What is the main objective of the EU cohesion policy?

The primary objective of the EU cohesion policy is to promote and strengthen economic, social and territorial cohesion by reducing disparities between levels of development across various regions, thereby ensuring balanced and sustainable development within the European Union.

How is funding allocated under the EU cohesion policy?

Funding under the EU cohesion policy is allocated based on regional development needs and gaps. Regions are categorised as less developed, transition, or more developed, with a higher proportion of funds allocated to less developed regions. Funding decisions are also influenced by economic, social, and territorial cohesion objectives.

What are the key elements for a region to qualify for EU cohesion policy funding?

The key elements for a region to qualify for EU cohesion policy funding include: having a per capita gross domestic product (GDP) below 75% of the EU average, facing structural difficulties such as high unemployment or low education levels, or transitioning towards a more competitive economy.

Who is eligible to receive funds under the EU cohesion policy?

EU cohesion policy funds are available to all regions and cities in the European Union to finance activities that support job creation, business competitiveness, economic growth, sustainable development, and improving citizens' quality of life.

How does the EU cohesion policy contribute to regional development and reducing disparities?

The EU cohesion policy funds projects that foster innovation, enhance employment, and promote social inclusion in regions. Its primary aim is to reduce economic and social disparities among EU regions, promoting balanced, sustainable development. This is achieved through three main funds: the European Regional Development Fund, the Cohesion Fund, and the European Social Fund.

What is the primary purpose of the EU Cohesion Policy?

EU Cohesion Policy is a commitment by the European Union to promote the harmonious development of its member states, reduce disparities among EU regions, and ensure balanced wealth distribution.

What changes were made to the EU Cohesion Policy Post-2020?

Post-2020, EU cohesion policy was aligned more closely with EU priorities focusing on research, innovation, and climate change mitigation. Changes under CRII and CRII+ prioritize healthcare systems, SMEs, labour markets, and more due to COVID-19.

What are the three main goals of the EU Cohesion Policy?

The three main goals are Economic convergence, Regional competitiveness and employment, and European territorial cooperation.

What significant event in EU cohesion policy happened in 2020?

In 2020, the Just Transition Fund was introduced to support regions heavily impacted by the transition towards a green economy.

How is the distribution of resources by the EU Cohesion Policy determined?

Distribution is based on the GDP per capita of each region, especially targeting less developed areas to stimulate progress.

EU Cohesion Policy: Definition, Budget & Post-2020 Changes

Understanding EU Cohesion Policy

The European Union's cohesion policy is an integral part of establishing balance and harmony among Europe's diverse regions. It plays a pivotal role in fortifying economic, social, and territorial cohesion. But, what exactly does this mean for EU member states and why is it vital? Stay with us on this learning journey as we delve into the depths of EU cohesion policy.

What is EU Cohesion Policy?

EU cohesion policy is a strategic commitment by the European Union that aims to promote and support the harmonious development of its member states. This commitment is backed by the EU's budget, which fortifies investments in regions to stimulate job creation, business competitiveness, economic growth, sustainable development, and improve citizens' quality of life.

The policy was established to reduce disparities in wealth and development among EU regions. You will find that it is particularly concerned with assisting poorer or less developed areas. By doing so, it aims to ensure a balanced distribution of benefits among all member states, irrespective of their economic standing.

EU cohesion policy is effectively targeted at all 274 regions of the EU to improve, among other aspects, infrastructure, quality of life, and economic competitiveness while maintaining a focus on sustainable development. However, the distribution of resources is heavily based on the GDP per capita of each region.

Key Principles and Objectives of EU Cohesion Policy

At its core, the EU cohesion policy aims to ensure that all regions have equal opportunities and access to growth. It serves as a beacon to guide regional development through three primary goals:

Economic convergence
Regional competitiveness and employment
European territorial cooperation

The principle of economic convergence focuses on accelerating growth in the EU's least developed regions. It's aimed at closing the gap between these regions and the rest of the EU.

For instance, a region in Eastern Europe that relies heavily on traditional means of farming might receive support, via EU cohesion policy, for developing its agricultural sector. This aid could range from financing the purchase of modern machinery, providing training programmes for farmers to introducing high-tech solutions in farming.

The second objective, regional competitiveness and employment, seeks to fortify the resilience and adaptability of regions that do not qualify as 'least developed'. The aim here is to bolster research and innovation, improve accessibility, boost quality of employment and integrate sustainable development practices into regional economy.

The third and final key objective is European territorial cooperation. This principle promotes cross-border activities to tackle common issues. It can encompass collaboration in sectors such as education, health, environment, research or culture. The overarching aim of this component of the policy is to cultivate harmony among EU regions and develop collective strategies for shared challenges.

The frameworks for spending under the cohesion policy are set in seven-year periods. For the 2021–2027 period, the policy is endowed with about €330 billion, representing around 30% of the total EU budget.

As seen, EU cohesion policy is a massive financial tool geared towards eliminating the stark disparities among various regions of the EU. It plays a significant role in shaping the growth and development landscape across the EU, making it a critical contributor to our modern Europe's fabric.

EU Cohesion Policy and its Budget Implications

The EU cohesion policy has significant implications on the budgetary considerations of the European Union. By strategically investing in the development of different regions, the cohesion policy ensures a more balanced distribution of growth and prosperity throughout the Union.

Understanding Cohesion Policy EU Budget

The Cohesion Policy EU Budget refers to the financial resources allocated by the EU for implementing the cohesion policy. It forms a substantial portion of the EU's total budget and is specifically designed to support various regional development initiatives.

To understand the extent of the Cohesion Policy EU Budget's impacts, it's essential to consider its size and allocation. The EU allocates nearly one-third of its whole budget towards cohesion policy. For the period of 2021-2027, the Cohesion Policy EU Budget is approximately €330 billion.

EU's total budget for 2021-2027	€1.074 trillion
Cohesion Policy EU Budget for 2021-2027	€330 billion
Percentage of total budget	\(\approx\) 30%

The budget is channelled through different funds aimed at distinct areas of development. These funds include the European Regional Development Fund (ERDF), the Cohesion Fund (CF), and the European Social Fund Plus (ESF+), with the ERDF and ESF+ being accessible to all EU regions while the CF is dedicated to countries with a Gross National Income (GNI) per inhabitant less than 90% of the EU average.

For instance, funds from the ERDF could be used to support technological advancement and innovation in businesses within a specific region, while the ESF+ might fund upskilling programmes for the workforce of the same region.

The allocation of the Cohesion Policy EU Budget is influenced by a region's GDP per capita compared to the EU average, unemployment levels, demographic challenges among other factors. The lesser the wealth of a region compared to the EU average, the higher the amount it receives from the cohesion fund.

Changes in EU Cohesion Policy After 2020

Post-2020, changes were introduced to the EU cohesion policy to reflect new challenges and to make it more streamlined, flexible, and effective. One crucial update was to align the policy more closely with the broader priorities of the EU, focusing on areas like research, innovation, and climate change mitigation.

Following the COVID-19 pandemic, additional changes have been made to the Cohesion policy, under the Coronavirus Response Investment Initiative (CRII) and CRII+. These adaptations prioritise healthcare systems, SMEs, labour markets, and other vulnerable sectors impacted by the crisis.

Several improvements have been proposed concerning policy delivery, cut red tape and increasingly digitalise procedures. Furthermore, there is a vast emphasis on flexibility and the ability to adjust to unforeseen circumstances – an important lesson learnt from the recent continuing crisis.

The 'Just Transition Fund' was established post-2020 as a part of the EU Cohesion Policy, it aims to alleviate the social and economic impacts of the transition to a climate-neutral economy, focusing on regions most affected by this transition. This fund ensures that the EU's climate goals do not disproportionately disadvantage certain regions and sectors.

In conclusion, the changes made after 2020 serves to make the EU cohesion policy more coherent, targeted, and better suited to tackle today's challenges. It offers a renewed focus on results, enhanced territorial cooperation, and a sharp attention on addressing each region's specific needs. It reconfirmed the EU's commitment towards ensuring cohesion, balance, and harmonious development.

Critique of EU Cohesion Policy

The EU cohesion policy, despite its ideals and objectives, has not remained immune to debates and controversies. It is faced with a mix of both macro and micro-level criticisms, questioning its efficiency, impact, and fairness in resource distribution. Let's delve into these criticisms and consider how the EU envisages addressing them.

Criticisms and Controversy Surrounding EU Cohesion Policy

The main areas of criticism concerning the EU cohesion policy revolve around its effectiveness, administrative complexity and potential for misuse.

Effectiveness refers to the capability of producing a desired result or the ability to bring about a change effectively. In the context of the EU cohesion policy, it signifies the capacity of the policy to achieve its objectives of promoting economic, social, and territorial cohesion.

Prevailing concerns about the policy's effectiveness question whether the investments made translate into tangible results. A core criticism lies in the distribution of funds. Critics argue that wealthier regions often receive more development funds than poorer ones. They point out that this approach contradicts the very ethos of the cohesion policy that aims to bridge socio-economic gaps.

Administrative complexity of accessing and managing funds
Inefficient monitoring and evaluation leading to suboptimal results
Potential for misuse of funds

Notably, the bureaucratic procedures involved in accessing funds under the policy are often pointed out as a significant pain point. The long and complicated processes are prone to deterring potential beneficiaries, thus contradicting the accessibility goal of the policy.

For instance, a small local community wanting to renovate its public infrastructure might struggle with the intricacy and the length of the application process for obtaining these funds, ultimately opting for other, perhaps less beneficial, financing avenues.

Fears regarding the misuse of funds have also been voiced. Without tight monitoring and enforceable compliance measures, there is a risk that allocated funds may not achieve their intended purpose.

Response to Criticisms of EU Cohesion Policy

In response to the critiques presented, the European Union has embarked on a path of continual assessment and reform of the EU cohesion policy.

Priority has been given to enhance the credibility of cohesion policy by strengthening necessary outcomes and performance frameworks. In the context of controversies surrounding the allocation of funds, policymakers are striving to ensure that the distribution is more needs-driven rather than being reliant purely on GDP per capita statistics.

A concerted effort is being made to simplify procedures, reduce administrative burdens, and enhance the use of digital tools in fund management. Specific provisions to regularise audits, evaluations, and compliance measures are also being fortified. With the goal of ensuring an efficient spending culture and minimising irregularities, the implementation and monitoring processes are becoming tighter.

One of the efforts to simplify procedures is the introduction of a single rulebook, which will apply to multiple EU funds. It aims to decrease the complexity and increase the efficiency of using these funds.

To counter misuse, the EU introduced rigorous governance benchmarks that regions must satisfy to access funds. This integrated approach propels the regions to improve their administrative capacities, promote reforms, and ensure greater transparency at all stages.

The EU is also exploring linking disbursements from the cohesion funds to member states' economic governance. Under this idea, the disbursement of funds could be suspended if a country is not making sufficient progress towards the economic recommendations set up by the EU. This strategic linkage aims to incentivise good economic governance and make financial assistance contingent on compliance with macroeconomic norms.

In essence, the EU's proactive responses mirror a commitment to refine the policy continually. The journey towards perfecting the EU Cohesion Policy is progressive, taking into consideration an array of complexities, criticisms, and demands. However, the central purpose of achieving balanced and sustainable growth across the EU remains at the core.

Historical Overview of EU Cohesion Policy

EU cohesion policy has been a cornerstone in the European Union's structure. It has evolved through various forms, with each stage reflecting the dynamic changes in perspectives, challenges, and objectives. Let's look at the historical trajectory of this pivotal policy.

Origins of EU Cohesion Policy

The origins of EU cohesion policy can be traced back to the Treaty of Rome in 1957, which marked the establishment of the European Economic Community. Although not explicitly referred to as 'cohesion policy' at the time, the treaty indicated the need for balanced development and reduced regional disparities as one of its objectives.

The actual term 'cohesion policy' came into play much later. The Single European Act of 1986 explicitly introduced the concept of economic and social cohesion. This commitment was further emphasised in the Maastricht Treaty of 1992, where the treaty added 'territorial cohesion' to the goal of promoting overall harmonious development.

However, policy instruments aimed at regional development were introduced earlier. The European Social Fund (ESF) was set up in 1957 to support employment-related projects across member states. The European Agricultural Guidance and Guarantee Fund (EAGGF) was set up in 1962 to support rural economics, and the European Regional Development Fund (ERDF) was established in 1975 to support economic and social development in less prosperous regions.

It's vital to note that while the EU's budget was significantly smaller in the early decades, as it has grown, so too has the scale and scope of the cohesion policy.

Milestones in EU Cohesion Policy History

Many milestones have played a key role in shaping the EU cohesion policy's path. Let's take a closer look at some of these significant developments:

1957: The European Social Fund was established.
1975: Creation of the European Regional Development Fund.
1986: The Single European Act formalised the concept of economic and social cohesion.
1993: The Cohesion Fund was created.
1994-1999: First real cohesion policy programming period.
2007: Territorial cohesion, alongside economic and social cohesion, became a policy objective.
2014: Reformed cohesion policy focusing on smart, sustainable, and inclusive growth.
2020: Introduction of the Just Transition Fund to support regions heavily impacted by the transition towards a green economy.

The evolution of EU cohesion policy has been marked by a continuous enlargement of the European Union, which has brought in new member states with distinct economic profiles and development needs.

The enlargement of the European Union refers to the process of admitting new countries into the Union. This has implications on the distribution of cohesion policy funds, as each new member could potentially change the proportions of GDP per capita across regions, thus affecting the allocation of funds.

For example, the inclusion of many Eastern European countries in 2004, known as the 'big bang' enlargement, significantly increased the Union's disparity in terms of GDP per capita. This necessitated a substantial recalibration of EU cohesion policy to tackle emerging challenges promptly.

The Maastricht Treaty of 1992 also brought in significant changes in funding allocation. A redistribution of available resources took place to ensure adherence to newly established fiscal rules. The policy has continuously evolved and adapted to new realities such as the 2008 economic crisis, the challenge of climate change, and most recently, the global health crisis caused by the COVID-19 pandemic.

Today, the scope and reach of EU cohesion policy are extensive. Concerted efforts focus on creating a fairer, more inclusive, and more sustainable Europe. Thus, the policy remains an evolving and dynamic tool in shaping the future of the European Union. It showcases the Union's promise of ensuring shared prosperity, societal wellbeing, and balanced development across its regions.

Post 2020 EU Cohesion Policy

The EU cohesion policy continually adapts to the socio-economic circumstances of Europe. Post-2020, it has witnessed significant amendments to meet new challenges and foster a more sustainable, inclusive and digital Europe. Let's explore the changes in detail.

Amendments to EU Cohesion Policy After 2020

The period post-2020 marked the start of a new programming period for the EU cohesion policy. Given the unprecedented challenges brought about by the COVID-19 crisis, the accelerated transition towards a green and digital economy and the ongoing process of shaping the Union’s long-term budget, several amendments have been introduced to the policy.

Programming periods are seven-year-long timeframes within which the funds under the EU cohesion policy are planned and expended. The current programming period extends from 2021 to 2027. Each programming period introduces new goals, regulations, and funding instruments matching the socio-economic status quo and future priorities.

One of the pivotal alterations was the introduction of Just Transition Mechanism (JTM) that includes a new Just Transition Fund (JTF). This new fund provides tailored financial and practical support for regions most affected by the transition towards a green economy, facilitating a fair and inclusive shift.

Moreover, to deal effectively with the economic crisis sparked by the pandemic, a significant part of the policy's funding was front-loaded in the first years of this period. The Coronavirus Response Investment Initiative (CRII) and (CRII+) were established to provide immediate crisis response and aid the transition towards recovery from the crisis.

Increased emphasis on research, innovation and digital transition
Greater focus on sustainable development and climate change mitigation
Strengthened provisions for addressing social inclusion, poverty reduction, and youth unemployment

The ERDF, ESF+ and the Cohesion Fund now work more integrally, promoting synergies and ensuring that different areas of development are not treated in isolation but as interconnected components of a comprehensive regional development strategy.

For instance, to establish a green-tech start-up in a low-income region, an integrated approach would first work on improving the region's research and innovation capacity, including human capital development via the ESF+. The ERDF could then support business-development services, provide venture capital, and finance the construction of environmentally-friendly operational facilities.

For the first time, a new performance framework has been put in place for the 2021-2027 cycle. It aims to link disbursement of funds with the achievement of set milestones and targets. Consequently, if any project fails to meet its pre-determined milestones, the associated funding may be suspended or redirected elsewhere. This not only encourages careful planning and foresight but also ensures greater accountability and effectiveness of the expenditure.

The Future of EU Cohesion Policy: Predictions and Speculations

The future trajectory of the EU cohesion policy, while not set in stone, can be predicted based on its ongoing evolution, current challenges, and the EU's long-term vision. Several trends and speculations mark the path ahead for this policy.

An unmistakable trend is the escalating focus on sustainability and climate change mitigation. As the EU strives to become the first climate-neutral continent by 2050, a 'Green Deal' governs much of its policy-making, including the cohesion policy. This movement suggests increased funding for green energy, climate resilience, biodiversity conservation, circular economy, and other environment-oriented projects.

The digital transition is another critical area likely to guide the policy direction. The COVID-19 pandemic has underscored the need for robust digital infrastructure, digital skills, and digitalisation of public services. Therefore, investments relating to digital competences, technology adoption, and cybersecurity are expected to swell.

Green Economy and Sustainability	Increased funding and policy support
Digital Transition	Boost in digital infrastructure development and training
Resilience post-Crisis	Strengthening socio-economic resilience and agility

In the aftermath of the pandemic, policies aimed at strengthening socio-economic resilience, flexibility, and crisis-response capacities in member states are predicted to gain significant importance. Equally, promoting social inclusion, equality, and reducing regional disparities will continue to remain at the core of the cohesion policy.

An example of a future scenario could be an extensive project to build a large solar plant in a lesser-developed region. Alongside improving renewable energy production and climate response, this project could offer prominent channels for job creation, significantly improve the regional GDP and stimulate an array of complimentary local businesses.

Moving forward, the EU cohesion policy will continue to be an essential tool in driving regional development, ensuring that all regions contribute to and benefit from the growth of the EU. It is poised to continue its legacy of harmonisation and balancing progress, subtly shaping the course of Europe's future.

EU cohesion policy - Key takeaways

The Cohesion Policy EU Budget is a substantial part of the EU's total budget that supports regional development initiatives, with nearly one-third of the entire budget allocated towards it - approximately €330 billion from 2021 to 2027.
The Cohesion Policy EU Budget is divided between funds such as the European Regional Development Fund (ERDF), the Cohesion Fund (CF), and the European Social Fund Plus (ESF+), which target distinct development areas.
The EU Cohesion Policy has been adapted post-2020 to align more closely with broader EU priorities, including research, innovation, and climate change mitigation, and to improve efficiency, flexibility, and effectiveness, especially under the Coronavirus Response Investment Initiative (CRII) and CRII+.
Criticism of the EU Cohesion Policy often focuses on its efficiency and the fair distribution of resources; issues include administrative complexity, inefficient monitoring and evaluation, and potential misuse of funds. The EU has responded with ongoing reforms and measures for improvement.
The cohesion policy of the EU has been a central part of the EU structure since the Treaty of Rome in 1957 and has continually evolved to address the changing needs and challenges of the EU.

EU cohesion policy

StudySmarter Editorial Team