Structural Funds and Cohesion Funds
Encyclopedia
The Structural Funds and the Cohesion Fund are financial tools set up to implement the Cohesion policy also referred to as the Regional policy of the European Union. They aim to reduce regional disparities in terms of income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes.
The Structural Funds are made up of the European Regional Development Fund
(ERDF) and the European Social Fund
(ESF).
Together with the Common Agricultural Policy
(CAP), the Structural Funds and the Cohesion Fund make up the great bulk of EU funding, and the majority of total EU spending.
Apart from funds under the Cohesion policy, there are other funds that have the potential to contribute to the regional development. These are:
Sections below present information about objectives that have been defined for the current programming period, which runs from 1 January 2007 to 31 December 2013. The overall budget for this period is €347bn: €201bn for the European Regional Development Fund, €76bn for the European Social Fund, and €70bn for the Cohesion Fund.
The objectives setup shapes the main focus of interventions (eligible activities and costs) and the overall allocations of funds from the EU budget.
The key indicator for the division of regions under singular objectives is the Gross National Product per capita (GDP p.c.) level. This is subject to criticism based on the fact that GDP p.c. is unable to reflect the real socioeconomic reality of regions. Some groups (e.g. Beyond GDP) and organizations propose the creation of a set of alternative indicators that could substitute the GDP and its derivates.
, the ESF
and the Cohesion Fund. The priorities under this objective are human and physical capital, innovation, knowledge society, environment and administrative efficiency. The budget allocated to this objective is € 283.3bn in current prices.
The funding – € 55bn in current prices – comes from the ERDF
and the ESF
.
initiatives of previous years, which were originally planned to be fully incorporated into the main objectives of the structural funds. Financed by the ERDF
with a budget of €8.7bn, its aim is to promote cooperation between European regions, as well as the development of common solutions for issues such as urban, rural and coastal development, shared resource management or improved transport links. This objective is divided in three strands:
. It applies to member states with a Gross National Income (GNI) of less than 90% of the EU average. As such, it covers all 12 new member states as well as Greece and Portugal. Spain is also eligible for the Cohesion Fund, but on a transitional basis (so-called "phasing out").
At the EU level the overarching priorities are established in the Community Strategic Guidelines (CSG). These set the framework for all actions that can be taken using the funds. Within this framework, each member state develops its own National Strategic Reference Framework (NSRF). The NSRF sets out the priorities for the respective member state, taking specific national policies into account. Finally, Operational Programmes for each region within the member state are drawn up in accordance with the respective NSRF, reflecting the needs of individual regions.
The Structural Funds are made up of the European Regional Development Fund
European Regional Development Fund
The European Regional Development Fund is a fund allocated by the European Union.-History:During the 1960s, the European Commission occasionally tried to establish a regional fund. Only Italy ever supported this, however, and nothing came of it. Britain made it an issue for their accession in...
(ERDF) and the European Social Fund
European Social Fund
The European Social Fund is the European Union’s main financial instrument for supporting employment in the Member States as well as promoting economic and social cohesion. ESF spending amounts to around 10% of the EU’s total budget....
(ESF).
Together with the Common Agricultural Policy
Common Agricultural Policy
The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
(CAP), the Structural Funds and the Cohesion Fund make up the great bulk of EU funding, and the majority of total EU spending.
Apart from funds under the Cohesion policy, there are other funds that have the potential to contribute to the regional development. These are:
- Funds under the CAP, namely the European agricultural guarantee fund (EAGF) and the European Agricultural Fund for Rural DevelopmentEuropean Agricultural Fund for Rural DevelopmentThe European Agricultural Fund for Rural Development is a European agricultural fund which was set up for the financing of Rural Development Programme actions by European Union Council Regulation No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy.Rural development is...
(EAFRD) - The European fisheries fund (EFF) established for the programming period 2007-2013 with the Council Regulation (EC) No 1198/2006 of 27 July 2006.
Sections below present information about objectives that have been defined for the current programming period, which runs from 1 January 2007 to 31 December 2013. The overall budget for this period is €347bn: €201bn for the European Regional Development Fund, €76bn for the European Social Fund, and €70bn for the Cohesion Fund.
The objectives setup shapes the main focus of interventions (eligible activities and costs) and the overall allocations of funds from the EU budget.
The key indicator for the division of regions under singular objectives is the Gross National Product per capita (GDP p.c.) level. This is subject to criticism based on the fact that GDP p.c. is unable to reflect the real socioeconomic reality of regions. Some groups (e.g. Beyond GDP) and organizations propose the creation of a set of alternative indicators that could substitute the GDP and its derivates.
Convergence Objective (Formerly Objective 1)
This objective covers regions whose GDP per capita is below 75% of the EU average and aims at accelerating their economic development. It is financed by the ERDFEuropean Regional Development Fund
The European Regional Development Fund is a fund allocated by the European Union.-History:During the 1960s, the European Commission occasionally tried to establish a regional fund. Only Italy ever supported this, however, and nothing came of it. Britain made it an issue for their accession in...
, the ESF
European Social Fund
The European Social Fund is the European Union’s main financial instrument for supporting employment in the Member States as well as promoting economic and social cohesion. ESF spending amounts to around 10% of the EU’s total budget....
and the Cohesion Fund. The priorities under this objective are human and physical capital, innovation, knowledge society, environment and administrative efficiency. The budget allocated to this objective is € 283.3bn in current prices.
Regional Competitiveness and Employment Objective (Formerly Objective 2)
This objective covers all regions of the EU territory, except those already covered by the Convergence objective. It aims at reinforcing competitiveness, employment and attractiveness of these regions. Innovation, the promotion of entrepreneurship and environment protection are the main themes of this objective.The funding – € 55bn in current prices – comes from the ERDF
European Regional Development Fund
The European Regional Development Fund is a fund allocated by the European Union.-History:During the 1960s, the European Commission occasionally tried to establish a regional fund. Only Italy ever supported this, however, and nothing came of it. Britain made it an issue for their accession in...
and the ESF
European Social Fund
The European Social Fund is the European Union’s main financial instrument for supporting employment in the Member States as well as promoting economic and social cohesion. ESF spending amounts to around 10% of the EU’s total budget....
.
Territorial Cooperation Objective (Formerly Objective 3)
This objective builds upon the InterregInterreg
Interreg is an initiative that aims to stimulate cooperation between regions in the European Union. It started in 1989, and is financed under the European Regional Development Fund...
initiatives of previous years, which were originally planned to be fully incorporated into the main objectives of the structural funds. Financed by the ERDF
European Regional Development Fund
The European Regional Development Fund is a fund allocated by the European Union.-History:During the 1960s, the European Commission occasionally tried to establish a regional fund. Only Italy ever supported this, however, and nothing came of it. Britain made it an issue for their accession in...
with a budget of €8.7bn, its aim is to promote cooperation between European regions, as well as the development of common solutions for issues such as urban, rural and coastal development, shared resource management or improved transport links. This objective is divided in three strands:
- cross-border cooperation (formerly the Interreg IIIA) - aimed at neighboring border-regions
- transnational cooperation - aimed at the multilateral cooperation of regions from countries (minimally 3) divided into wider programme areas (e.g. Central Europe, Southeast Europe, Mediterranean, etc.)
- interregional cooperation - aimed at cooperation in the field of policy making, research and capacity building, encompassing programmes Interact II, ESPON, Interreg IVC and URBACT
The European Regional Development Fund (ERDF)
The ERDF supports programmes addressing regional development, economic change, enhanced competitiveness and territorial co-operation throughout the EU. Funding priorities include modernising economic structures, creating sustainable jobs and economic growth, research and innovation, environmental protection and risk prevention. Investment in infrastructure also retains an important role, especially in the least-developed regions.The European Social Fund (ESF)
The ESF focuses on four key areas: increasing the adaptability of workers and enterprises, enhancing access to employment and participation in the labour market, reinforcing social inclusion by combating discrimination and facilitating access to the labour market for disadvantaged people, and promoting partnership for reform in the fields of employment and inclusion.The Cohesion Fund
The Cohesion Fund contributes to interventions in the field of the environment and trans-European transport networksTrans-European Transport Networks
The Trans-European Transport Networks are a planned set of road, rail, air and water transport networks designed to serve the entire continent of Europe. The TEN-T networks are part of a wider system of Trans-European Networks , including a telecommunications network and a proposed energy network...
. It applies to member states with a Gross National Income (GNI) of less than 90% of the EU average. As such, it covers all 12 new member states as well as Greece and Portugal. Spain is also eligible for the Cohesion Fund, but on a transitional basis (so-called "phasing out").
A New Strategic Approach
This section explains the interplay between different political levels - European, national and regional - in determining the priorities for the Structural Funds and the guidelines for implementing regional projects. In general, the overarching priorities for the Structural Funds are set at the EU level and then transformed into national priorities by the member states and regions.At the EU level the overarching priorities are established in the Community Strategic Guidelines (CSG). These set the framework for all actions that can be taken using the funds. Within this framework, each member state develops its own National Strategic Reference Framework (NSRF). The NSRF sets out the priorities for the respective member state, taking specific national policies into account. Finally, Operational Programmes for each region within the member state are drawn up in accordance with the respective NSRF, reflecting the needs of individual regions.
- EU Level: Community Strategic Guidelines,
- National Level: National Strategic Reference Framework for each member state,
- Regional Level: Operational Programme for each region.
Community Strategic Guidelines
The Community Strategic Guidelines (CSG) contain the principles and priorities of the EU's cohesion policy and suggest ways the European regions can take full advantage of the funding that has been made available for national and regional aid programmes for the period 2007-2013. There are three priorities:- Improving the attractiveness of member states, regions and cities by improving accessibility, ensuring adequate quality and level of services, and preserving their environmental potential;
- Encouraging innovation, entrepreneurship and the growth of the knowledge economy by supporting research and innovation capacities, including new information and communication technologies;
- Creating more and better jobs by attracting more people into employment entrepreneurial activity, improving adaptability of workers and enterprises and increasing investment in human capital.
National Strategic Reference Framework
A National Strategic Reference Framework (NSRF) establishes the main priorities for spending the EU structural funding a member state receives between 2007 and 2013. Each member state has its own NSRF. Adopting an NSRF is a new requirement of the Structural Funds regulations for 2007 to 2013. Each NSRF functions as a high-level strategy for the Operational Programmes in the respective member state. The document provides an overview of the economic strengths and weaknesses of the member state's regions, and sets out the approach to future Structural Funds spending across the member state.Operational Programmes
An Operational Programme (OP) sets out a region's priorities for delivering the funds. Although there is scope for regional flexibility, a region’s priorities must be consistent with the member state's NSRF. There is an Operational Programme for each region in the EU. These OPs, just like the NSRF, have to be approved by the European Commission before any implementation.Funds management
Although the Structural Funds are part of the EU budget, the way they are spent is based on a system of shared responsibility between the European Commission and the member state authorities:- The Commission negotiates and approves the NSRFs and OPs proposed by the member states, and uses these as a basis for allocating resources.
- The member states and their regions manage the programmes. This includes implementing the OPs by selecting individual projects, controlling and assessing them.
- The Commission is involved in overall programme monitoring, pays out approved expenditure and verifies the national control systems.
See also
- European Union Regional policyEuropean Union Regional policyThe Regional policy of the European Union is a policy with the stated aim of improving the economic well-being of regions in the EU and also to avoid regional disparities...
- ERDFEuropean Regional Development FundThe European Regional Development Fund is a fund allocated by the European Union.-History:During the 1960s, the European Commission occasionally tried to establish a regional fund. Only Italy ever supported this, however, and nothing came of it. Britain made it an issue for their accession in...
- ESFEuropean Social FundThe European Social Fund is the European Union’s main financial instrument for supporting employment in the Member States as well as promoting economic and social cohesion. ESF spending amounts to around 10% of the EU’s total budget....
- European Grouping for Territorial CooperationEuropean Grouping for Territorial CooperationThe European Grouping for Territorial Cooperation is a Community level cooperation instrument with legal personality created on July 5, 2006 under EU council Regulation 1082/2006.- Composition of an EGTC :...