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European Union Studies

Regional policy – economic, social


and territorial cohesion in the EU

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Main aim

• Article 174 of the Treaty on the Functioning of the European Union


(TFEU) provides that, in order to strengthen its economic, social and
territorial cohesion, the Union is to aim at reducing disparities
between the levels of development of the various regions and the
backwardness of the least favoured regions or islands, and that
particular attention is to be paid to rural areas, areas affected by
industrial transition, and regions which suffer from severe and
permanent natural or demographic handicaps.

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The evolution of the policy
• In the 50’s no regional policy and support for EC
countries and regions
• In the 60’s limited support through the CAP and EIB
• In the 70’s realisation of the need for a
comprehensive regional policy

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In the 70’s
• European Regional Development Fund (ERDF) was
established in 1975 with the aim of reducing economic
and social disparities between European regions
• Other funds were also established: European Social
Fund (ESF, 1957), European Agricultural Guidance
and Guarantee Fund (EAGGF) and in 1993 Financial
Instrument for Fisheries Guidance (FIFG)
• These were the Structural Funds until 2006

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In 80’s
• The accession of the three Mediterranean countries
caused major challenges:

• Population increased by 22% while the GDP just by 10%


• The GDP of the 5 most developed regions was more times
higher than that of the 5 least developed ones

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Consequences
• Reform of the system of regional aid
• Single European Act (1986): regional development
on new foundations
• Economic and social cohesion was and still is a
Community objective
• Regional support policy was officially recognised

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Consequences
• Shifting emphasis from individual projects to more
complex programme-oriented development with
cleary defined set of objectives
• „Programming” principle

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The principles
• The principle of concentration
• The principle of partnership
• The principle of additionality
• The principle of programming and planning

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The principle of concentration
• The concentration of measures on the priority objectives for
development. 
• Concentration of resources: the greater part of structural fund
resources (70% for 2014-2020) are concentrated on the poorest 
regions and countries.
• Concentration of effort: Targeting Investments on Key Growth
Priorities
• Concentration of spending: at the beginning of each
programming period, annual funding is allocated to each
programme. These funds must be spent by the end of the second
year after their allocation (known as the N+2 rule)

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The principle of partnership
– Partnership, which implies the closest possible co-
operation between the Commission and the appropriate
authorities at national, regional or local level in each
Member State from the preparatory stage to the
implementation of measures. 
– Each programme is developed through a collective process
involving authorities at European, regional and local level,
social partners and organisations from civil society.
– This partnership applies to all stages of the programming
process, from design, through management and
implementation to monitoring and evaluation.

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The principle of additionality
– Additionality which means that Community assistance
complements the contributions of the Member States rather
than reducing them.
– Except for special reasons, the Member States must maintain
public spending on each Objective at no less than the level
reached in the preceding period.
– Financing from the European structural funds may not
replace national spending by a member country.

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The principle of programming and
planning
– Programming, which results in multi-annual development
programmes (7 years), the result of a process leading to a
decision taken through partnership. The process has a
number of stages. The adopted measures then become the
responsibility of the managing authority. 

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The principle of programming and planning
– Cohesion policy does not fund individual projects. Instead, it funds multi-
annual national programmes aligned on EU objectives and priorities.
– Programming refers to the administrative mechanism used to pursue the
objectives of the European Structural and Investment Funds. Multi-annual
programmes – known as operational programmes – ensure consistency and
continuity over a seven-year period. Programmes relate to specific
geographical areas at international, national or sub-national level, depending
on the governance arrangements in place.
– Programme aims include identifying strategic priorities and indicative actions,
outlining financial allocations, and summarising management and control
systems. The current programming period runs from 2014 until 2020.

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Principle of Subsidiarity

• Furthermore, relations between the Commission and the


member States are governed by the principle
of Subsidiarity, which is enshrined in the Treaty of
Maastricht. In general terms, this means that a higher
authority may not and must not act if an objective can
be achived satisfactorily at a lower level. One
consequence of this is that it is up to the managing
authorities appointed by the Member States to select the
projects to be financed and to supervise their
implementation.

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The NUTS system
• French acronym for Nomenclature des Unités
Territoriales Statistiques
• Used by Eurostat
• Region are classified into 5 categories according to
their size and inhabitants
• NUTS 2 level (region) is the most important

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Hungary’s NUTS levels

NUTS 1

NUTS 2

NUTS 3
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Treaty of Maastricht – Cohesion
Fund
• A new source was added to the support policy:
Cohesion Fund 1992
• This aimed to help less developed MSs (countries
are the beneficiaries with an exact eligibility criteria)
• The Cohesion Fund gives financial support for
investment in infrastructure

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Cohesion Fund
• The Cohesion Fund is a structural instrument that helps
Member States to reduce economic and social disparities
and to stabilise their economies since 1994.
• The Cohesion Fund finances up to 85 % of eligible
expenditure of major projects involving the environment
and transport infrastructure.
• Eligible are the least prosperous member states of the
Union whose gross national income (GNI) per capita is
below 90% of the EU-average.
• Map!

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The growing importance of
regional policy
• Sharp rise in the Community expenditure: 5% in the
70’s, 10% in the 80’s and 30% in the 90’s, 33% in
2020’s

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In the 90’s
• Economic and social cohesion has become one of
the greatest achievements of the EC
• The support prevented the widening gaps between
regions and helped poorer regions

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Treaty of Lisbon, 2007
• The objective of territorial cohesion appears
• According to article 174 of the TFEU, the economic,
social and territorial cohesion policy intended to reduce
disparities between the levels of development of the
various regions and the backwardness of the least
favoured regions

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Treaty of Lisbon
• Special emphasis on rural areas, areas under industrial
transition, areas with several and permanent natural or
demographic handicaps
• Pursuant to Article 177 of TFEU, the EP and the
Council are responsible for defining the tasks, priority
objectives and organisation

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The role of the Commission
• Initiation, disbursing aid, approving specific
national programmes, monitoring the
implementation programmes and the use of funds
• It prepares a report of progress regularly

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Structural and Cohesion Funds
before 1999
• In 1988 the Delors package I set 5 objectives
• The system was built on these objectives

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Objective 1

• Helping regions whose development was lagging


behind to catch up
• NUTS 2 regions where per capita GDP did not
exceed 75% of the EC average
• Examples: regions in Greece, Portugal, Ireland,
most of Spain, Flevoland in the Netherlands, etc.
• It absorbed 70-73% of the Funds

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Objective 2
• Supporting economic and social conversion in
regions worst hit by the decline in industrial
production
• Example: heavy industrial areas like Ruhr in
Germany
• It absorbed 7-9% of the Funds

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Objective 3
• Supporting programmes aimed at helping the
young and long-term unemployed
• It absorbed 5-6% of the Funds

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Objective 4
• Supporting measures for re-training and
promoting the adjustment of the workforce to
changes, in order to avoid unemployment
• It absorbed 5-6% of the Funds

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Objective 5(a)
• Supporting the modernisation and structural
adjustment of certain agricultural and fisheries
sectors
• It absorbed 4% of the Funds

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Objective 5(b)
• Supporting the development of typically
agricultural regions with high agricultural
employment
• It absorbed 4-5% of the Funds

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Objective 6
• Supporting the adjustment of sparsely populated
regions (fewer than 8 people per square km)
• Examples: part of Northern Finland and Sweden
• It absorbed 0.5-1% of the Funds

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The budget available (1993-1999)
• 16.75 bn € at 1999 prices
• Spain, Greece, Portugal and Ireland received 55.2%,
17.9%, 17.9%, 8.9% (82%) of the funds

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Stuctural and Cohesion Funds
(2000-2006)
• Further enlargement of EU posed a massive
headache:
• In CEE almost every region was eligible for the
funds

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Stuctural and Cohesion Funds
(2000-2006)

• Previous beneficiaries were no longer entitled to


assistance, reduction in the common budget
• These problems cried for help

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Berlin European Council (1999)
• The same level of financing for old MSs, lower financing
terms for the new MSs (Multi-speed Europe)
• The EU allocated 260 bn € at 1999 prices and 47 bn € was
set aside for structural measures
• Increasing the efficiency and concentration of the
Structural Funds new objectives
• The tasks were carried out by the four SFs (ERDF, ESF,
EAGGF, FIFG)
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in the beginning: Structural Funds

• European Social Fund (ESF)


• European Regional Development Fund (ERDF)
• Financial Instrument for Fisheries Guidance (FIFG)
• Guidance section of the European Agricultural
Guidance and Guarantee Fund (EAGGF)

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Today: European Structural &
Investment Funds

• There is a single set of rules covering the EU's 5


structural and investment funds (ESIF):
• European Regional Development Fund (ERDF)
• European Social Fund (ESF)
• European Agricultural Fund for Rural
Development (EAFRD)
• European Maritime & Fisheries Fund (EMFF)
• Cohesion Fund (CF)

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European Social
Fund

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European Social Fund - ESF

•The ESF is Europe’s main instrument for supporting


jobs, helping people get better jobs and ensuring
fairer job opportunities for all EU citizens. It works by
investing in Europe’s human capital – its workers, its
young people and all those seeking a job.

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ESF - HISTORY

• The European Social Fund was created in the founding 


Treaty of Rome in 1957; it is the oldest of the 
Structural Funds. While the ESF has always taken
higher employment as its objective, it has adapted its
focus over the years to meet the challenges of the time.
In the early post-war years, it concentrated on
managing the migration of workers within Europe.
Later it moved on to combating unemployment
among the young and poorly qualified.

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ESF
• The European Union is committed to creating
more and better jobs and a socially inclusive
society.
• The ESF invests in people, with a focus on
improving employment and education
opportunities across the European Union.
• Aims to improve the situation of the most
vulnerable people at risk of poverty.

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ESF – 2000-2006
• The ESF sets out to improve employment and job opportunities in
the European Union.
• The ESF supports actions in Member States in the following
areas:
• adapting workers and enterprises: lifelong learning schemes,
designing and spreading innovative working organisations;
• access to employment for job seekers, the unemployed,
women and migrants;
• social integration of disadvantaged people and combating
discrimination in the job market;
• strengthening human capital by reforming education systems
and setting up a network of teaching establishments.

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ESF - Priorities
• to boost the adaptability of workers with new skills, and
enterprises with new ways of working.
• focus on improving access to employment:
• helping young people make the transition from
school to work,
• training less-skilled job-seekers to improve their job
prospects
• vocational training and lifelong learning opportunities to give
people new skills form a large part of many ESF projects.
• helping people from disadvantaged groups to get jobs

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ESF 2007-2013:
'Investing in People'
• Tasks are:
• reaching full employment;
• increasing quality and productivity at work;
• promoting social inclusion (in particular the access of
disadvantaged people to employment);
• reducing national, regional and local employment
disparities.
•€75 billion – close to 10% of the EU budget – on
employment-enhancing projects

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ESF 2007-2013:
'Investing in People'
• Priorities:
• increasing adaptability of workers, enterprises and
entrepreneurs with a view to improving the anticipation
and positive management of economic change;
• enhancing access to employment and the sustainable
inclusion in the labour market of job seekers and
inactive people;
• preventing unemployment, in particular long-term and
youth unemployment;
• encouraging active ageing and longer working lives;

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ESF 2007-2013: 'Investing in
People'
•Priorities:
• increasing participation in the labour market;
• reinforcing the social inclusion of disadvantaged people
with a view to their sustainable integration in employment;
• combating all forms of discrimination in the labour market;
• enhancing and increasing human capital;
• promoting partnerships.

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ESF 2014-2020

• € 80 billion is earmarked for human capital


investment in Member States between 2014 and
2020,
• An extra of at least € 3.2 billion allocated to the
Youth Employment Initiative

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ESF – 2014-2020
•PRIORITIES:
• promoting employment and supporting labour mobility
• promoting social inclusion and combating poverty
• investing in education, skills and lifelong learning
• enhancing institutional capacity and an efficient public
administration

•20 % of ESF investments will be committed to activities improving


social inclusion and combating poverty.
•This is known as thematic concentration.

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ESF

• The ESF is not an employment agency – it does not


advertise jobs.
• Rather, it is funding tens of thousands of local, regional and
national employment-related projects throughout Europe
• http://ec.europa.eu/esf/main.jsp?catId=45&langId=en
• http://ec.europa.eu/regional_policy/index.cfm/en/funding/
social-fund/

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ESF – project in HU
• IMPROVING STAFF MANAGEMENT AND HEALTH CARE
SERVICES

• An ESF-funded project at Pándy Kálmán Hospital in Hungary


resulted in better working conditions for staff and improved
care for patients
• ESF contribution: EUR 183 145 - participants: 244

• ( http://ec.europa.eu/esf/main.jsp?catId=46&langId=en )

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VIDEOS
• http://
ec.europa.eu/avservices/video/player.cfm?ref=I07159
5&videolang=en&sitelang=en
• http://
ec.europa.eu/esf/videos_include.jsp?mode=1&videoId
=2602&vl=en&langId=en
• http://
ec.europa.eu/esf/videos_include.jsp?mode=1&videoId
=2599&vl=en&langId=en
• http://ec.europa.eu/esf/videos_include.jsp?mode=1&vi
deoId=2601&vl=en&langId=en
• http
://ec.europa.eu/esf/videos_include.jsp?mode=1&video
Id=2880&vl=en&langId=en www.company.com
European
Agriculture
Guarantee and
Guidance Fund
(EAGGF)

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EAGGF
• European Agricultural Guidance and Guarantee Fund
(EAGGF), which had been set up by Regulation No 25 of 1962
on the financing of the CAP.
• In 2007 the two sub funds were devided replacing the former
EAGGF:
• 1, European Agricultural Guarantee Fund (EAGF) finances
direct payments to farmers under the Common Agricultural
Policy (CAP) and measures to regulate agricultural markets
such as intervention and export refunds.
• 2, The European Agricultural Fund for Rural
Development (EAFRD) finance the rural development
programmes of the Member States.

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European Agricultural Fund for
Rural Development (EAFRD)

• The EU's rural development policy is funded through the


European Agricultural Fund for Rural Development (EAFRD)
worth
• €100 billion from 2014-2020, with each EU country
receiving a financial allocation for the 7-year period.

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EAFRD
• Thematical focus on:
- improving the competitiveness of farm,
- forest and agri-food businesses;
- helping protect the natural environment;
- supporting rural economies;
- assisting quality of life in rural areas
- climate change,
- renewable energy,
- biodiversity and
- water management.

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EAFRD

•Aimis to support EU’s rural development policy.


• Farming and forestry remain central to rural
economies, and rural development also focuses
on revitalising rural areas in other ways.
• Rural development is a vitally important policy area,
affecting over 50% of the population of the EU and
almost 90% of EU land.

• https://
www.fi-compass.eu/video/benefits-financial-instrum
ents-eafrd
• https://www.youtube.com/watch?v=TQRYpJr5xfU
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FIFG

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FIFG

The Financial Instrument for Fisheries Guidance (FIFG)
finances measures for the adjustment of fisheries and
aquaculture structures and the processing and
marketing of their products.
• FIFG aims to support a sustainable balance between
marine resources and their exploitation and promotes
the modernisation of fishing structures to ensure the
future of the industry.

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FIFG
• The FIFG is one of the European Union’s Structural
Funds. It was set up in 1993, replacing a number of
earlier structural instruments.
• The Regulation on the Financial Instrument for Fisheries
Guidance (FIFG) sets out the policy priorities and the terms of
assistance for the fisheries and aquaculture sector.
• The FIFG is designed to help achieve the aims of the
common fisheries policy by providing structural assistance. It
thus strengthens the competitiveness of the operating
structures and the development of economically viable
enterprises.

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FIFG
• Financial instrument for fisheries guidance (FIFG) 1994-
2006
• The FIFG was launched in 1994 to support the EU
fisheries sector. In 2007 it was replaced by the
European Fisheries Fund (EFF), which is more closely
aligned with the new emphasis on sustainability. The
EFF has simpler operating procedures and has been
set up to reflect the needs of the enlarged EU with its 27
Member States.

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FIFG

• By encouraging the development of coastal areas


that are dependent on fishing, the FIFG is helping
to strengthen economic and social cohesion within
the Union.

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FIFG priorities are:
• Adjustment of fishing effort
• Fleet renewal and equipment or modernisation of fishing vessels
• Small-scale coastal fishing
• Fishing in inland waters
• Protection and development of aquatic resources
• Fishing port facilities
• Development of aquaculture
• Processing and marketing of fishery and aquaculture products
• Measures to identify and promote new market outlets
• Social measures accompanying restructuring
• Measures by groups within the trade
• Temporary cessation of activities

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The European Fisheries Fund (EFF)
(2007-2013)

• The European fisheries fund (EFF) provides funding to the


fishing industry and coastal communities to help them adapt
to changing conditions in the sector and become
economically resilient and ecologically sustainable.
• Funding is available for all sectors of the industry – sea and
inland fishing, aquaculture (the farming of fish, shellfish and
aquatic plants), and processing and marketing of fisheries
products. Particular attention is given to fishing communities
most affected by recent changes in the industry.

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EFF 2007-2013
• There are five priority areas (axes) for EFF funding:
• adjustment of the fleet (e.g. to support scrapping of fishing vessels)
• aquaculture, processing and marketing, and inland fishing (e.g. to
support the shift to more environmentally friendly production methods)
• measures of common interest (e.g. to improve product traceability or
labelling)
• sustainable development of fisheries areas (e.g. to support
diversification of the local economy)
• technical assistance to finance the administration of the fund.

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BUDGET
• Projects are funded on the basis of strategic plans
and operational programmes drawn up by national
authorities.

• The total FIFG budget for 2000–06 is € 3.7 billion.


• The EFF has a budget of €4.3 billion for 2007-2013.
• The EMFF has an overall budget of over €6 billion
for 2014-2020.

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European Maritime and Fisheries
Fund (EMFF) 2014-2020
• The EMFF is the fund for the EU's maritime and
fisheries policies for 2014-2020.
• It is one of the five European Structural and Investment
(ESI) Funds which complement each other and seek to
promote a growth and job based recovery in Europe.

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European Maritime and Fisheries
Fund (EMFF) 2014 -2020

• The fund
• helps fishermen in the transition to sustainable fishing
• supports coastal communities in diversifying their economies
• finances projects that create new jobs and improve quality of life
along European coasts
• makes it easier for applicants to access financing.
•This support is provided to fisheries (including data collection and
control), aquaculture and processing, as well as to the sustainable
development of fishery and aquaculture areas and the Integrated
Maritime Policy.

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European Regional
Development Fund

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ERDF - 1994-1999 Objectives

• ERDF resources are mainly used to co-finance:


• productive investments leading to the creation or
maintenance of jobs;
• infrastructure;
• local development initiatives and the business
activities of small and medium-sized enterprises.

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ERDF

• In practice, ALL development areas are covered:


transport, communication technologies, energy, the
environment, research and innovation, social
infrastructure, training, urban redevelopment and
the conversion of industrial sites, rural
development, the fishing industry, tourism and
culture.

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ERDF
• ▫ R+D, innovation and company operations, including the strengthening of
research and technological development capacities by supporting infrastructure,
R+D operations of SMEs, technological transfer, contacts between universities
and enterprises, research and technological centres, enterprise networks and
„clusters”, etc.;
• ▫ Information society, including local content services, services and use,
broadband networks, safe access to on-line public services, support and
services offered for SMEs and the effective use of info-communication
technologies;  
• ▫ Environmental protection, including waste and water management, local
wastewater treatment and improving air quality, integrated pollution prevention
and control, rehabilitation of polluted areas and brown fields, promoting
biodiversity and nature protection, including investment in NATURA 2000 areas,
supporting SMEs in the introduction and use of cost-efficient environmental
protection management systems and pollution prevention technologies;    

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ERDF
• ▫ Risk prevention, including the elaboration and implementation
of plans helping to prevent and deal with environmental risks;
• ▫ Tourism, including support for natural treasures as the
potential base for the development of sustainable tourism,
protection of natural heritage and highlighting its relevance in
economic and social development, funding targeting the
development of the range of tourism-related services;     
• ▫ Culture, including the protection and conservation of cultural
heritage, cultural infrastructure development within the scope
of economic and social development, making the region more
appealing, development of the provision of cultural services;

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ERDF
• ▫ Transport investments, including trans-European
networks and integrated clean transport strategies, with
special regard to urban transport, including equal access to
transport for disadvantaged persons;
• ▫ Energy, including trans-European networks, which
contribute to improving the safety of services, integrating
environmental factors, increasing energy efficiency, as well
as the development of renewable energy resources;   
• ▫ Investment in education and healthcare, as well as the
social infrastructure in justified cases.

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ERDF 2014-2020
• The ERDF aims to strengthen economic and social
cohesion in the European Union by correcting imbalances
between its regions.

• The ERDF focuses its investments on several key priority


areas. This is known as 'thematic concentration':
• 1. Innovation and research;
• 2. The digital agenda;
• 3. Support for small and medium-sized enterprises (SMEs);
• 4 The low-carbon economy.

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ERDF budget

• 1975-1988 - 24,4 milliárd ECU


• 1989-1993 - 35,4 milliárd ECU
• 1994-1999 - 80,5 milliárd ECU
• 2000-2006 - 100 milliárd euro
• 2007-2013 - 138 milliárd euro
• 2014-2020 - 199 milliárd euro

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Cohesion Fund

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Cohesion Fund

1992. Maastrich Treaty

The Cohesion Fund: special solidarity


fund for supprting the less developed
coutries:
- Greece, Portugal, Ireland, Spain

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CF
• It aims to reduce economic and social disparities
and to promote sustainable development.

 Thematic focus on:


• transport infrastructure projects
• environmental projects

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CF
• Eligibility for support:
• The Cohesion Fund is aimed at Member States
whose Gross National Income (GNI) per inhabitant is
less than 90 % of the EU average.

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CF
• Maastricht convergence criteria focuses mainly on the
fulfilment of financial requirements, which inspire to
postpone projects with long term return - especially
those that the less developed countries need
(infrastructure, water supply, sevage system,
environment protection, etc.)
• Treaty on the EU - Maastricht criterias vs big
infrastructural projects
• The main aim of the CF is the solve this challange.
• https://www.youtube.com/watch?v=yzYZOxvtmMM

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The four Structural Funds in 2000-2006
• Financial instrument for fisheries guidance (FIFG)
• European Agricultural Guidance and Guarantee Fund
• European Social Fund
• European Regional Development Fund

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2014-2020

• In the 2014-2020 programming period, the European


Structural and Investment Funds, in particular the European
Regional Development Fund (ERDF), the European Social
Fund (ESF) and the Cohesion Fund, will support 11
investment priorities, also known as thematic objectives:

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Thematic objectives
• 1. Strengthening research, technological development and innovation
• 2. Enhancing access to, and use and quality of information and
communication technologies (ICT)
• 3. Enhancing the competitiveness of small and medium-sized enterprises
(SMEs)
• 4. Supporting the shift towards a low-carbon economy in all sectors
• 5. Promoting climate change adaptation, risk prevention and management
• 6. Preserving and protecting the environment and promoting resource
efficiency
• 7. Promoting sustainable transport and removing bottlenecks in key network
infrastructures
• 8. Promoting sustainable and quality employment and supporting labour
mobility
• 9. Promoting social inclusion, combating poverty and any discrimination
• 10. Investing in education, training and vocational training for skills and
lifelong learning
• 11. Enhancing institutional capacity of public authorities and stakeholders and
efficient public administration
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Objectives 2014-2020
Classification of regions
from 2014 to 2020:  
- Less developed
regions (GDP/ head is
less then 75% EU27
average) red
  - Transition regions
(GDP/ head is between
75% and 90% EU27
average) yellow
  - More developed
regions (GDP/ head is
more then 90% EU27
average) blue

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Interesting links about the European
Regional Policy

http://
ec.europa.eu/eurostat/web/europe-2020-indicators/euro
pe-2020-strategy

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