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The following OECD assessment and recommendations summarise chapter 7 of the Economic survey of the European Union published on 20 September 2007.
Cohesion policy aims to reduce regional disparities and encourage economic convergence. Its record so far has been patchy: regional disparities are not falling, or at best are declining very slowly. The budget is too small to make a real dent in income gaps, so the challenge is to get the maximum benefit from the available funds by making sure member states focus on activities that will spark sustainable growth, such as education, research and important infrastructure projects. The Commission has changed its approach for 2007-13 by focusing more on each country’s broad strategy rather than vetting specific projects. The desire to decentralise is understandable as many people thought the previous system was too bureaucratic and heavy handed. At the same time, the minimum rate of national co-financing has been reduced in the new member states, so the system is now more like a block grant. Taken together, there is a risk that these changes could lead to less careful project selection and management. To maintain strong incentives to invest wisely, it would have been better to increase rather than decrease the rate of co-financing by member states. In principle, national strategic plans should allocate most money to the Lisbon goals but in practice the list of eligible activities is long and provides little focus. Moreover, it may be helpful to re-assess whether state aid and social housing schemes should be eligible. The Community could achieve more with its regional budget if it were more performance-based so that money could be shifted to projects with the highest payoffs. There are several ways this could be done, including sunset clauses or a mandatory performance reserve in which a portion of funding is tied to results.
Regions are barely converging
Coefficient of variation of GDP per capita relative to EU231
1. At NUTS-2 level (i.e. 228 regions). Excludes Malta and Poland.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of the EU 2007 is available from:
For further information please contact the EU Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by David Rae, Boris Cournède and Marte Sollie under the supervision of Peter Hoeller.