Steps to bridge economic gaps between countries and regions in the EU

Within the European Union there are significant differences in terms of development of countries and regions. In the East, in Romania or Bulgaria for instance, apart from much lower salaries as compared with Germany or the Nordic countries, there is less access to quality health and education services and to modern transport infrastructure. For this reason the European Union has drawn up policies aimed at reducing disparities between its countries and regions. The most important one is the so-called cohesion policy aimed at creating strategies for development through interventions in infrastructure, research and innovation, employment, education, the business sector, environmental protection, climate change and energy efficiency. Under this strategy, a policy package is applied at regional and even local level based on public investment in the essential fields.

Implementing the cohesion policy, beyond its financial aspect, largely depends on the countries’ and regions’ ability to absorb EU funds. This topic was at the centre of events hosted by Brussels recently during the European Week of Regions and Cities. Opening the event, the European Commissioner for Regional Policy Corina Cretu and President of the Committee of the Regions, Karl-Heiz Lambertz, presented the 7th report on the EU’s economic, territorial and social cohesion. The document, which analyses the current situation, says that Europe’s economy is bouncing back but disparities persist between and within member states. The report also says that in the past two decades, the cohesion policy has yielded results in all EU regions and has been a major source of investment. It has directly created 1.2 million jobs in the EU in the last 10 years while public investment favouring economic growth has decreased drastically in many member states. Here is EU Commissioner for Regional Policy Corina Cretu:

“Differences between the regions have started to narrow again since 2015, yet many EU citizens live in regions where the GDP is still lower than before the crisis. Over the last years Europe’s poor regions have converged towards the EU average but there is still a long way to go before these regions can offer the same opportunities to the citizens. Europe’s richest regions by contrast have grown faster than all, although they are confronted to migration pressure, social exclusion and poverty, pollution and security concerns. Those regions in the middle, that we can regions in transition, have seen the GDP per capita growth slow down, wages stagnated and the industry sector remained small and they remain the most vulnerable to globalisation challenges.”

The economic crisis that has just recently ended would have affected Europe even worse had it not been for the cohesion policy, Corina Cretu also said: 

“Investments financed by cohesion policy played an essential role during the economic crisis and beyond. For many countries it remained the only source of stable, long-term investments. As you know, many national budgets cut firstly the investments. Cohesion policy provides funding of more than 8% of public investments in the EU, a figure which rises to 50% for a number of countries. In these countries, cohesion policy finances more than a half of the new connections to broadband, of the schools renovated or of the kilometers of roads built or renovated. The investments increased GDP of the 12 member states which joined the EU in 2004 and 2007 by 3% in 2015, while for the current period, the increase is estimated to be a further 3% cohesion policy, so it’s supporting real convergence”. 

According to official data, under the financial framework 2014-2020, Romania has been allocated some 23 € billion from the cohesion fund, 10% less than the amount allocated for the 2007-2013 period. However, Romania is faced with issues concerning the absorption of such funds, mainly because of a poor administrative capacity, at national, regional and local level. The main issues are the lack of adequate resources for co-financing, the lack of competences needed to start or implement projects or the lack of political will. However, the European Commissioner Corina Cretu says that there are solutions:

“I always say that money is not everything. The most important thing is the administrative capacity. For 2014-2020, we have introduced a number of ex ante conditionalities and also we have country specific recommendations to be fulfilled by the member states and I think in many countries we did some progress and we offer a lot of instruments, tools, platforms, advisory hubs, we have pier to pier, we have more than 3000 people working on the ground. I think is very important to make exchange of good practices. I’m a big fan of this exchange of good practices, because only when you see with your own eyes you know what to do.”

According to the European Commission, public consultations will be launched in early 2018 on the future cohesion policy. Against this background, a proposal will be presented regarding the multi-annual financial framework next year in May, followed by concrete proposals concerning the cohesion policy after 2020. (Translated by E. Enache & M. Ignatescu)