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Toward Re-Centralization? A “Hidden” Challenge for the European Union Regional Policy

0 Comments 🕔12.Dec 2014

This article is part of our EU Cohesion Policy 2014-2020 feature.

The Coombe, Dublin, Ireland. Credit: William Murphy

The Coombe, Dublin, Ireland. Credit: William Murphy

by Nicola Francesco Dotti and Rocco Luigi Bubbico

 

Introduction

In the current debate about the economic crisis affecting Europe, limited attention has been devoted to regional aspects. The national dimension has attracted most of the interest of the political debate, while the intra-national effects of the crisis have been neglected. While there are major claims for a more “European Union (EU)-driven” intervention to better coordinate efforts across member states, the regional and local dimensions of the crisis have been left behind. In this regard, the EU Commission has proposed a significant reform of the EU Cohesion Policy for the programming period 2014–2020, addressing the crisis using a place-based approach, but the current political debate does not seem to have fully understood this opportunity.

In this framework, we want to highlight the risk determined by a ‘hidden’ challenge: Since the beginning of the crisis, member states have re-centralized policies, weakening the possibility for a policy intervention adapted across different territories. Our objective is to argue in favor of a place-based policy to address the current crisis considering regional and local specificities, based on the recognition that the EU already has a policy in place that is able to provide a significant contribution to recover from the crisis.

 

The territorial dimensions of the crisis

On the one hand, the debate on the current crisis in Europe is broad and very animated, and this is not surprising. On the other hand, at least three major elements seem to be missing from the whole debate: the prevalence of the national perspective, the underestimation of the EU Cohesion Policy as a tool to recover from the crisis, and the absence of a territorial perspective.

Both political and scientific debates on the crisis have assumed the national scale as the predominant one, if not the only one. This is determined by the prevalence of a nation-state perspective, but its implications have not really been considered. All of the strategies have been implemented by national governments – from tax reforms and improved social protection to labor market reforms and business supports. While the effectiveness of these measures seems far from being able to end the crisis, other levels of policy-making have been largely neglected.

There have been questions regarding the role of the EU, or lack thereof. In the political debate, much has been said about the possibility of the EU breaking up as a result of delays in intervention, its indecision, and the structural limits of its governance. While we do not wish to enter into a debate on the EU’s effectiveness in solving the crisis (mainly in terms of Eurozone and the banking union), we would like to draw attention to the limited discussion on the EU Cohesion Policy as a tool to recover from the crisis. The interest for this policy is determined by the fact that an EU-wide investment policy is already in place, with its governance, mechanism, and rationale that could be immediately used to address the crisis.

Finally, the territorial dimensions are the third topic missing from the general debate on the crisis. The focus, which has been limited to the national perspective, has given little attention to the effects within each member state, while it can be easily shown that even in the short-term impact of the crisis (2008–2010), regional differences in terms of per capita gross domestic product (GDP) and unemployment are very significant (see Figure 1). Looking within national borders, we can observe a patchwork of regional trends, most of them negative indeed. The crisis has determined differentiated regional impacts, and these differences claim for interventions adapted to differentiated territorial contexts.

Figure 1. European Regions 2010: Economic Welfare and Unemployment. Credit: ESPON 2013*

Figure 1. European Regions 2010: Economic Welfare and Unemployment. Credit: ESPON 2013*

 

The EU Cohesion Policy

In order to promote a public intervention, the EU Cohesion Policy is an already established tool that can contribute to solving the current crisis. Nevertheless, it is necessary to understand the policy’s rationale to fully benefit.

Since the 1970s, all European countries have been interested in a process of institutional decentralization, which has been moving in two directions. On the one hand, the process of European integration has been supported by the establishment of supranational institutions, and not only by international agreements. The creation of the EU is a sign of this process of supranational political integration, with multiple effects such as the EU law and the creation of EU policies (the CAP, the Cohesion Policy and the Framework Programme/Horizon 2020 are the three most significant examples). Despite all of the limitations in this process, the EU has become a benchmark worldwide (e.g., MERCOSUR in Latin America). On the other hand, all the European countries have been interested in a process of decentralization with growing powers for sub-national tiers of governments, mainly regions. Even though each country has followed a different path that takes into account national specificities, this general trend aims to improve the effectiveness of policies by tailoring interventions to each region.

In this regard, the EU Cohesion Policy has provided a significant contribution in terms of increasing resources for regional governments and explicitly involving them in the design of regional development programs. Specifically, the Cohesion Policy has pushed member states to differentiate policy interventions across regions in order to tailor interventions according to territorial specificities. Nonetheless, this is possible only if regional governments have the resources to do it.

 

The Policy challenge

In this context of differentiated regional impacts determined by the crisis, the EU Cohesion Policy is a significant tool to promote investments adapted to differentiated regional needs. However, we have observed very different adaptation strategies across member states in terms of balance between central and regional interventions as well as capacity to promote capital investments (see Figure 2 and Figure 3).

The general trend is a re-centralization of public investments at the national level, with two dangerous effects. The first effect is the centralization of intervention risks to undermine the possibility for policies adapted to regional specificities. Even though the crisis is common all over Europe, regional differentiations cannot be neglected, as shown in Figure 1. Second, since the EU Cohesion Policy relies on the resources of regional governments, if national governments reduce their transfer, regions cannot fully benefit from this policy exploiting EU resources. This criterion called ‘additionality’ is a fundamental characteristic of the EU Cohesion Policy and aims to create synergies between European and national resources coordinating public investments’ strategies. Yet, if regions do not have these resources, this coordination cannot be implemented.

Public capital expenditure graph

Figure 2. Public Capital Expenditure and Public Non-Capital Expenditure in Europe: 2008–2011 Average vs. 2004–2007 Average as a percent of GDP** (Source: Eurostat)

 

Capital expenditure graph

Figure 3. Public Capital Expenditure by Level of Government as a percent of GDP**

 

Conclusions

In this article we have explored a hidden challenge in the EU Cohesion Policy. The reduction in transfer in favor of regional governments has resulted in a re-centralization of policy interventions in order to face the crisis, which in turn has resulted in two risks: the limited adaptation of interventions to regional specificities and the weakening of regional capacities to exploit the EU Cohesion Policy. In this regard, we would like to open the discussion to approaches that can be used to overcome these risks. A first contribution has been recently published based on the “territorial capital” approach,[1] but the debate is still open, since the crisis does not seem to be over and the EU needs further contributions.

 

Nicola Francesco Dotti is a post-doc in Economic Geography at Cosmopolis, Centre for Urban Research of the Vrije Universiteit Brussel (VUB). He did a PhD on the territorial impact assessment of the EU Cohesion Policy based on the territorial capital theory. His current research interest is in the European research geography, and how research can support territorial policy innovations.

Rocco Luigi Bubbico is a Policy Analyst at the Directorate-General Regional and Urban Policy (DG-Regio) of the EU Commission. He has been working on regional public investment and the integration of EU regional policy and economic governance. He holds a PhD in planning at University of Manchester.

This paper represents solely the views of its authors and cannot, under any circumstances, be regarded as the official position of the EU Commission. 

This article is part of our EU Cohesion Policy 2014-2020 feature.


* Map provided by ESPON: <http://www.espon.eu/main/Menu_Publications/Menu_MapsOfTheMonth/map1103.html>. Texts and maps stemming from research projects under the ESPON programme presented in this report do not necessarily reflect the opinion of the ESPON Monitoring Committee.

** Graphs first published in Nicola Francesco Dotti and Rocco Luigi Bubbico, “New Challenges for Structural Funds: The New Territorial Capital Approach in the Perspective of the Evolution of the EU Regional Policy” European Structural and Investment Funds Journal 2, no. 2 (2014): 89–100, available at <www.lexxion.de/en/verlagsprogramm-shop/details/4599/391/estif/estif-2/2014/new-challenges-for-structural-funds>.

[1] Nicola Francesco Dotti and Rocco Luigi Bubbico, “New Challenges for Structural Funds: The New Territorial Capital Approach in the Perspective of the Evolution of the EU Regional Policy” European Structural and Investment Funds Journal 2, no. 2 (2014): 89–100, available at <www.lexxion.de/en/verlagsprogramm-shop/details/4599/391/estif/estif-2/2014/new-challenges-for-structural-funds>.

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