Memorandum by Professor Daniel Tarschys,
Department of Political Science, Stockholm University
THE FUTURE OF EUROPEAN STRUCTURAL FUNDS
1. In considering the record of EU Structural
Policy, it is important to note its many different motives
and objectives. Measured against some of its explicitly stated
goals the policy is not convincing at all, but on the other hand
there are important achievements in areas that do not figure prominently,
if at all, in the official documents. This creates enduring problems
for the evaluation industry, but also for politicians trying to
make sense of the policy.
2. European Structural Policy is a prime
example of "goal congestion". Some of its objectives
serve as criteria for allocation (Objective 1, 2, 3, etc.) but
in this context I am concerned only with the more or less formally
recognised motives and purposes. These can be grouped into ten
1. Compensatory measures ("side payments")
intended to facilitate agreement on other policy decisions. While
the official documents have nothing to say about this motive for
the Structural Funds, historians are agreed that it has been important
at several junctures in the recent past when well-designed increments
were successfully employed to overcome resistance to further steps
in the integration process:
(i) In the enlargement process, there
were often regional pockets of resistance both in the old Member
States and in the candidate countries that were encouraged to
overcome their doubts through targeted benefits. In the UK case,
the method involved to overcome some early objections to accession
was the introduction of regional policy in the European Community
(pioneered by Lord Thomson).
(ii) Objections to the internal market
reforms in the 1980's in some Member States were met by the
doubling of the funds for Structural Policy (Delors I).
(iii) A similar strategy was used to overcome
concerns about inequities in the foreseen impact of the monetary
union, again through a doubling of the Structural Policy budget
(Delors II). This time the additional allocation was not integrated
into the structural funds but kept apart as a so-called cohesion
fund, a separation and a label intended to underscore that it
was only a temporary measure.
2. Compensatory measures to offset persistent
disadvantages ("juste retour"). Compensation may
also be requested by Member States that, rightly or wrongly, perceive
themselves to be victims of persistent disadvantages. Structural
policy payments is only one way of handling such complaints; budget
rebates is another one.
3. Distributive justice and solidarity.
The wealth and income gaps between different regions of the European
Union are considerable, although not quite as considerable as
is often claimed.
An important motive for Structural Policy is to redistribute resources
from wealthier to less wealthy parts of the continent. Well handled,
such transfers can give satisfaction to both donors and recipients.
4. Visibility and legitimacy of the Union.
To many Europeans the EU is but a ceaseless bombardment of
incomprehensible rules. A cure frequently prescribed is to offer
more visible and down-to-earth evidence of common European investments
5. Modernisation and institutional development.
The conditionality linked to the various structural programs involves
the promotion of financial discipline and the diffusion of modern
administrative and managerial standards. Both before and after
accession, the funds have been used to enhance the rule of law
and the institutional development in many Member States.
6. Network-building and Europeanisation.
Many activities in the field of structural policy have promoted
cross-border contacts and contacts with the European institutions.
7. Regional growth, employment and development.
Beyond mere redistribution, Structural Policy interventions aim
at boosting the long-term capacity for growth and job creation
in economically weaker regions. Whether this aim is achieved is
very difficult to say. There is ample evidence for the short-term
impact of the various programmes and projects but far less is
known about the longer-term effects. The quality of most implementation
reports and evaluation studies is disappointing.
8. Aggregate growth and employment.
Some elements in Structural Policy, such as the "missing
links" investments in trans-border infrastructural networks,
may be beneficial to aggregate growth, but the main pattern of
reallocation from more prosperous to less prosperous areas has
probably a weakly negative impact on the long-term growth rates
of the whole Union. Even the short-term impact is unknown, however,
since Structural Policy evaluation reports tend to overlook the
opportunity costs involved. Efforts are made to measure "jobs
created" and sometimes "jobs maintained", whatever
that may mean, but never "jobs destroyed" or "jobs
9. Convergence. Inter-state economic
gaps have no doubt shrunk somewhat, but the crediting of this
highly complex process to Structural Policy interventions should
be taken with a grain of salt. Efforts have been made to sort
out the contribution of the Structural Funds to convergence, but
the differentials highlighted in these studies tend to shrink
when more numerous variables and more sophisticated assumptions
are integrated into the models.
10. Cohesion. If cohesion is taken
to mean, as the Commission defines it, "an expression of
solidarity between the Member States and regions of the European
Union", then any measure should qualify. In the dictionary
version, however, cohesion means a "tendency to stick together"
(Webster) or a "tendency to remain united" (Oxford).
If we understand cohesion to mean a "sense of togetherness",
then it seems likely that all EU policies make some modest contributions
towards this goal, but it is not self-evident that the Structural
Funds are more efficient in this respect than other policies.
To find measures that give particular value for money in pursuing
the sense of European community, one should probably look to such
fields as education, culture, mass media, sports and youth mobility.
3. European Structural Policy has scored
some successes with respect to at least the first six of the 10
goal clusters. The contribution to goal clusters 7, 9 and 10 is
much more modest, and to cluster 8 possibly negative.
4. The record contains some significant
achievements. But what are the prospects for the future? Some
tasks assigned to Structural Policy have already been completed.
Such results should be gracefully acknowledged but do not necessarily
justify continued investments or interventions.
5. The basis for the inclusion of any item
in the next Financial Perspectives must be well-founded expectations
about future impact rather than historical accomplishments. In
assessing the prospects, one would have to:
assign weight to the various objectives;
consider whether and to what extent
they can at all be successfully pursued by national or European
policies; and then
make educated guesses about the possible
future contributions by the instruments in the repertoire of European
Structural Policy, as compared to other available policy instruments.
6. The compensatory measures made to achieve
particular decisions (cluster 1) have already served their purpose
and do not merit being continued. In some other areas, one should
probably expect declining marginal returns from established programmes.
Eg, if the most urgent infrastructural investments have already
been supported, the next round is likely to be less useful. The
same may hold for investments in administrative modernisation.
7. As to the grand objectives towards the
end of the list (clusters 9 and 10), the slow pace and underlying
causal complexity of regional equalisation conspire to make convergence
an unsuitable policy goal for the European Union. If the goal
of cohesion is understood to mean "the sense of European
community", then the present repertoire of instruments in
Structural Policy are not so well chosen. If we are serious about
this objective, as we should be, then an entirely different set
of measures should be considered.
8. When the usefulness of an established
European policy declines, whether through task completion or changing
priorities, there are two principal options at hand: the available
resources could either be redirected to other pressing needs,
or the policy in question could be redefined and filled with a
new substance. There are several examples in the past of such
exercises in "retro-fitting", in the case of CAP through
the invention of rural development as a partial exit strategy
from agricultural subsidies and in Structural Policy through a
bundle of measures presented under the label of "lisbonisation".
9. While intellectual honesty and considerations
of rationality speak in favour of an explicitly recognised transfer
of resources towards ascending priorities, the high transaction
costs involved in shaping agreements and making budgetary decisions
in the European Union will often make retro-fitting more expedient.
It is not the best strategy to choose, but at least better than
leaving things where they are.
10. The budget of the European Union contains
both seriously under-funded and seriously over-funded areas. Facilitating
a badly needed redeployment of resources requires increased attention
to the political and institutional aspects of policy termination
through the phasing out of expenditures that have already fulfilled
their purpose or cannot be expected to offer satisfactory returns
in the future.
30 December 2007
11 The official statistics on regional gaps reflect
the gross disparities before taxes, social transfers and public
consumption. When such domestic political interventions are taken
into account, a substantial part of the intra-national gaps tends
disappear. Production disparities are much greater than consumption