Analytics, EU – Baltic States

The EU Regional Policy is bridging the EU gap with citizens; this aspect is crucial for the member countries and regions. Re-establishing the links with the citizens can be done most optimal through re-building competitiveness and by making productive investments in the regions that create jobs while improving peoples’ quality of life.

New Regional Policy

European regions hold the key to the EU’s future prosperity. Besides, they are the most appropriate level to assess the needs and strengths of a certain area. With their local knowledge, regions are able to build a proper, tailor-made strategy for growth and competitiveness.

Encouraging regions to come-up with such strategies is at the heart of the new EU Regional Policy which aims to provide regions with the tools to address their competitiveness challenges.

Regional Policy has already shown its significance during the crisis when investments from national resources declined, limiting availability of funding across all areas of investment.

Without EU Regional Policy, according to the Commission’s assessment, investments in those member states that were most affected by the crisis would have collapsed by an additional 50%. In fact, EU regional funding now represents more than 60% of their investment budget.

The impact of the new Regional Policy is now set to be even more decisive in the future.

Reference: European Commission, Johannes Hahn, Commissioner for Regional Policy, SPEECH/14/558 “EU Regional Policy 2014-2020, in the wake of EP elections”, Brussels, 18/07/2014.  

Main aspects of the reform

The reform that was adopted for the 2014-20 programming period enables Regional Policy, more than even before, to become a more efficient and effective investment policy for European regions.

EU Regional Policy has become very much strategic and at policy level it is aligned with the EU-2020 strategy. At the implementation level the introduction of ex-ante conditions means that projects will follow the strategy guidelines, and not the other way around.

Such conditions have been introduced to ensure that the right environment exists before spending any funds in specific fields. For example in order to finance investments in research and development project applicants would have in place a smart specialisation strategy. For example, for transport sector there would be no investment or/and any funds unless an applicant had an integrated transport plan.

These conditions are to guarantee the strategic approach but also to make sure that the funds flow in a sound environment where there impact will be optimal.

In this context the EU “Smart Specialisation Strategies” are becoming very important. It is an inclusive and bottom-up journey for the regions through which they will identify their strengths and accordingly built on them their growth strategy for the future. It is an innovation-driven, place-based, entrepreneurial process in which all key players in the economy should participate. They know where the business needs are and how to boost the region's competitive advantages.

Making a proper assessment of every region's assets and weaknesses and designing a consistent growth strategy are critical to the success of Regional Policy investments.

Another new element of the regional policy reform is the introduction of the principle of thematic concentration. This means that support provided by Regional Policy is made more efficient by concentrating on key growth-enhancing areas.

The idea is to focus investments on areas linked to EU-2020 objectives where the impact will be more decisive in the achievement of a better and more competitive growth.

According to the principle of thematic concentration, the bulk of the available resources the EU will allocate to areas such as research and innovation, ICT, low carbon economy, as well as SME support.

A clear focus on achieving concrete and measurable objectives for results means two things.

The first is that it encourages transparency: targets and indicators will be set to really assess their achievement and to make it possible to hold accountable the relevant authorities.

The second is that the Commission establishes a “performance framework” in assessing and rewarding the programs which are fulfilling their objectives.

Turning challenges into opportunities: priorities

Europe has many challenges ahead; however, the new Regional Policy is now better equipped to help European regions become more competitive and prosperous. It can provide real, meaningful investments to help regions turn challenges into opportunities for growth. Thus, EU Regional Policy becomes an investment source for regions to tackle the urgent challenges and turning them into opportunities.

In addressing these challenges, the EU institutions would keep to European values while building on the EU’s own competitiveness model. The European values can be inspiring for the future development: e.g. high social standard, respect of the individual, freedom and entrepreneurial spirit, etc. which would give additional strengths to investment projects.

One example is European dependency on raw materials and energy, which are of critical concern for political and economic reasons. In 2012, Europe would have had a positive trade balance of € 317 billion if it was not for energy and raw material imports, said the Commission. Instead, because of this dependency, the EU trade balance for 2012 was negative by €105 billion.

The EU challenge is to reduce such dependency; innovations can help to turn this into an opportunity for growth. In this direction, investment in key enabling technologies could provide the member states with solutions to reduce this dependency.

The same priority is for investments for lower energy consumption and increased energy efficiency. New material and new technologies in these fields can both help to reduce dependency from imports and increase competitiveness for the years to come.

It is by no coincidence that the new Regional Policy encourages the low carbon economy and the area of Key Enabling Technologies.

Such innovations can increase EU in general and the member states’ competitiveness and generate growth. It is for the member states to understand that it is no more feasible to continue with “business as usual”; they have to become smarter to be able to be more competitive.

Thus, the EU Regional Policy not only provides the investment in monetary terms but it also provides the right framework for the EU states and regions to think strategically and concentrate their efforts in those areas where it really matters.

It is through this process that the EU would be able to have a policy which is fit-for-purpose, delivering a better quality of life for its citizens. The new Regional Policy is designed not only to lead Europe out of the crisis and into the path of growth but also to re-establish the link between the EU institutions and the citizens.