2. MORE GROWTH AND JOBS FOR
ALL CITIES OF THE EU
DISTRIBUTION OF EU FUNDING AND HOW
THE LESS PROSPEROUS AREAS OF THE EU
MIGHT MANIPULATE THE FUNDING TO
THEIR ADVANTAGE
BY PIANOS GERALD MANJERA
3. Outline
• What is the convergence regional funding?
• Aims of the CRF
• First group to benefit and how the funds were
distributed and the changes towards the targeted
areas. (overview)
• Case study: Ireland
• Effectiveness of the EU funding(overview)
• Case study: Ireland
4. What is convergence regional
funding?(CRF)
• A component of regional policy set up to help transfer
resources form the rich to the poor areas of the EU
community.
• In fact it was set up to help those regions in the EU
whose development was lagging behind.
• The CRF was set up so as to help in the solidarity of the
EU as it targeted to benefit citizens and areas which are
economically and socially disadvantaged as against the
EU averages.
• 10 major dynamic areas of the EU were marked by a
level of affluence, with GDP almost thrice higher than the
least, i.e. London, Brussels and Hamburg.
• The EU regions are classified on financial support
producing three tupes of regions(objectives)
5. Aims of the CRF
• Aimed at the objective 1
• Under the structural funding, the CRF
aimed at the following:
– Develop infrastructure such as transport and energy.
– Aid regions affected by industrial decline
– Support the development of rural areas
– Extent telecommunication services
– Provide training for workers
– Combat long term unemployment
– Disseminate the tools of know-how and information society
– Promote research and development.
6. Changing distribution
• There have been four programming periods for EU
structural funds.
1989-1993
1994-1999
2000-2006
2007-2013
• Spending is determined by member state
executives
7. Distribution
1989-1993
•A period in which the structural funds were first distributed all in the name of cohesion policy.
•In this particular CP aimed at reducing disparities between the various regions and the backwardness of
the least-favored regions.”
•Under this period, provision was made to special cases were the member state could influence the
outcome: commission`s ceiling of 15% was exceeded by 1.8% adding 6.3 million people.
•Direct financial transfers to the ‘poor four’ (Greece, Ireland, Portugal and Spain)
1994-1999
•There was more emphasis on the role of the member states to proposes areas eligible.
•This led to other regions above qualifying threshold becoming eligible for support.
•Objective 1 extended its cover to regions of Hainaut, Merseyside, Highlands and Islands, Cantabria,
Flevoland and Abruzzi.(table)
2000-2006
•The move of the EU was towards the simplification of the cohesion policy.
•10 new members(May 2004) entered the EC and all were rightfully deemed eligible into the structural
funding.
•E.g. Cyprus, Czech republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia.
•The Commission has tried to keep the priority on lagging regions with a per capita GDP less than 75 %
in comparison with the EU average.
•Resulted in the highest concentration of resources on the poorest countries as it shall be clearly noticed
on the 2007-2013 period.
8. Community population eligible for structural
funds(%)
Objecti Objecti Objecti Objecti total
ve 1 ve 2 ve 5b ve 6
1989- 21.7 16.8 5.0 n/a 43.5
1993
1994- 26,5 16.4 8.8 0.4 51.3
1999
2000- 22.5 18.2 n/a n/a 40.7
2006
An increase from first to second period due to the extension of funding
A decline attributed to the phasing out of other regions as according to the
EU standards.
9. 2007-2013
• The cohesion policy had new structure of objectives (convergence; regional
competitiveness and employment; European territorial cooperation)
• Among the EU-27, the period sought to cover 84 regions( 17 member states): a
population of 154 million people.
• Eligibility still open to those regions with less than 75% GDP.
• They fix the level of allocations between objectives, geographical eligibility and the
allocation method (by region or Member State), including upper transfer limits
• In addition, the conclusions define several transitional arrangements (e.g. phasing out
the Cohesion Fund for certain countries, 16 regions with 16.4 million people),
exceptions (e.g. eligibility; co-financing), and a list of special treatments (e.g.
additional financial allocations) of several Member States and regions.
• Phasing in the cohesion funds to other regions: 13 regions, a population of 19 million
• Phasing out regions: Asturias, Ceuta, Melilla and Murcia whilst phasing in Canarias,
Castilla y León and Comunidad Valenciana (Spain), Kentriki Makedonia, Dytiki
Makedonia whilst
• Phasing-in: Sterea Ellada, Notio Aigaio(Greece)
12. Case study: Ireland
• Joined EU in 1973, poorest of the then 12 members
• Started to avail funds in 1989. and progresses through the four programming periods.
• 1989-1993, 1994-1999, 2000-2006, & 2007-2013
• Between 1989-1999, Ireland qualified as objective 1 region: got 4.2 billion(1989-
1993) which accounted for an increase of 2.1% GDP. And 1994-1999 got 7.3 billion
which accounted for 1.6% GDP.
• During the first decade, its main concern was:
– Economic convergence
– Raising long-term growth potential
– Addressing labor market imbalance.
• The money was spent on infrastructure(36%), productive sector(35%), human resource
development(25%) and local development(4%)
2000-2006
• Ineligible for objective 1
• Split into 2 separate for EU
• Purposes Border, Midland and Western Region()BMW Objective 1 Southern and
Eastern Region(S&E)
13.
14. Effectiveness of the EU funding
EU Cohesion Policy can improve the efficiency of national regional policy by ensuring
that:
•spending is concentrated in places where it is most needed;
• EU co-ordination of Member states´ regional policies, through competition policy,
can reduce the scope for costly and inefficient
•competitive outbidding for mobile investments between nations and regions;
• there is a common interest argument that depressed regions benefit nobody and that major
disparities in income and unemployment are unacceptable on social equity grounds; and
• there is dynamic argument that regional disparities may be a barrier to further integration
15. Success Factors of the Irish Economy
• Social Partnership Agreements industrial stability – National
Consensus
• European Regional Funding
• Access to EU and Global Markets
• Stable currency and interest rates and inflation
• Inward investment and availability of skilled workforce
• Low rate of Corporation Tax (12.5%)
• Rapid increase in tourist numbers and high cultural interest in Ireland
• Pro-enterprise policies and supports
16. • Between 1992-2003 cohesion funding spent 2
billion in more than 120 infrastructure projects.
• Last 10 years, 130 Irish projects received
Case study: Ireland cohesion funds:
– Dublin ring road, Bublin-Sligo, Dublin-
Limerick, Bublin-Roslaire
• Rural projects included the upgrading of the main
rural corridors, cross border routes to Belfast.
• Re0development of Heuston station in Dublin.
• Environmental sector had marked results:
– Improved water quality
– Improved supply of drinking water
– Improvement in quality and conservation
– 12 water supply projects were supported.
