Two key reports backs the Commission's initiative on the catching-up regions
Two recent reports published by the World Bank and the Organisation for Economic Cooperation and Development (OECD) strengthen the case for the Commission's approach in tackling the obstacles that hinders the competitiveness of these regions and why they have not yet reached the expected levels of growth and income for the EU. In 2016 the Commission had launched the initiative for the catching-up regions (also known as "lagging regions") in order to help those regions identify and properly address the investment needs of the regions, namely human capital, innovation, quality of institutions, better accessibility, as well as the tools available within the framework of EU Cohesion Policy that could support them in their future.
Confirming the starting point for this initiative, the World Bank's Rethinking Lagging Regions report highlights the nature and implications of regional disparities in Europe. There are still examples of great inequalities in wealth, opportunities and productivity across the EU. These are high and have been exacerbated by the economic and financial crisis. Today, the EU’s poorest regions have a GDP per capita that is seven times lower than in the richest areas. The impact of technology on labor markets will exacerbate these trends in the future. While changing demographics and migration patterns provide additional pressures.
It also highlights five horizontal policy priorities for cohesion policy:
- Addressing macro-structural weaknesses that limit regional growth potential – for example, national fiscal and external debt in countries with “low- growth” lagging regions cripples growth potential;
- Improving the regional business environment: firms in lagging regions are smaller, less productive, and much more likely to be engaged in non-tradables than those in “non-lagging” regions, in part as a result of weak local and regional business environments;
- Leveraging the productivity potential of cities: investment in secondary cities – which generate 40 percent of EU GDP with only 15 percent of the population – as sources of productivity, human capital accumulation and locations of opportunity;
- Investing in skills as a “no-regrets” policy: addressing entrenched regional gaps in foundational skills is critical to deliver on the potential of regions and to enable individuals to reach their own potential;
- Strengthening institutional endowments: weak institutions are one of the defining features of lagging regions, and addressing them is fundamental to expanding regional potential.
Similar conclusions are drawn also by the OECD in its Productivity and Jobs in a Globalised World. (How) Can All Regions Benefit? This report looks at how regional policies can support productivity growth and jobs. While there has been a remarkable decline in inequality in OECD countries, inequality among regions within certain countries has increased over the same time period. Regions that narrowed productivity gaps tended to benefit from economically vibrant tradable sectors and integration with well-functioning cities. This report considers in detail the role of the tradable sector as a driver of productivity growth and its relationship with employment. It addresses the possible risks of a growing tradable sector and how diversification is central to strengthening regional economic resilience. It considers how regions integrate global value chains and highlights the role of regional and policy links in fostering productivity growth and job creation. It asks what policies can help better anticipate or cushion shocks from trade in specific regions and, more generally, what strategies and framework conditions are conducive for regional productivity and employment growth.
The catching-up regions initiative part of a wider commitment to provide tailor-made assistance to regions in order to help them improve the way they manage and invest Cohesion Policy funds and foster more ownership, coordination and prioritisation in regional investment and development strategies.
The conclusions of both the analytical and the practical side of the initiative have been integrated in the preparation of the new programming period beyond 2020.
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