Regional Policy 区域政策 EU background for regional policy Although the European Union is one of the richest parts

of the world, there are striking internal disparities of income and opportunity between its regions. The entry of 10 new member countries in May 2004, whose incomes are well below the EU average, has widened these gaps. Regional policy transfers resources from rich to poorer regions. It is both an instrument of financial solidarity and a powerful force for economic integration. Why in General? * Convergence or divergence? Difference between regions: bigger? Disparities → divergence Without regional policy → Convergence? Reasons of Regional Policy in general: 1. Fairness Regional policy is seen as a way of ensuring that all parts of society can share in the benefits of a modern, growing economy 2. Extra production Regional policy is essential if peripheral region’s unutilized resourcesparticularly unemployed labors are to be drawn into productive use. 3. Lower inflation/faster growth The concentration of economic activity in core regions is overheating, which lead to inflation. By spreading economic activity, regional policy allows the economy to enjoy lower inflation and more sustained growth. 4. Fewer urban problems Economic activity in EU is increasingly concentrated in big cities. The quality of life-traffic congestion, pollution, and crime and overcrowding are serious problems. Regional policy offers a way of easing the pressures on the big cities by diverting part of the economic activities elsewhere.

Why in EU? Arguments: 1. Avoiding competitions Between EU different regions for inward investment project 2. Vested interest The more integrated the EU, the bigger would be the spill-over effect of one member states on another. (spill-over effect: confidence of stabilized) 3. Financial targeting Poor member states are not able to support their own poorer regions 4. Coordination ????? don’t understand 5. Effects of integration

Effects of EU integration on regional disparities Divergence forces: 1. Agglomeration economies (Geographical terms) Occur when firms from many different industries locate close to one another. (eg: transport facilities, financial facilities). These “external economies of scale” effects tend to strongly favor the core regions of the EU. 2. Dominant market position (open competition → weaker company couldn’t survive)

Large multinational firms are already concentrated and dominated in the core regions of the EU, opening up peripheral regions to competition from them could have serious effects for the smaller and less powerful firms more frequently found in peripheral regions. 3. Selective migration (well educated workers move from remote to center area) As integration proceeds, peripheral regions suffer migrant loss from the free movement of labour. Young skilled, and economically active labour migrate from peripheral to core regions. 4. Loss macro-policy (loss of monetary policy) Euro zone member state lost the power to use monetary policy to stimulate a weak local economy. Peripheral member state face a future of very limited macro-policy powers. This will restrict their ability to protect their local economies such as by way of currency devaluation. * Disparities economic development of the least advantaged regions In short, Europeans do not all have the same advantages in the face of the challenge of globalisation * Solidarity European solidarity: purpose to strengthen its economic and social cohesion and specifically to reduce the gaps among levels of development in the various regions. Eg: infrastructure, information society, R&D

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