Regional | Knowledge for policy

Regional Policy

Recognition of the importance of the territorial dimension is included in the EU treaty and is at the core of the EU structural policies.

With the introduction in the Lisbon Treaty of territorial cohesion as an explicit objective of Cohesion Policy, a stronger emphasis has been given to access to services, functional geography, territorial analysis and sustainability. This shift is mirrored in the increased focus on sustainable growth in Europe 2020.

Growth and job creation depend on the capacity to make best use of territorial assets and to build links among territories to ensure that resources are used in a coordinated and sustainable way.

Regional Policy is the EU’s main investment policy. Regional Policy targets all regions and cities in the European Union in order to support job creation, business competitiveness, economic growth, sustainable development, and improve citizens’ quality of life.

Regional Policy provides financial support to help regions to overcome the obstacles to their development, whether these take the form of inadequate infrastructure or lack of capacity to innovate or to adapt to a changing global economic environment. These obstacles are present in all regions to varying degrees, though the level of financial support provided reflects their level of development and their need for financial assistance to tackle them effectively.

In order to reach these goals and address the diverse development needs in all EU regions, € 351.8 billion – almost a third of the total EU budget – has been set aside for Cohesion Policy for 2014-2020.

As enshrined in Article 175 of the Treaty on the Functioning of the European Union, updates on the state of EU's territorial cohesion are periodically released - every three years - through the Report on Economic, Social and Territorial Cohesion.

Europe 2020 Strategy

Europe 2020 is the European Union’s growth and jobs strategy for the current decade to create the conditions for smart, sustainable and inclusive growth. The strategy envisages measures to overcome the economic crisis and move beyond it by addressing the structural weaknesses in the European economic model. The final objective is to deliver high levels of employment, productivity and social cohesion in the Member States, while reducing the impact on the natural environment. To reach its objective, the EU has adopted five headline targets to be attained by 2020:

Employment — increase the employment rate among those aged 20–64 to at least 75%
Research and development — increase combined public and private investment in R&D to 3% of gross domestic product (GDP)
Climate change and energy sustainability — reduce greenhouse gas emissions by at least 20% compared with 1990 levels, increase the share of renewable energy in final energy consumption to 20%, and encourage a 20% increase in energy efficiency
Education — reduce the rate of early leavers from education and training to less than 10% and increase the proportion of those aged 30–34 having completed tertiary education to at least 40%
Poverty and social exclusion — lift at least 20 million people out of the risk of poverty and social exclusion

To accommodate the heterogeneity among EU countries, the above European-wide objectives were subsequently transformed into a set of national targets for individual countries in order to reflect the situation and possibilities of each Member State to contribute to the common goal.

The EU statistics office, Eurostat, regularly publishes comprehensive progress reports for the targets, an overall visualisation at EU level and a scoreboard by country.

In 2014-15, the Commission performed a mid-term review of Europe 2020. Following the review, the Commission decided to continue the strategy, monitoring and implementing it through a process known as the European Semester.

Europe 2020: Territorial dimension

In its communication of 6 October 2010 ("Regional Policy contributing to smart growth in Europe 2020"), the European Commission has set out the role of Regional Policy in implementing the Europe 2020
strategy, hence recognising a central role to regions in turning priorities into practical actions on the ground. As a result, in 2011, the Smart Specialisation Platform was established with the aim to help National and regional governments to develop smart specialisation strategies and maximise the impact of Regional Policy in combination with other Union policies.

Smart specialisation strategies can ensure a more effective use of public funds and can stimulate private investment. They can help regions to concentrate resources on few key priorities rather than spreading investment thinly across areas and business sector. They can also be a key element in developing multi-level governance for integrated innovation policies.

In March 2014, the European Committee of the Regions adopted the Athens Declaration, which reinforced the territorial dimension of the Europe 2020 strategy and introduced an enhanced monitoring system at the regional and local level. As a result, the Europe 2020 monitoring platform has been set up to analyse the implementation of the Europe 2020 strategy at different territorial levels and facilitate the exchange of information and good practices between local and regional policy makers.

The 2018 Country-specific recommendations include a significant increase in the number of recommendations that involve and address directly local and regional authorities (LRAs).

The territorial analysis shows that 36% of 2018 CSRs directly involve LRAs in 16 Member States, up from 24% in 2017.

Taking into account also those CSRs involving LRAs indirectly and those not involving LRAs but having a territorial impact, the overall number of territory-related recommendations has further increased in 2018 and now represents 83% of all CSRs (compared to 76% in 2017).

Europe 2020 Index

The Europe 2020 Index is a composite indicator that has been jointly developed by DG REGIO and the JRC to measure regional progress towards meeting the key objectives set forth by Europe 2020 strategy. The index can be applied to measure the distance to both EU and national targets at different levels - national, regional and city level – based on a group of relevant economic, social, and environmental indicators.

For the national level, all five headline targets have been taken into account. Each country receives between 0 and 20 points for each. If a country has reached a headline, it receives 20 points. The countries furthest removed from this get 0 points. The rest receive a score proportional to the distance to the. The index is the sum of these points. If a country has reached all targets, it scores 100.

Due to data availability, the climate change and energy sustainability targets had to be omitted at the regional level. As result, each is worth 25 points (instead of 20, as at the national level).

The results at the regional level, with respect to the EU targets, are shown below. More information is available in the report "The Europe 2020 Index: The progress of EU countries, regions and cities to the 2020 targets"

The regions in the Nordic Member States and many of the regions in Germany, Austria, UK, France and the Benelux score higher on the Europe 2020 index, while the southern regions and those in the newer EU-13 tend to score lower.
We can see large variation within countries (e.g. in Italy, Spain and Belgium).

Funding

The European Structural and Investment Funds (ESIF)

Over half of EU funding is channelled through the 5 European Structural and Investment funds (ESIF). They are jointly managed by the European Commission and the EU countries.

The European structural and investment funds are:

European regional development fund (ERDF): promotes balanced development in the different regions of the EU.
European social fund (ESF): supports employment-related projects throughout Europe and invests in Europe’s human capital – its workers, its young people and all those seeking a job.
Cohesion fund (CF): funds transport and environment projects in countries where the gross national income (GNI) per inhabitant is less than 90% of the EU average. In 2014-20, these are Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia.
European agricultural fund for rural development (EAFRD): focuses on resolving the particular challenges facing EU's rural areas.
European maritime and fisheries fund (EMFF): helps fishermen to adopt sustainable fishing practices and coastal communities to diversify their economies, improving quality of life along European coasts.

In the 2014-2020 programming period, the ESI Funds support 11 investment priorities, also known as thematic objectives:

Strengthening research, technological development and innovation
Enhancing access to, and use and quality of information and communication technologies (ICT)
Enhancing the competitiveness of small and medium-sized enterprises (SMEs)
Supporting the shift towards a low-carbon economy in all sectors
Promoting climate change adaptation, risk prevention and management
Preserving and protecting the environment and promoting resource efficiency
Promoting sustainable transport and removing bottlenecks in key network infrastructures
Promoting sustainable and quality employment and supporting labour mobility
Promoting social inclusion, combating poverty and any discrimination
Investing in education, training and vocational training for skills and lifelong learning
Enhancing institutional capacity of public authorities and stakeholders and efficient public administration

The first four of these thematic objectives constitute key priorities for the European Regional Development Fund (ERDF), and a significant part of the investments focus on these areas (between 50% and 80%, depending on the region’s level of development).

The goal of these objectives is to focus regional policy funding on areas that deliver the highest benefits to citizens, creating synergies between the funded projects and avoiding an excessive fragmentation of funding.

A comprehensive updated overview of data on financing and achievements under the ESI Funds 2014-2020 (per theme, country or fund) is available at the Data Portal for ESIF.

Additionally, DG REGIO and the JRC have developed a tool (STRAT-Board) providing continuously updated state of play on how ESIF supports the integrated approach to urban and territorial development.

STRAT-Board provides a visual overview of Sustainable Urban Development (SUD) and Integrated Territorial Investment (ITI) strategies currently implemented across Europe.

The European Fund for Strategic Investments (EFSI)

EFSI is an initiative launched jointly by the European Commission and the European Investment Bank (EIB) Group to assist in overcoming the current investment gap in the EU by maximising the impact of public resources and by mobilising private financing for strategic investments.

The breakdown of results by country and sector from the European Fund for Strategic Investments shows that the Juncker Plan has exceeded its initial mid-2018 of €315 billion by mobilising €335 billion in additional investment across the EU since July 2015. That is €20 billion more than the original, set in 2015 when EFSI was launched, helping to close the investment gap left as a result of the financial and economic crisis.

Other Fundings

Structural and investment funds for regional and urban development projects are complemented by the following 4 funds:

Territorial Impact Assessment

Territorial Impact Assessment is generically referred to as the procedure (or method) to evaluate the likely impact of policies, programmes and projects on the territory, highlighting the importance of the geographic distribution of consequences and effects and considering the spatial developments in Europe.

Living conditions as well as industrial structures, infrastructure endowment and geographical conditions vary substantially across the EU. EU's cohesion and regional policies are designed to mitigate these differences and ensure that poorer regions have means to address regional challenges. In spite of good progress in convergence across Europe on many parameters, there is still significant dispersion within the EU. Still many policy measures address specific territorial areas or have specific consequences concentrated in certain territories. For example, the reduction of poverty and social exclusion is a common Europe 2020 objective, but the extent of the problem varies a lot across countries and regions.

A spatially uneven problem can lead to an uneven geographical distribution of costs and benefits and a policy measure may produce uneven territorial impacts even where a problem is not necessarily unevenly distributed.

Territorial Impact Assessment contributes to the better understanding of spatial impacts of policies and supports the decisional process towards the selection of the best options for European territories (regions, macro-regions, cities and specific geographical areas).

The KCTP provides access to a wide suite of tools, models and data in support to Territorial Impact Assessment of EU Policies.

The procedure for a Territorial Impact Assessment can be summarised in the following main steps:

Quantification of the issue at stake
Definition of the "Territorial Baseline Scenario"
Evaluation of options and proposals vs. baseline
Involvement of experts and stakeholders

Themes

Regional disparities and territorial differences need to be dealt with by a holistic and integrated approach to evaluate local specificities and opportunities for innovation and growth.

The KCTP approaches the analysis of selected policy relevant topics by looking at their territorial (regional and urban) dimension and by progressively quantifying inter-sectoral relationships to evaluate trade-offs and elaborate possible scenarios.

Themes with a territorial dimension include:

This list may be changed or adapted following the addition of new functionalities or on request of stakeholders.

Regional classification

The NUTS classification (Nomenclature of territorial units for statistics) is a hierarchical system for dividing up the economic territory of the EU for the purpose of :

The collection, development and harmonisation of European regional statistics
Socio-economic analyses of the regions
- NUTS 1: major socio-economic regions
- NUTS 2: basic regions for the application of regional policies
- NUTS 3: small regions for specific diagnoses
Framing of EU regional policies
- Regions eligible for support from cohesion policy have been defined at NUTS 2 level

The current NUTS 2016 classification is valid from 1 January 2018 and lists:

104 regions at NUTS 1
281 regions at NUTS 2
1348 regions at NUTS 3

To meet the demand for statistics at a local level, Eurostat also maintains a system of Local Administrative Units (LAUs) compatible with NUTS. These LAUs are the building blocks of the NUTS, and comprise the municipalities and communes of the European Union.
Until 2016, two levels of Local Administrative Units (LAU) existed. Since 2017, only one level of LAU has been kept.

The LAUs are:

administrative for reasons such as the availability of data and policy implementation capacity;
a subdivision of the NUTS 3 regions covering the whole economic territory of the Member States;
appropriate for the implementation of local level typologies included in TERCET, namely the coastal area and DEGURBA classification.

Since there are frequent changes to the LAUs, Eurostat publishes an updated list towards the end of each year.

Another type of classification, mostly based on NUTS 3, identifies regions belonging to a specific regional typology.

The six identified regional typologies are:

Outermost Regions

The nine outermost regions, Europe's real outposts in the world, are thousands of kilometres from the continent. A distance that the European Union is bridging by giving them special attention. The new strategy for the outermost regions launched on 24th October 2017 is another concrete example of a Europe that protects and empowers.

Macro Regions

A 'Macroregional strategy' is an integrated framework endorsed by the European Council, which may be supported by the European Structural and Investment Funds among others, to address common challenges faced by a defined geographical area relating to Member States and third countries located in the same geographical area which thereby benefit from strengthened cooperation contributing to achievement of economic, social and territorial cohesion.

Four EU macro-regional strategies, covering several policies, have been adopted so far:

The EU Strategy for the Baltic Sea Region (2009)
The EU Strategy for the Danube Region (2010)
The EU Strategy for the Adriatic and Ionian Region (2014)
The EU Strategy for the Alpine Region (2015)

The Joint Research Centre (JRC) of the European Commission is coordinating an initiative to provide scientific support to the European Union Strategy for the Danube Region (EUSDR), with the close cooperation of key scientific and public sector partners. In establishing this initiative, a common access point for harmonised data covering a broad range of topics would be needed. The DRDSI platform is meeting this demand by providing access to data from projects, Danube Region actors and pan-European organisations. Importantly, DRDSI is also building on EU Member States’ investments to implement the INSPIRE Directive (2007/2/EC). The platform is aiming to increase the number of records of datasets (currently over 9,000) and to develop a collaborative environment for data and service sharing to provide more harmonised data for research across multiple domains (including air quality and public health, water quality, soils and bioenergy) and potentially a resource for software and service developments.

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PAGE | 20 Nov 2023