Economic and Monetary Union Cohesion Policy


One key re-distributive policy being pursued by the Economic and Monetary Union would be the Cohesion Policy. The cohesion policy finds its origins in the Treaty of Rome (1957) and the Treaty of Lisbon (2010), which is effectively known as the treaty of the European Union. The cohesion policy is renewed and reformed once every seven years with enhancements that better allow it to meet its aim-at-large of improving economic well-being of regions in the EU and to avoid regional disparities. It is noteworthy that the cohesion policy has always been emphasized on as a key objective of the EU since the times of the Treaty of Rome to the current Treaty of Lisbon. This highlights the prime importance of the cohesion policy to the EU that views the necessity for regions to be cohesive despite the differences in wealth, economy and culture of the member states. Simply put, for the EU to be effective and successful within itself and as one single European market to the rest of the world, cohesion is a necessary factor that needs to be sustained strongly and redistributing financial resources from the EU budget towards all regions to varying degrees is one way of achieving cohesion in the EU.

  1. Cohesion Policy: 2007 to 2013

The cohesion policy from the period 2007 to 2013 had the theme of “Investing in People” where it contained three main objectives: convergence, regional competitiveness and employment and European territorial cooperation (European Commission, 2015). By convergence, the cohesion policy looked towards increasing human and physical capital along with innovation and knowledge within the regions. Regional competitiveness and employment objective was aimed at increasing the attractiveness of the regions in order to draw an inflow of employment and investments while the objective of European territorial cooperation was to allow for regions and member states to work together, learn from the other and to promote joint projects and networks in efforts to reduce regional disparity. In order to meet these objectives, the cohesion policy 2007-2013 had set aside three funds: European Regional Development Fund (ERDF), European Social Fund (ESF) and the Cohesion Fund. According to the Cohesion Report (2014) by the European Commission, the ERDF and the ESF were used towards the creating of jobs and the sustaining of employment not only locally within member states but also regionally. Of particular importance is the Cohesion Fund where 70 Billion Euros, which forms a third of the EU budget, was used in efforts to reduce regional disparities in aspects such as income, wealth and opportunities.

  1. Cohesion Policy: 2014 to 2020

However, with the Eurozone crisis that had started towards the end of 2009, the cohesion policy in the period 2014 to 2020 had now revamped its main theme to “Investing in Regions”. Through this, the policy hopes to aid the EU in meeting challenges of the 21st century and thereby allowing it to be globally competitive (European Commission, 2015). In the cohesion policy 2014-2020, regions were split according to their levels of development. All countries benefit from the cohesion policy 2014-2020, but the regions that are less developed gain more funding from the EU budget as compared to their more developed counterparts. The aim of division by level of development is to allow for less developed and transition regions to catch up with more prosperous EU states and also to reduce regional disparity while more developed regions are to use the funds they receive for making their regions more competitive and attractive to investors. The criterion that divides the regions into ‘Less Developed, Transition and More Developed’ would be the EU average Gross Domestic Product (GDP) per capita. Countries that have a GDP per capita less than 75% of the EU average fall under the category of ‘Less Developed’ regions while countries that have a GDP per capita above 75% and under 90% of the EU average would be termed as ‘Transition’ regions and countries with GDP per capita above 90% of the EU average as ‘More Developed’ regions. Similar to previous years, the current cohesion policy also consumes a third of the EU budget. However, the magnitude of this amount is now 351.8 Billion Euros as compared to the previous 70 Billion Euros spent (European Commission, 2015). This is one important factor to consider showing the EU’s concern over the redistribution within the regions and the need for it since more funds are allocated. The cohesion policy 2014-2020 now has eleven objectives as well as five funds whereas previously, there were just three objectives and three funds in the period 2007 to 2013. The additional two funds are namely the European Agriculture Fund for Rural Development and the European Maritime and Fisheries Fund which now covers a wider scope of target beneficiaries of the cohesion policy. Of the eleven objectives of the current cohesion policy, the main objectives tend to circle around encouraging innovation, competitiveness of small and medium enterprises, employment and environmental well-being. As such, the cohesion policy now targets a wider prospective to include more areas of concern in order to allow for the re-distributive effects of the policy to be essentially more distributed.



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