European Regional Development Fund

Although the EU is growing ever closer as a single economic entity, the difference in wealth and economic power among its member nations – from Germany and France to Romania and Bulgaria – is still enormous. This is despite the European Union’s continuous efforts to reduce welfare differences between its member states since its foundation in 1958: The long-term objective of the EU is a convergence of income and GDP per capita levels within the entire Union. This policy is known as European cohesion policy, which nowadays accounts for more than one third of the EU’s total budget. The vast financial importance of the cohesion policy naturally begs two questions: Are structural funds effective in promoting economic growth? And if so, do they promote income and welfare convergence within the EU? Yet most studies so far have merely yielded fragmented results, as they only focus on single EU member states, or consist of data for short time periods. In contrast, this study captures long-term effects of structural funds in the recent past and delivers accurate and meaningful empirical results. It focuses on data for the European Regional Development Fund since this is the most important item of cohesion policy which financially supports projects that aim to foster convergence directly. In this book: - European cohesion policy; - structural funds; - European Regional Development Fund; - economic convergence; - Solow-Model; - growth theory

The European Community is committed to promoting `economic and social cohesion' across its regions. This guide explains how the European Regional Development Fund operates and its relationship to other sources of funding from the EC.

The abolition of the Regional Development Agencies removed the main source of match funding for ERDF sponsored projects, and the economic downturn has curbed alternative options for match funding even further. There is a pressing need to spend each region's ERDF allocation before 2015, but unless ministers take urgent steps to deliver on the Government's promise to make it easier for projects to secure match funding through the Regional Growth Fund, there is a significant risk that value for money will suffer and ERDF will not make the impact it could to help rebalance the UK's economy. The Committee endorses a number of sensible rule changes that will govern the next ERDF round (2014-20) currently proposed and related proposals to give Member States the power to tailor the size of their Operational Programme areas - which could permit Local Economic Partnerships in England to take responsibility for managing EU funds. MPs also challenge the current allocation system where even the wealthiest Member States receive some ERDF funding when a portion of what they pay in originally gets recycled back to them. The cross party group of MPs calls for this 'circular money flow' to end, and for England to retain this portion of funding to deliver its own regional policy. The Government would have to guarantee the same level of funding across the EU's 7 year funding cycle. This change would not affect the Government's contribution to ERDF for the poorer Member States. Lastly, MPs challenge the Government to evaluate the value for money of ERDF funded projects