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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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The Sound of Gita Gopinath

IMF Chief Economist Gita Gopinath joins Bruegel Director Guntram Wolff to discuss the uneven recovery from the pandemic with a live clubhouse audience.

By: The Sound of Economics Topic: Global Economics & Governance Date: May 6, 2021
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Past Event

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Divergent Recoveries from the Pandemic: Conversation with IMF Chief Economist Gita Gopinath and Bruegel Director Guntram Wolff

In this episode of The Sound of Economics Live, IMF Chief Economist Gita Gopinath and Bruegel Director Guntram Wolff will debate the uneven recovery from the pandemic.

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By: The Sound of Economics Topic: Global Economics & Governance Date: April 21, 2021
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By: Zsolt Darvas and Catarina Midões Topic: European Macroeconomics & Governance Date: April 1, 2021
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The unequal inequality impact of the COVID-19 pandemic

Less-educated workers have suffered most from job losses in the COVID-19 pandemic, and it is quite likely there was a significant increase in European Union income inequality in 2020.

By: Zsolt Darvas Topic: European Macroeconomics & Governance, Global Economics & Governance Date: March 30, 2021
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Many gender gaps persist, but an important one that puts women in a very disadvantageous position is the gap in financial literacy.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: March 30, 2021
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Gender gap in financial literacy: a lack of knowledge or confidence?

“If women and girls are fearless, they will benefit by becoming more financially independent, more financially secure, more in control of their future and society will benefit.”

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: March 24, 2021
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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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