Cohesion Policy – Aims and Instruments

Seminar Paper, 2007

10 Pages, Grade: 1,5


Table of Content

1. Introduction

2. General Aims of Cohesion Policy

3. Division of the EU areas

4. Elements/ Instruments of European cohesion policy
4.1 Structural Fund

5. Cohesion policy for the period 2007-2013

6. Conclusion: Evaluation of Cohesion Policy



Der Grundgedanke Europäischer Kohäsionspolitik ist es, wirtschaftliche und strukturelle Differenzen auf nationaler und regionaler Ebene zu harmonisieren. Um diese Defizite perspektivisch und gezielt zu beheben, hat die EU Kommission Fonds aufgesetzt. Die verschiedenen Arten der finanziellen Unterstützung und deren Handlungsrahmen wird auf den folgenden Seiten erläutert. Durch die Aufnahme der 10 neuer Länder in die EU 2004, steht die Europäische Kohäsionspolitik vor neuen Herausforderungen.

1. Introduction

The aim of European cohesion policy is to increase economic integration and to strengthen the cooperation between the European countries. Already in the year 1957, the countries which signed the Treaty of Rome stated, that they want to integrate their economies and to support their smooth and harmonic development with the agreement to decrease the gap between less developed countries within the member states (Baldwin/Wyplosz, 2004: pp.260-266). Nowadays these statements are still valid and therefore the need for cohesion policy still up to date when we look at the inequalities within the European Union. To support this statement, we just have to look at the GDP of the ten richest regions of the EU 15 at the end of the 1990s, which was three times as big, as the GDP from the ten poorest regions. The unemployment rate of the ten poorest regions was seven times higher compared to the richest ones. In order to offer a certain planning security, the cohesion politics are arranged in long term steps (Ribhegge 2006: pp.91). Right now we are in the planning period 2000-2006 which will be described briefly on the following pages. Afterwards the planning period 2007-2013 will continue. To fulfill the aims of the cohesion policy, the EU has introduced several funds.

2. General Aims of Cohesion Policy

The EU pursues a regional cohesion policy with actually two big objectives. First, to assist the development of special areas which are lagging behind as an action of solidarity between rich and poor Community areas, and second to balance regional differences within the member states by modernization of their economic systems and to reduce disparities between them. There is a wide gap in income levels and economic structures between the Southern and Western periphery on the one side and the core member states on the other. These differences arose mostly in the mid- 1980s and is called the cohesion problem (Tondl, 2000: p.180-181). The EU supported highly the cohesion countries (Spain, Portugal, Ireland and Greece as well as the areas in the Italian South and East Germany). These areas belong to the Objective 1 area. Also with the ten new member states which joined the EU 2004, the gap between the GDP per capita increased tremendously because all new member states were below the average EU GDP per capita income and support the need of cohesion policy within the 25 EU countries and areas.

3. Division of the EU areas

In order to distribute the funds fairly and correctly, the commission has made up three categories corresponding their intensity and need for support.

Objective 1: Areas suitable for objective 1 funding must have an average GDP per capita below 75% of EU average GDP per capita. The EU Commission is checking this criterion quite strictly and areas overcoming this maximum level have to phase out their programs (for example Ireland in 2004). Different funds are used for improvement of infrastructure, coaching and assistance for small and medium sized enterprises, the support of research and development institutions and advanced technology transfer. The aim of the vocational training is to make the integration of unemployed easier. During the period 2000-2006 approximately 64% of the whole funds was given to Objective 1 areas (Wagener, Eger, Fritz 2006: p.502). These were 50 regions that include 22% of the European population (Ribhegge 2006: pp.96). All cohesion countries mainly consist of Objective 1 regions.

Objective 2: Areas often hit by economic crisis, like declining industrial and rural output, or highly relying on fishery, which find themselves in the process of economic and social restructuring are eligible for objective 2. The most important criterion for this objective, is the rate of unemployment (especially youth unemployment) particular one-sided employment in industry or agriculture. Hence the basic aim is, to diversify the employment, generate a better business culture and to advance the protection of the environment. About 10% of the structural fund is given to objective 2 regions (Wagener, Eger, Fritz 2006: p.502).

Objective 3: This area has the goal to equalize and modernise the educational and employment systems basically with the social fund. The amount of the financial support depends on the class (objective) where the region is located in. Objective 3 is only horizontally oriented, i.e. where, in general all regions with some kind of problem can get support from the structural fund. Regarding objective 1 and 2 the structural fund has a regional orientation.

The exact distribution of the financial support to the three Objectives can be seen at Table 1, S.7.

4. Elements/ Instruments of European cohesion policy:

illustration not visible in this excerpt

Figure: Elements of cohesion Policy (Ribhegge 2006: pp.92)1

A requirement for getting support from one of these funds is, that the member countries discuss and sign their development program with the EU Commission. The three objectives as discussed in point 3, are very important for the distribution of the money. The Cohesion and Structure Fund of the EU are the second biggest item (35% of total budget) of the Union’s expenditure. This makes this area a political battlefield of the actors of European Union’s policy. It is very natural that each country wants to keep its contribution as low as possible but receive support payments as high as possible. The measures of cohesion policy are often an object of "package-deals" between the member countries and the Commission. To satisfy the concept of subsidiary and to strengthen the self responsibility of the regions, the structural funds are only co-financing instruments. For objective 1 countries, the amount is 75% and for the other two 50%. For companies it is 35% and 15% respectively (Ribhegge 2006: pp.96).

The Cohesion fund was created in 1993, with the basic goal to help out the lagging Member states in order to develop and reconstruct their infrastructure while consolidating their budget to make sure that these countries still meet the criteria for Maastricht and the European Monetary Union (Tondl, 2001: p. 181). Spain, Greece, Portugal and Ireland were supported out of the Cohesion fund. Ireland had a drastic economic improvement (GDP per capita increased significantly over EU average) and dropped out of the fund in 2004. At the same time the ten new member states joined the cohesion fund.


1 Because of the minor role compared to the other funds, the solidarity fund will not be explained in this paper

Excerpt out of 10 pages


Cohesion Policy – Aims and Instruments
European University Viadrina Frankfurt (Oder)  (Economics)
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ISBN (Book)
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EU, Chesion Policy, Agricultural policy, Subsidies, Agrar Subventionen
Quote paper
Master of Science in Management Swen Beyer (Author), 2007, Cohesion Policy – Aims and Instruments, Munich, GRIN Verlag,


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