Focusing Funds on Regions in Need
Events
17.07.2024
Presentation of Study on EU Cohesion Policy at Joint Event by ZEW Mannheim and the Federal Ministry of Finance in Brussels
The EU Cohesion Policy is an important element of European solidarity. Its purpose is to offset economic and social differences within the EU by means of targeted investments. However, this multi-billion euro structural policy demands a considerable portion of the EU budget, which is coming under scrutiny in these current times of penny-pinching, also in Brussels. What are the current challenges facing EU Cohesion Policy and how can reform be attempted in the next financial framework? Against this background, ZEW economist Professor Friedrich Heinemann presented the final report of a project funded by the German Federal Ministry of Finance at the Representation of the State of Baden-Württemberg to the European Union in Brussels, headed by Bodo Lehmann, on 15 July 2024. In front of around 300 guests, including seven EU finance ministers, numerous state secretaries and ambassadors, he handed over the study to the Commissioner for Cohesion and Reforms, Elisa Ferreira. German Finance Minister Christian Lindner emphasised the high costs of structural policy and called for existing spending programmes to be systematically reviewed for their effectiveness.
“Given the many indications that Cohesion Policy is only partially effective, it is desirable to concentrate funds on regions in need where a significant impact can be expected. This applies in particular to regions in less developed EU Member States that have efficient and corruption-free administrations,” explained Friedrich Heinemann at the handover of the final report. “In fact, despite 30 years of Cohesion Policy in Southern Europe, regional disparities in the EU have hardly diminished. Of course, the differences could be even greater in a scenario without Cohesion Policy, but the result of decades of effort remains sobering.”
Linder emphasises individual responsibility of the Member States
Christian Lindner reminded the audience that there had been calls for new, perhaps debt-financed EU instruments or instruments with collective responsibility. He is convinced that this approach would lead the EU in the wrong direction. Instead, he said, the focus should be on strengthening market forces and individual responsibility among Member States to increase their own competitiveness, as well as on tapping into the potential of the single market. In this way, economic resilience can be improved in the Member States and in Europe as a whole. Additionally, Lindner expressed his gratitude that he was able to gain the expertise of ZEW with its broad network of internationally renowned researchers.
EU Commissioner warns against cuts to Cohesion Policy
EU Commissioner Elisa Ferreira stressed the importance of regional policy, especially in times of crisis, and reminded the audience how the transformation of the automotive industry in Baden-Württemberg and “Silicon Saxony” were both made possible through Cohesion Policy. She added that it was also important for the EU to hold its own in global competition in a multipolar world.
To close the event, Claudia von Schuttenbach, managing director of ZEW, thanked the four-person international team of experts who worked on the study. She said: “We are particularly pleased that EU Commissioner Elisa Ferreira personally accepted the study. This made the relevance of the topic clear and showed the importance of what ZEW stands for, which is policy-relevant economic research and evidence-based policy advising.”
Final report highlights potential for improvement
The final report was compiled by researchers from ZEW Mannheim and an international team of experts from the fields of regional economics, finance and law. The report contains 14 chapters with analyses and concrete proposals for improving the effectiveness of Cohesion Policy. In their study, the researchers come to the conclusion that regional policy has positive effects on growth and employment, but that these are mostly of a short-term nature. It also shows that the policy is particularly effective where public administration functions well and the institutional environment is good. A key recommendation is therefore to particularly focus funding on the less developed EU Member States which have efficient and corruption-free administrations.
