National Policies and Cohesion

Together with experts of the Politecnico di Milano and the Technopolis Group, Prognos researched trends of national and regional disparities as well as the role of national policies to reduce these imbalances.

The economic disparities between the Member States and the regions of the EU remain a concern for the overall economic and social well-being of the continent. Therefore, the European Commission assigned this study in order to better understand the underlying trends behind between- and within-country disparities. The study is based on extensive quantitative analysis as well as simulation modelling, stakeholder interviews and case studies in selected Member States.

Results of the study

Regional disparities have been on the rise in many European Member States. Most Central and Eastern European Member States have a GDP-per-capita of less than 75 % of the EU-28 average. Similarly, regions in the Southern European Member States show significant gaps to leading regions. Since the economic crisis in 2008, this trend has turned negative again.

There are several reasons for this trend: The enlargement of the EU has favoured convergence between Member States but also exacerbated intra-national disparities. Similarly, the European Single Market and the introduction of the Euro helped convergence between Member States but also resulted in different effects on intra-national disparities;investments were made mainly in major cities. Regional disparities have their sources in either a different level of productivity among regions, or in the uneven distribution of growth assets. With a similar industrial composition across European regions or with a similar productivity, the disparities would in fact be much lower.

Suggestions for reducing the disparities

Despite the significant investments from the EU’s Cohesion Policy and national efforts, disparities remain deeply ingrained in the regional structures and are difficult to reverse. Nevertheless, national policies – especially if they are coordinated with the EU’s Cohesion Policy – can reduce imbalances;and the disparities might also be even higher without this policy. Investments in human capital, access to infrastructure, and improving governance appear to be the most effective instruments in this respect. 

The national policies should particularly focus on assets for growth and transformation, improve productivity in low output sectors or sectors that do not perform to their potential, take measures to balance the growth of major cities with regions that might be left behind, and focus on policies that are additional to and coordinated with Cohesion Policy.

To the study (PDF, European Commission Website)

Authors: Jan-Philipp Kramer, Paul Jeffrey, Janis Neufeld, Janosch Nellen, Moritz Schrapers, Neysan Khabirpour (Prognos AG); Roberta Capello, Roberto Camagni, Ugo Fratesi, Silvia Cerisola (POLIMI); Nikos Maroulis, Kinscö Izsak, Laurent Laurich (Technopolis Group)