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How the EU cohesion policy can help low income and low growth regions ?

The European Commission has published in April 2017 a report on low-income regions. The report identifies “clear paths to support regional growth strategies, with the help of EU funds”. It focuses on 47 lagging regions in eight Member States (in South and East Europe).

This report identifies five main reasons as to why some regions have not yet reached the expected rate of growth and . The reasons identified are:

  1. The macroeconomic framework has a significant impact on regional economic growth. Low-growth regions are affected by a combination of stagnating productivity and rising labour cost, which in turn reduced their export shares.
  2. Lagging regions have lower productivity, educational attainment and employment rates compared to the other regions in their country.
  3. Underdeveloped regional innovation systems, skills gap and poor institutional quality undermine the growth potential of lagging regions.
  4. The significant population losses in low-income regions and especially the out-migration of the younger and more educated population may limit their growth prospects.
  5. Public and private investment dropped in these regions, especially in low-growth regions.

Several of these barriers can be relevant in low-income mountain areas like in some parts of the Carpathians. For example, several mountains areas lost population. This means that they face an out-migration of young qualified workers and have a limited capacity to attract talent from other regions.

More importantly, the report identifies the investment needs of the regions, namely human capital, innovation, quality of institutions, better accessibility, as well as the tools available within the framework of EU Cohesion Policy that could support them in the future. These are the following:

  1. Develop and implement smart specialisation strategies.
  2. Reduce gaps in infrastructure and invest in education to attract and keep high quality human resources
  3. Link cities better to the surrounding areas.
  4. Invest in quality of institutions and regional administrative capacity.
  5. Strengthen the link between the European Semester and Cohesion Policy including by identifying the necessary conditions for investment (conditionalities).

“Moving to the next level of economic development cannot be accomplished by a one size-fits-all policy, but will require regionally differentiated investments and policy responses”, says the report.

The report concludes by highlighting the key role played by the Cohesion Policy in all lagging regions. Cohesion Policy accounts for a very high share of their public investment in most of them.

Read more

  • Competitiveness in low-growth and low-income regions – the lagging regions report
21 April 2017

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