Cohesion Policy for all

March 2024

Cohesion Policy is the cornerstone of the EU’s efforts to promote economic, social, and territorial cohesion by reducing disparities between regions. Since its inception, the policy has evolved to address the changing dynamics and challenges of places and people. However, as the EU faces new economic, environmental, and social transitions, the need for a Cohesion Policy that benefits all regions and groups becomes increasingly apparent.

The report of the group of high-level specialists on the future of Cohesion Policy (Öffnet in neuem Fenster), makes a clear case, that Cohesion Policy should be for all, to be able to make a contribution to addressing the development challenges ahead of us. This is crucial not only for the prosperity of all places and people in the EU, but also for achieving the EU's long-term goals of a green, digital transition, and an inclusive economy.

Cohesion Policy needs to be a universal policy, adapting to modern challenges and ensuring that all regions, regardless of their current level of development, can contribute to and benefit from growth and innovation. Through a universal Cohesion Policy, the EU can foster a more balanced, resilient, and inclusive future for all its citizens.

Diverse development needs

The EU is characterised by its rich regional diversity in economic potentials and challenges. This diversity underlines the imperative for a Cohesion Policy that is attuned to the unique circumstances of each region, i.e. place-based and people-centric.

In addition to differences in economic growth and employment, which often dominate development debates, there are also territorial characteristics which come with particular development needs. In very general terms different types of needs for development support are put forward in the debates:

• Comparably low levels of GDP per capita are traditionally the predominant indicator to define needs for boosting growth and employment in Cohesion Policy. As a measure of development it is proving to be too narrow. Regions across the EU exhibit diverse development needs that go beyond economic indicators, including challenges related to demographic changes, digital transformation, and the transition to a green economy. It is clear, a one-size-fits-all approach is no longer effective – or never has been.

• Geographical specificities which pose permanent obstacles to development are another entry point for defining needs for development support. Examples of such geographical specificities include peripheral and outermost regions, peripheral regions, inner peripheries, remote and sparsely populated areas, border regions, islands etc. They all face specific challenges e.g. due to their distance to markets and places offering advanced services.

• Various types of rural and urban areas face particular challenges due to their economic structures, economic and social transitions. Many rural and small urban areas face e.g. demographic decline which affects their possibilities to provide services of general interest and attract investments. Often rural areas and urban areas are portrayed as opposites in these debates. However, they are mutually interdependent and relations between them have evolved substantially in recent decades. Nevertheless, rural and urban areas often face divergent development prospects, including asymmetrical effects of the green, digital and demographic transitions.

• Thriving and metropolitan regions also have development needs. These are often twofold, to boost (global) economic competitiveness and to address local disparities. Many of the most prosperous cities and metropolitan areas also have considerable pockets of poverty, housing problems, traffic congestion and poor air quality, generating distinctive challenges for social and economic cohesion.

This diverse landscape of development needs calls for a Cohesion Policy that is flexible, responsive, and inclusive. It also illustrates that it is not easy to define criteria which would allow some to benefit from Cohesion Policy funding and exclude others.

Geographical broadening of Cohesion Policy

This difficulty is also reflected in the evolution of Cohesion Policy. Over the first four periods (1975-2006), the emphasis was on investments and growth in less developed areas. This steadily included more focus on areas affected by industrial decline, adapting to industrial change, rural development, sparsely populated areas, etc. Still for the first 30 years of Cohesion Policy, there were limited areas eligible for support and these did not cover all parts of the Union.

As of 2007, all regions in the EU became eligible for Cohesion Policy. This was reflected by the introduction of the ‘convergence’ and ‘regional competitiveness and employment’ objectives (2007-2013). Since the 2014-2020 period, Cohesion Policy has worked with ‘less developed’, ‘transition’ and ‘more developed’ regions covering all territories of the EU. At the same time the granularity used to define eligible regions was reduced to NUTS2.

Stepping up to covering all regions reflected the need to adapting to the dynamic nature of regional development, fostering conditions that enable all regions to thrive. Such a policy not only contributes to the economic resilience of the EU but also to its social fabric, ensuring that growth is balanced, sustainable, and equitable.

As for the future

In times of increasingly tight public finances, it is tempting to reduce policy support to the neediest or those promising best returns on investment. The report of the group of high-level specialists on the future of Cohesion Policy discards this logic and clearly argues for Cohesion Policy for all:

• Cohesion Policy is not a charity policy providing support because people and places are in need. It is an investment policy which shall enable places and people to make most of their economic opportunities. Cohesion Policy investments aim at ensuring that all regions can advance and contribute to the prosperity of the EU. In doing so it aims at reducing disparities.

• The EU needs to tap into the potential of all places and people and boost their dynamics, to address declining economic competitiveness, green, digital and demographic transitions, and increasing geopolitical uncertainties. Only when firing on all cylinders the challenges can be mastered. Accordingly, cohesion is needed to enable all places and people to make their contribution and not leave them behind.

• Adapting to new challenges will be crucial in the decades to come. As the EU navigates through the 21st century, its regions and citizens face unprecedented challenges. The green, digital and demographic transitions, new technologies as well as geological uncertainties are reshaping the landscape of regional development. These modern challenges require a policy framework that is adaptive, forward-looking, and inclusive. As their geographies are unknown today, excluding certain regions from Cohesion Policy may be disastrous.

• Not leaving anyone behind can help to stem the rise in discontent and restore faith in the EU. Recognising and reducing economic inequality as well as addressing the developmental, social and political challenges faced by various places and societal groups is crucial to countering the rising tide of Euroscepticism.

• A genuinely place-based, people-centric and future-oriented Cohesion Policy is needed to address the diversity of needs and opportunities. It needs a strong focus on place specific regional and local transformation, encouraging diversification, collaboration and the exploitation of potential and opportunities.

In conclusion, a future-wise Cohesion Policy may not fall back to the times before 2007 by limiting access to support to certain types of territories. Keeping the eligibility of the full EU territory does not imply that it shall be a one-size-fits all policy. It needs to steer through different place-sensitive objectives which allow for a comprehensive approach, ensuring that all regions in the EU can thrive. By addressing the unique challenges and leveraging the strengths of each region, the EU can achieve balanced and sustainable development, ensuring a prosperous future for all its regions and citizens.

The full report of the group of high-level specialists on the future of Cohesion Policy, and a range of background materials are available at the group’s website (Öffnet in neuem Fenster).

 by Kai Böhme