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Policy Contribution

How to improve European Union cohesion policy for the next decade

This policy contribution investigates the performance of the design, implementation and effectiveness of cohesion policy, the most evaluated EU tool for promoting economic convergence. By analysing the effects of cohesion policy on economic growth through reviewing literature, conducting empirical research by comparing regions, as well as considering attitudes and expectations collected through interviewing stakeholders, the authors provide reform recommendations.

By: , and Date: May 23, 2019 Topic: European Macroeconomics & Governance

The academic literature on the effectiveness of the European Union’s cohesion policy is inconclusive: some studies find positive long-term impacts, others find positive but only short-term impacts, while others find no or even negative impacts. This range of results arises from major complicating factors, related to complex local environments, the diversity of policy interventions beyond cohesion policy, varying time frames, cross-regional spillover effects, lack of appropriate data for the analysis and various econometric problems and related estimation biases.

We adopted a novel methodology that first estimated ‘unexplained economic growth’ by controlling for the influence of various region-specific factors, and then analysed its relationship with about two dozen characteristics specific to projects carried out in various regions in the context of EU cohesion policy. We found that the best-performing regions have on average projects with longer durations, fewer priorities, more inter-regional focus, lower national co-financing, more national (as opposed to regional and local) management, a higher proportion of private or non-profit participants among the beneficiaries (as opposed to public-sector beneficiaries) and a higher level of funding from the Cohesion Fund. No clear patterns emerged concerning the sector of intervention.

Interviews with stakeholders suggested that cohesion policy is the most evaluated of all EU policies and generates European value added. In some countries, local stakeholders have different attitudes towards cohesion and national funds, which sometimes leads to less-careful management of EU funds. The Performance Framework is seen as creating an additional layer of administrative burden, without a clear connection to results or the quality of interventions. Beyond the crucial role of administrative capacity and institutional quality, there are no clear-cut characteristics that contribute to the success of cohesion programmes.

Cohesion policy reform should focus on addressing the underlying problems, involving more strategic planning, fostering simplification but with stricter controls when the corruption risk is high, increasing the interregional focus and exploring synergies with other EU and national programmes. Focused and longer-term strategic programmes do not require high levels of flexibility. The national co-financing rate should be set on the basis of fiscal constraints, the additionality principle and corruption risk. The importance of a locally-led perspective should be reconciled with our finding that centralised management works better. Thematic concentration along with fewer EU goals is well justified for more-developed regions, but not for less-developed regions. A strengthened link with the European Semester should be avoided. Transparency over data, design and implementation of projects should be increased.

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Opinion

Central banking’s brave new world

Ever since the 2008 financial crisis, central bankers have been busy developing new policy instruments to fight fires and ward off emerging threats. Nonetheless, many secretly dreamed of returning to the good old days of cautious conservatism (with financial stability taken seriously).

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: February 24, 2021
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Opinion

疫情對全球經濟的結構性改變或比想像的更深

現在是時候重新思考我們目前經濟模式中的基本原理,來減輕這些影響。

By: Alicia García-Herrero Topic: Global Economics & Governance Date: January 21, 2021
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Blog Post

COVID-19 has widened the income gap in Europe

Workers with low-educational levels suffered far worse than others in terms of COVID-19 related job losses during the first half of 2020 in the EU. Jobs for tertiary-educated workers even increased. Thus, the pandemic has increased income inequality, reinforcing the case for inclusive development.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: December 3, 2020
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Opinion

The pandemic will structurally change the global economy more than we think

It is time to rethink many of the basic principles of our economic model to mitigate the impacts of the COVID-19 pandemic.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 20, 2020
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Opinion

Europe’s recovery gamble

Next Generation EU, was rightly hailed as a major breakthrough: never before had the EU borrowed to finance expenditures, let alone transfers to member states. But the programme and its Recovery and Resilience Facility amount to a high-risk gamble.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: September 25, 2020
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External Publication

Diversification and the world trading system

Diversification is important because it is associated with economic growth and reduced volatility.

By: Mohammed Al Doghan, Abdelaaziz Ait Ali, Muhammad Bhatti, Carlos Braga, Uri Dadush, Abdulelah Darandary, Anabel González and Niclas Poitiers Topic: Global Economics & Governance Date: September 16, 2020
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Past Event

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The Sound of Economics Live: The State of the Union going forward

In the first Sound of Economics Live episode after summer we look at the State of the Union address delivered by Ursula von der Leyen.

Speakers: Giuseppe Porcaro, André Sapir, Guntram B. Wolff and Alicia García-Herrero Topic: Energy & Climate, European Macroeconomics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 16, 2020
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Opinion

Without good governance, the EU borrowing mechanism to boost the recovery could fail

The European Union recovery fund could greatly increase the stability of the bloc and its monetary union. But the fund needs clearer objectives, sustainable growth criteria and close monitoring so that spending achieves its goals and is free of corruption. In finalising the fund, the EU should take the time to design a strong governance mechanism.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 15, 2020
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Past Event

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Bruegel Annual Meetings 2020 - Day 3

Third day of Bruegel Annual Meetings.

Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 3, 2020
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Past Event

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Bruegel Annual Meetings 2020 - Day 2

Second day of Bruegel Annual Meetings.

Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 2, 2020
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Blog Post

Emerging market central banks and quantitative easing: high-risk advice

Central banks in emerging markets with weak currencies should not resort to unorthodox monetary tools such as quantitative easing as a response to the crisis triggered by COVID-19. Preferable alternatives include shifting public spending away from less pressing needs, moderately increasing public debt and falling back on official development assistance.

By: Marek Dabrowski and Marta Domínguez-Jiménez Topic: Global Economics & Governance Date: August 26, 2020
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Opinion

Can households in the European Union make ends meet?

Half the households surveyed by Eurostat see themselves as unable to find the resources they would need to cope with an unexpected expense within a month, estimated by experts at €375 in the case of Greece.

By: Maria Demertzis, Marta Domínguez-Jiménez, Annamaria Lusardi and Bruegel Topic: Finance & Financial Regulation Date: July 24, 2020
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