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Chart of the week: EU Cohesion Policy and the role of national governments

Publishing date
29 October 2012

The official mission of EU Cohesion Policy is to reduce “disparities between the levels of development of the various regions and the backwardness of the least favoured regions”. We run standard convergence analysis and find that this rather broad policy objective is only half-met. Countries and regions in Europe have been converging over the last decade but the dispersion in regional GDP per capita in each country is instead on the rise (Chart 1a).

However, if we look at regional disposable income (after benefits and taxes) we do not find the same divergence pattern. This would suggest that governments, which are responsible for determining benefits and taxes, are able to successfully redistribute across regions. Even more interestingly, we do not find that this positive redistribution record is limited to fiscally decentralized States (Graph 1b).

The EU should devote some time to properly reassess the role and remit of EU Cohesion Policy for the next Financial Perspective 2014-2020. Should EU Cohesion Policy really be used to eliminate regional disparities in each country or should it have more of a European remit? Are all intra-country regional disparities bad? Is standard income convergence analysis the right tool to assess whether all European regions have been given the right instruments for growth?

CHART 1: DISPERSION OF REGIONAL GDP AND INCOME PER CAPITA WITHIN COUNTRIES, 2000-2009

RTEmagicC_120830_P1.jpg
RTEmagicC_120830_p2.jpg

Source: own elaboration based on data from EUROSTAT

Note: The dispersion (ie coefficient of variation) of regional per capita GDP (and disposable income) is the average country-level dispersion across 26 EU countries (excluding Luxembourg) in each year.

About the authors

  • Benedicta Marzinotto

    Benedicta Marzinotto was a Resident Fellow at Bruegel from 2010 to 2013. She is now with the European Commission as a Policy Analyst – Economist, Labour market reforms, at DG ECFIN.

    She is also a Lecturer in Political Economy at the University of Udine and Visiting Professor at the College of Europe (Natolin Campus).

    Her research for Bruegel focused on EU macroeconomic developments, EU Institutions, finance and growth. More precisely, she was working on the macroeconomics of the recent crisis, the competitiveness debate (macro and micro-approach), the role of the EU budget in the crisis and the impact of financial regulation on economic growth.

    From 2004 to 2009, Benedicta was a Research Fellow in the International Economics Programme at Chatham House. She also has experience as a freelance political economic analyst. She has held visiting positions at the Free University of Berlin and at the University of Auckland.

    Benedicta holds a MSc and PhD in European Political Economy from the London School of Economics. Her research interests include: EU macroeconomics, EU economic governance, varieties of capitalism, and labour markets institutions.

    She is fluent in Italian, English and German.

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