European Regional Science Association
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European Regional Science Association
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The abstract for paper number 188:
Sara Davies, European Commission, DG for Economic and Financial Affairs, Brussels, Belgium
Cohesion policy and the Accession countries
The enlargement of the European Union to include, initially, eight new countries from Central Europe will pose new challenges to EU policies. This paper focuses on the contribution which EU Cohesion policy could make to facilitating the integration process. It assesses the main investment needs of the Accession countries, and draws on evaluations of Cohesion policy and similar public investment programmes in order to provide some indications for the economic development strategies of the Accession countries.
Although the Accession countries have already experienced a significant redirection of trade and investment flows, along with wide-ranging institutional changes, their level of GDP per capita lies well below the EU average. There are also regional variations in GDP per capita in these countries, and some show strong regional differences in unemployment rates. The closure of heavy industries has often had region-specific effects, while rural eastern regions often suffer from the reorientation of economic activities.
The ongoing process of economic integration should gradually lead to convergence in terms of GDP per capita. However, this process will also be affected by the policy context, whether in terms of the macroeconomic policy mix, the extent to which further necessary structural reforms are implemented, and the efficiency of public investment strategies. EU Cohesion policy can contribute to catching up in the new Member states by expanding the productive potential of lagging Member states and regions via investments in basic infrastructure and human capital, and the provision of incentives for private investment.
The investment needs of the Accession countries vary from country to country but generally include transport and other basic infrastructure, human and knowledge capital, and environmental clean-up. These countries face the difficulty of raising public investment in order to stimulate long run growth, while also ensuring fiscal sustainability, and meeting commitments on current expenditure (e.g. social services and healthcare). Given the limited resources available for investment in these countries, it is of particular importance that funds have the strongest possible impact on catching up.
The paper will assess available evidence on the impact of different types of interventions on catching up, focusing on the main instruments of Cohesion policy, namely investment in basic infrastructure, human capital and support for the productive sector (Barry et al, 2002; de la Fuente / Ciccone, 2002; Rodríguez Pose / Fratesi, 2002). While the thematic allocation of funds is important, so too is their geographical distribution e.g. whether funds should be distributed evenly across the territory, targeted on the most dynamic areas (“growth poles”), or focused on the lagging regions (Davies / Hallet, 2002).
A further important aspect is the extent to which the impact of Cohesion policy is reduced by government failures (Ederveen et al, 2002). There may also be tension between the need for a coherent national strategy and the importance of bottom up strategies involving a range of local actors. Finally, the impact of Cohesion policy is likely to depend on the overall context including macroeconomic and structural policies.
Unfortunately full paper has not been submitted.