Narrowing the divide: regional policy as an instrument for boosting Europe's competitiveness?

19 July 2006

Danuta Hübner, the European Commissioner for Regional Policy, began by pointing out that it was a good moment to take stock of regional policy, as the Council of Ministers had just adopted the main legislative package of the new Cohesion Policy for 2007-2013 and the Commission had adopted its Strategic Guidelines for Cohesion Policy.

She said there were currently three key issues facing regional policy: there was a need for a reformed, modern policy to respond to the challenge of globalisation; the push to harness Europe’s regional and local potential must come “from below”; and regional policy can be a means to boost Europe’s growth and competitiveness.

Ms Hübner said the EU’s current challenges came from accelerated growth outside Europe, as the entry of low-cost producers into the world market had forced Europe to restructure its economy. Unfortunately, the rate of change in Europe had been far too slow. Europe’s ageing society did not want to accept change and preferred to retain existing legislation, even though some of this was not conducive to competition.

The Commissioner insisted that European society had to be “as open as the economy” to guard against protectionism and exploit the new opportunities. She argued that EU growth depended on innovation and said this could be fostered by harnessing local knowledge, expertise, entrepreneurship and cooperation.

Bolstering growth

Ms Hübner stressed the significant changes in regional policy that are now underway. These include taking a more strategic approach, based on EU priorities; concentrating on the thematic and financial aspects of this approach; devolving responsibility to Member States; and setting up a more effective system for delivering policy programmes.

Turning to the issue of how EU regional policy could contribute to European growth, the Commissioner argued that it would foster integration between the local, regional and European-wide levels and that this would help to boost competitiveness.

She stressed that efforts to enhance convergence and competitiveness through regional policy went hand-in-hand as they both involved EU Member States, the regions and stakeholders, and could be used to involve regions in achieving the Lisbon Agenda goals. As regions were networking directly with each other, they were also exchanging ideas as well as beginning to compete against each other, which was a good sign.

Member States are now integrating the different elements of EU policy into their own policies and linking national reforms with EU-led programmes such as the Lisbon Agenda. The current Commission is also encouraging a synergy between different policy areas and mainstreaming regional policies across the directorates-general.

Commissioner Hübner added that individual cities could play a role as “drivers for change and innovation”. Member States therefore needed to give them more visibility and get them more “engaged” so that they could fulfil their potential.

Encouraging private capital

The Commissioner emphasised the importance of encouraging private capital to bolster regional innovation, as it had “worked miracles” in some European regions.

She said that when necessary, she would encourage EU financial institutions such as the European Investment Bank and the European Bank for Reconstruction and Development to get involved in order to improve the quality of projects supporting regional growth and convergence.

She also stressed that the EU’s financial resources would be concentrated on the most needy regions and Member States.

A move to greater subsidiarity

The new regional policy moves away from the “one size fits all” approach and towards greater subsidiarity, devolving greater responsibility to regional and local authorities to manage, audit and assess programmes.

The key word here is “partnership”, said Ms Hübner, who explained that the Commission would be working with national, regional and local authorities as well as its economic and social partners, civil society and local entrepreneurs. In this context, the Commissioner stressed the importance of investing in people. “Human capital is our major priority,” she said.

She acknowledged that the bureaucratic controls introduced by the Commission in the past to prevent financial mismanagement had become very “burdensome” and had stopped some Member States and regions from receiving the financial support they needed. To overcome this problem, the Commission is putting a more effective system in place.

Successful regionalisation

Ms Hübner said the Commission’s new approach to regional development was beginning to show results and, as a consequence, other countries - such as China - were interested in using it as a role model for their own regional development programmes.

She ended by stressing how regional policy had successfully mobilised local and regional constituencies. “My feeling is that this local and regional Europe is waking up,” she said. “If we are strong enough, we can use it to get Europe working.”