Fiona Wishlade

Global reversal, regional revival?

This is an Accepted Manuscript of an article published by Taylor & Francis in Regional Studies on 19 January 2017, available online: http://www.tandfonline.com/10.1080/00343404.2016.1255720.

EU Cohesion Policy and European Integration : The Dynamics of EU Budget and Regional Policy Reform

EU Cohesion policy accounts for a major share of the EU budget and is central to economic and social development in many European countries. This book provides a comprehensive and theoretically-informed analysis of how Cohesion policy has evolved over time and, in particular the budgetary and policy dynamics of the 2007-13 reform. In the context of the budgetary politics of the EU, the book examines the process by which the reform of Cohesion policy has been was shaped; it identifies the key factors that explain the allocation of funding, assesses the roles of the Member States, European Commission and European Parliament, and tests whether the process and outcome are consistent with the expectations of EU decision-making and integration theories. Based on extensive, EU-wide research over a ten-year period, the book provides new insights into both the process and outcomes of EU policy reform. Presenting original research in an accessible format, this book will be of interest to scholars as well as undergraduate and postgraduate students in the fields of European integration and policy studies.

Editorial: New Times, Shifting Places

This issue marks the handover of Regional Studies to a new editorial team. Taking over the reins appeared somewhat less daunting because the journal is in robust health with a generous stock of papers and special issues in the pipeline. Special thanks go to Arnoud Lagendijk who led a group of highly committed editors and ensured a smooth transition to the new team. Arnoud has kindly agreed to remain as an editor so the journal will continue to benefit from his experience. The new team will maintain the successful policies and practices we inherited, including a commitment to publish the highest quality research, encourage diversity, ensure ethical integrity, provide constructive feedback to authors, share decision-making among editors, commission special issues, and support special sessions in international conferences. We want the journal to be a vital and valued forum for discussion of the most significant ideas and knowledge about cities and regions, and to be accessible to as wide an audience as possible. As a more dispersed editorial team, we will operate differently and seek to streamline administrative arrangements to manage the rising volume of submissions. After sketching the rationale for Regional Studies, we set out the changing context for regional research and then introduce our first issue.

Made to Measure? Europeanization, Goodness of Fit and Adaptation Pressures in EU Competition Policy and Regional Aid

Abstract The measurement of Europeanization and adaptational pressures can be facilitated by three elements: an EU-wide perspective to enable a comparative assessment of impacts and outcomes; using a clear example of a new European-level policy initiative that impacts on all member states simultaneously; and a detailed knowledge of the ex ante and ex post situation in each country. This article incorporates these elements in a comparative case study of adaptational pressures and policy change under EU regional state aid policy, which casts doubt on the utility of goodness-of-fit propositions.

The impact of European Cohesion Policy in different contexts

ABSTRACT The impact of European Cohesion Policy in different contexts. Regional Studies. Cohesion Policy, an important pillar of the European Union, has always been closely scrutinized and subject to debate because of the size of the budget and supranational role of the European Commission. Recent research has acknowledged that the impact of Cohesion Policy is far from uniform; academic interest has shifted away from attempts to assess its ‘total impact’ towards an emphasis on the ‘conditioning factors’ that explain where, when and how policy is effective. This provides insights that can contribute to policy design. The five papers in this thematic issue contribute to this research agenda by showing in what contexts and under what conditions Cohesion Policy can be more effective.

When policy worlds collide : tax competition, State aid and regional economic development in the EU

Abstract This paper explores the relationship between tax competition, regional development and state aid control. In the 1990s, partly against the backdrop of the impact of globalisation on tax revenues, ‘unfair’ tax competition rose up the policy agenda. EU and OECD initiatives led to the amendment of various tax measures sometimes, paradoxically, enhancing their attractiveness. In parallel, the European Commission pursued an increasingly rigorous approach to disciplining regional aid — even in the most disadvantaged regions. Meanwhile, the European courts addressed the longstanding question of whether corporate tax rates set by regional authorities involve state aid. The consequence of these policy outcomes is that national governments and ‘genuinely’ autonomous regional authorities may operate more generous tax measures than those authorised under the state aid rules in the most severely disadvantaged regions. This raises important issues for EU cohesion policy, small island economies, and the relationship between EU competition policy and taxation.

Improving the Take-Up and Effectiveness of Financial Instruments: Final Report

In the wake of the financial crisis, public and private investment has stagnated due to loss of confidence and austerity policies. The supply side for investment is complex, with the boundaries between public and private often blurred. The overall landscape varies widely between countries, but is characterised by the growing importance of national promotional banks (NPBs) in economic development. Carefully calibrated financial instruments, often provided through NPBs, can provide sustainable support for revenue-generating / saving projects in areas like SME support, R&D&I and energy efficiency where market imperfections result in suboptimal levels of investment. The uptake of ESI Fund co-financed FIs has increased in 2014-20, but remains focused on loan-based SME support. The regulatory framework for ESIF co-financed FIs has improved, especially through mandatory ex ante assessments, but the implementation of FIs remains challenging for Managing Authorities, suggesting that more timely guidance, more stable rules, and perhaps more ‘off-the-shelf’ instruments would be beneficial. However, the plethora of initiatives at domestic and European levels can make the FI ‘scene’ difficult to decipher and quantify. Related, there is evidence of policy competition, pointing to the need to rationalise modes of intervention and tailor FIs to the relevant institutional and economic context.

Financial Instruments for Enterprises - Final Report: Ex post evaluation of Cohesion Policy programmes 2007 - 2013, focusing on the European Regional Development Fund (ERDF) and the Cohesion Fund (CF)

For many Member States financial instruments (FI) were a new approach to delivering Cohesion policy. Their increased use in 2007-13 created significant challenges especially for Managing Authorities with limited experience. The regulatory framework provided flexibility to accommodate domestic arrangements, but demanded considerable administrative capacity. FIs can be more sustainable than grants, generate better quality projects, and may be considered more cost-effective in some circumstances. However, their main rationale in the OPs has been to facilitate access to finance for SMEs, which became more important in the crisis. The scale of FI varies between countries, as does the share reaching final recipients. In most countries, FI are over 80% invested, but some very large FIs have been overcapitalised and the EU average is 61%. Governance arrangements tend to be context specific, but build heavily on existing public financial institutions. Implementing FI proved complex with demands for greater clarity and certainty met through successive changes to the Regulations and guidance, many of which have been consolidated into the 2014-20 regulatory framework. Monitoring systems for FI are weak, with little hard data on outcomes such as private funding, job creation and innovation, but some evidence that FI increase access to finance and can help develop private markets.

Financial Instruments under Cohesion Policy 2007-13: How have Member States and Selected Financial Institutions Respected and Preserved EU Financial Interests?: Interim Report

This study assesses the implementation of financial instruments (FIs) in Cohesion policy during the 2007-13 programming period. It takes stock of existing knowledge on the operation of FIs as reflected in the academic literature and policy documents. A comparative analysis of eight case studies, focusing on the different stages in the lifecycle of FIs, provides the basis on which to draw lessons from the implementation of FIs in 200713, highlighting implications for 2014-20.

The Merchants Of Venice or A Tale of Two Cities

This case arose from a decision of the Italian authorities to extend an existing regional aid scheme – a social security concession for the south of Italy - to the cities of Chioggia and Venice in the north, which fell outside the designated regional aid areas approved on the basis of Article 107(3)(a). This measure was not notified to the Commission in advance and, following an investigative procedure, the Commission reached a decision requiring the recovery of aid except insofar as it had been paid either to SMEs, to firms located in designated assisted areas, concerned the employment of ‘hard-to-place’ employees or to specified municipal companies. The recovery decision was contested before the General Court. The Commission claimed that the applicants lacked standing, but this was rejected by the Court which found that belonging to a closed class of actual beneficiaries of an aid scheme affected by the obligation to repay aid was sufficient to differentiate them from all other persons. On substance, the applicants argued, inter alia, that the measures were compensation for additional costs arising from their location in the Venice lagoon (not State aid), that the Commission had failed to account of the situation of undertakings other than selected municipal companies, and that the Commission had infringed Article 107(3)(c) in relation to regional aid. The substantive claims were rejected by the General Court. The applicants also challenged the legality of the recovery order, arguing that the measure was a mere extension in time and territory of a measure dating back to the 1970s. This was not accepted by the General Court which accordingly dismissed the actions. The applicants appealed the General Court’s judgment before the Court of Justice. For its part, the Commission, by cross appeal, sought the annulment of the General Court’s judgment insofar as it declared the applicants’ actions admissible. The Court of Justice upheld the General Court’s ruling on the standing of the applicants, though it found that the General Court had erred in law in finding that it was not for the national authorities to verify in each individual case whether the conditions for the existence of aid were met. The Court of Justice dismissed the main appeals of the applicants against the judgment of the General Court and confirmed the order for the recovery of the unlawful aid.