work is very econometric. This book covers both issues of economic, social and territorial cohesion problems and issues of various policies devised to solve these problems.
• Integrated approach. The book integrates the results of theoretical and empirical work on both the evolution of cohesion problems and on the fundamentals of policy design and implementation. It draws from different disciplines such as economics, political science, sociology, geography and public administration.
• Clear structure. It facilitates access to the vast material on complicated issues by providing a rigorous structure inspired by the policy cycle; identification of the problems (diagnosis); design of an intervention method; delivery and implementation (therapy); evaluation and feedback.
• Long time frame. Much of the available studies deal with the present situation only. As the cohesion problem is of a structural nature and solutions take time we have to look at the long-term development. So this book covers a period of more than half a century from the very beginnings of the EU up to the present time. This long time frame applies to both the analytical part and the policy part. It also applies to the theoretical foundations of both the development of the system and the influence of policy.¹
• Open and critical attitude. The book is based on an evaluation of the existing theoretical and empirical literature. It is non-partisan in the sense that it does not take a priori views and it does not set out to make a point. On the contrary, it acknowledges the results of the work of different schools. It substantiates positions by referring to authoritative studies made of the subject. It does not present the existing set up as self-evident but refers to other options that might have been chosen as well. It invites the reader to reflect critically on the foundations and modalities of the EU cohesion policy.
• Extensive reference base. The broad scope of the book means that it is not based on a small specialist part of the literature but on a wide range of contributions from very different disciplines and information sources. As many readers may be unfamiliar with the origins of the information given in the book that is outside their own specialist area we will give ample reference to the evidence that substantiates the views expressed in the book. This will moreover be of much help to those who want to use the book for more indepth study of specific parts. We hope that the book will in this way contribute to the design of better policies and in doing so help to optimize welfare of the European citizen.

1.1.2 For whom is the book written? Which readership?

The book addresses primarily two groups of readers:

• Students. These include in particular students in economic geography, regional economics but also students in sociology, public administration, political science and European integration. In this book they will find a balanced view of the subject whereby issues are first of all analysed from the theoretical point of view, immediately followed by a presentation of the insights of empirical analysis. Ample reference to publications in the form of books, articles, documents and websites permits students to use it as a starting point for executing tasks on specific subjects. Although this book is not one that provides easy access to simplified notions and precooked exam questions, it should be of essential reading for advanced students (master level) of this fascinating field of EU policy making.
• All those who are professionally interested in European cohesion policy. This group includes, first, all those involved in the daily execution of cohesion policy. It also includes researchers, consultants and journalists who find here the essential framework for their specialist work. Although this book is not a popular ‘How to’ book it provides the essential information on the practical functioning of the EU policy machinery; essential for effective contribution in the definition of specific projects and the monitoring and evaluation of policy measures.

The material of the book has been organized to permit a fruitful study of individual subjects without having to work through the previous chapters. To facilitate deeper and more advanced study of the subjects treated we give ample references to more specific literature.² To facilitate the access of all readers from different target groups, the book has been written in such a way that it can be read with only a basic knowledge of one or other of the diverse disciplines cited before. Moreover the use of mathematics has been avoided.

1.2 European cohesion policy: a controversial subject

1.2.1 The controversy

The EU is confronted with very large disparities in wealth. These lead to social and political problems. To cope with such problems the EU has elaborated a cohesion policy. This policy absorbs the lions’ share of the EU budget. It is implemented through thousands of development projects. It influences in a multitude of ways the daily work of hundreds of thousands involved in its delivery and subjected to its effects. And it arouses both admiration and contempt.

Admirers say European cohesion policy is the cement that holds the construction of the EU together. Without it the construction would fall apart. It would mean that the flow of benefits (for instance enhanced productivity and hence welfare growth) that one draws from integration would stop. In this view the cost of cohesion policy is the price we pay for earning the advantages of integration. Although many would agree with this major political statement there is not much agreement as to the actual performance of EU cohesion policy.

The dominant view is more or less positive. The premise is that without the EU cohesion policy the economic system would increase divergence between the rich and the poor. Those who hold this view consider that in the past the EU cohesion policy has been able to decrease the wealth difference between member countries. Moreover, they consider that the EU has increased the effectiveness of the joint efforts of the EU and the member states by setting up better intervention and delivery systems than the national ones. In other words: thanks to the EU cohesion has improved. We should be proud of it.

There are other views on cohesion policy, some of which are highly critical. Some consider that the European cohesion policy is the very opposite of what it says and realizes. Some find that cohesion policy is not appropriate: a good set of other policies producing the conditions for healthy growth would also lead to convergence of wealth levels. Others find that cohesion policy is not effective: they observe that during the years that the EU cohesion policy was very limited disparities decreased: following huge increases in EU cohesion spending, disparities have actually increased. Yet others find that the policy is inefficient; observing that the actual functioning of the policy takes up a lot of resources and just keeps an army of civil servants from doing better things. In short they consider EU cohesion policy a waste of money. We should be ashamed of it.

1.2.2 What to do to bring clarity?

Who is right, who is wrong in this debate? How good are the arguments of each of the antagonists? The answer to these questions is not easy. It requires a whole series of investigations. To begin with, one has to define correctly the problems and their possible solutions. Next, one has to take a closer look at the soundness of the theoretical foundations of the various strands of thought. Finally, one has to measure correctly the efforts made by the policy and observe empirically the effects it has realized. In other words one has to go in depth into the various mechanisms that produce cohesion, and into the way policies can support them. That is in essence what this book sets out to do.

In the rest of this introductory chapter we will start with some definitions: each of the three words in the title of this book merits a short introduction. Next we introduce the basic structure of the book followed by its main features.

1.3 Introducing the main notions

1.3.1 Europe: from small nucleus to almost complete coverage

The term Europe here designates the EU.³ Now the EU has changed quite a bit in the course of the time period we cover in this book. This applies both to its area and subject coverage.

Area. The EU started in the early 1950s from a fairly small basis of originally six countries. In the course of the past decades the EU has been successful in realizing its objectives of providing an area of peace and economic growth. In this way membership of it has become attractive for other European countries. The number of member countries has gradually increased, as countries that fulfil the criteria for membership wish to share in the advantages of European integration. This has resulted in several rounds of enlargement. The EU now consists of 27 countries.⁴ Even though the EU has not covered this area over the whole period of its existence, we will, as much as possible, describe developments for this larger area. However, due to data limitations we will often be constrained to smaller areas. This applies notably to the period before 1990; for this period comparable data for countries in Central and Eastern Europe are not available.⁵

Subjects. The EU started off as a common market (CM). At that moment the EU did have almost no competences in matters of cohesion. However, over time and with increased integration the need for an EU cohesion policy increased and the EU has been endowed with very extended competences in cohesion matters. We will go in detail into the way in which this process has been given shape.

1.3.2 Cohesion: from a political notion to operational indicators

The EU is confronted with very large cohesion problems. One of them is the existence of large disparities between its different parts. These disparities were already quite large in the former EU 15. To give an example: by the turn of the century the income per head in the richest region was about five times as high as in the poorest region. Since the recent enlargement the disparities in income have doubled; the average gross domestic product (GDP) per head in the ten new member states (NMSs) in Central and Eastern Europe is about half the average of the EU 27.

The capacity of regions and countries to do something about this disparity is not equally distributed. Some countries that are economically weak tend to stay so because their vulnerability in macro economic and monetary matters puts them at risk of having to adapt their policies to counteract important turbulence on exchange markets, with negative effects on economic growth. Large rich countries tend to be able to shield themselves, to a large extent, from such problems.

Next there are also differences in access to employment. These have also increased since the accession of the NMSs. In the EU 27 only 56 per cent of the population of working age held a job (around 2004), while the figure for the EU 15 was 64 per cent. Problems of unemployment are sometimes exacerbated by problems of social exclusion; people that have lost their job risk ending up in a vicious circle of lack of income (poverty) and exclusion from social contacts and from participation in social life. There are also big differences between parts of the EU in the occurrence of this problem. However, that is not so much a question of the less developed areas; social problems can be very acute also in the urban areas of the wealthier member states.

These large disparities are often felt as morally unjust and may lead to discontent. In some cases such discontent takes very violent forms, for instance riots in the suburbs of major cities. In other cases it takes the form of absence of support, which on the EU level may translate into a lack of progress for the European project. So for economic, moral and political reasons these disparities are a problem. The EU has realized, itself, that it cannot function well in cases where large segments of the European society are not part of the beneficial effects of integration. So it has set out to foster internal cohesion.

Cohesion is a concept that has been introduced in the EU policy without a precise definition. Over time such a practical definition has been developed. Cohesion is now understood as the degree to which disparities in social and economic welfare between the different regions or groups within the EU are politically and socially tolerable.

Whether cohesion is achieved is largely a political question. In general, one does not try to answer this question in the static way it is asked here. One rather looks at it in a dynamic way. That means that one looks at the change in disparity from one period to another. A decrease in disparity (convergence⁶) then means improved cohesion and an increase in disparity (divergence) means less cohesion. Any decrease in disparity is supposed to ease the situation in terms of political and social tolerance, any increase acerbates the situation on this score.

1.3.3 Policy: a multi-actor game in a cyclical framework

Cohesion does not come about by the natural processes that operate in modern socio-economic and political systems. As a matter of fact the very dynamics of the integrated economy of the EU may even increase cohesion problems. So, a policy is needed to bend the processes in such a way as to lead to targets: less disparity and more cohesion. Policy making involves the coherent use of a set of instruments to influence the determining factors of the target variables. So the essential elements of the policy are: the attribution of responsibilities to actors, the definition of objectives, the set up of a framework for intervention and the deployment of instruments. We will detail each element somewhat hereafter:

Actors. Given the scale of the problem the EU has taken responsibility for a significant part of this policy. It is not solely responsible, however. Member states play an important role. Moreover, the EU also involves local governments and representatives of the third and private sector. This multi-level governance of the EU cohesion policy involving many actors is set up to increase participation and hence effectiveness.

Objectives. The EU has set a number of objectives for its cohesion policy. The first is directly related to the main problem of disparity discussed in the previous section. The others have been added at certain points in time in EU development.

1. Improve cohesion (that is decrease disparities or generally the convergence of wealth levels) on three dimensions: economic, social, territorial.
2. Contribute to other EU objectives:
   • Facilitate major advances in economic integration such as enlargement or the passing into higher stages of integration (e.g. the Economic and Monetary Union (EMU)).
   • Contribute to major policy targets such as the increase in competitiveness or the stimulation of environmental sustainability.

Framework. Taxpayers and other stakeholders that contribute to the policy want to be assured that the policy is effective. To that end, one has to set up adequate institutions and intervention systems, implement in practice the policy and evaluate the results. The better understanding that is thus gained can be used to adapt the policy and make it better geared to its objectives.

Instruments. The EU no...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Illustrations
• Foreword
• Preface
• Acknowledgements
• Abbreviations
• 1 Introduction
• Stage I Assessing the Problems and Identifying Their Causes
• Stage II Designing a Solution-Oriented Intervention System
• Stage III Specifying Objectives and Matching These with Instruments
• Stage IV Implementing Actions and Delivering Results
• Stage V Checking Effectiveness and Consistency
• Stage VI Drawing Lessons
• Notes
• References