Transcript EU Cohesion policy - Bordeaux Segalen University

EU COHESION POLICY
L3 EUROPEAN ECONOMICS AND
POLICY
Sophie Brana
Course Contents
Chapter 1. The economic, social and territorial
dimension of cohesion
Chapter 2. The convergence process
Chapter 3. The European cohesion policies
The European cohesion policies (Topics)
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The Lisbon strategy and Europe 2020 strategy
(March 4)
The European budgetary system (March 4)
The ”services of general economic interest”(March
18)
The Common agricultural policy (March 18)
The European industrial strategy (March 25)
Policies for sustainable development (March 25)
The Lisbon strategy
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Was set out by the European council in Lisbon in
March 2000
It was a development plan for the Economy of the
EU between 2000 and 2010
Very ambitious objectives. Its aim was to make the
EU ”the most competitive and dynamic knowledgebased economy in the world capable of sustainable
economic growth with more and better jobs and
greater cohesion”
The Lisbon strategy
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By the mid term in 2005, it was already clear that
the results were disappointing
An evaluation of the Lisbon strategy was launched
in 2004 : the Kok report.
It concluded that the EU was very unlikely to meet its
2010 goals chiefly due to a lack of determined
political action.
It highlighted an overload agenda, poor
coordination and conflicting priorities.
The Lisbon strategy
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In February 2005, European commission President
José Manuel Barroso announced the relaunch of the
Lisbon Strategy as a “Partnership for growth and
Jobs”, simplifying targets and reporting procedures,
with a single NRP (national reform programme) for
each country.
The Lisbon strategy has been a failure. By 2010,
most of its goals were not achieved.
The Lisbon strategy
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A key issue has been the lack of determined
political action. The goals were unrealistic.
The non-binding character of the Lisbon Strategy
contributed to the failure.
The guidelines address practically all macro and
structural policy areas of a member state.
Experience shows that too many priorities may be
easily transformed into no priority at all.
The Lisbon strategy
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The guidelines are the same for all the member
states, even through they have different levels of
socio-economic development.
Deficiencies in governance have remained the
weakest point of the Lisbon strategy. The commission
has relatively limited power to force a member
state to design and implement structural reform.
The Europe 2020 Strategy
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On march 2010, the European Commission has
launched the Europe 2020 Strategy, to go out of
the crisis and prepare EU economy for the next
decade.
The strategy is focused on five ambitious goals in
the areas of employment, innovation, education,
poverty reduction and climate/energy.
To ensure that the Europe 2020 strategy delivers, a
system of economic governance has been set up to
coordinate policy actions between the EU and
national levels.
The Europe 2020 Strategy
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The 5 targets for the EU in 2020
1. Employment
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2. R&D
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greenhouse gas emissions 20% (or even 30%, if the conditions are right)
lower than 1990
20% of energy from renewables
20% increase in energy efficiency
4. Education
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3% of the EU's GDP to be invested in R&D
3. Climate change and energy sustainability
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75% of the 20-64 year-olds to be employed
Reducing the rates of early school leaving below 10%
at least 40% of 30-34–year-olds completing third level education
5. Fighting poverty and social exclusion
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at least 20 million fewer people in or at risk of poverty and social exclusion
The European Budgetary system
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The EU budget was around € 140 billion in 2011
which is very small compared to the sum of national
budget (budget of all 27 EU member states : more
than € 6300 billions)
The EU own resources are very low. The EU budget
should rely less on member states contributions.
 The
question of EU funding priorities is always
overshadowed by debate on ‘net contributors’ or ‘juste
retour’.
The European Budgetary system
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is also a need to end the rebate system and the
marathon of negotiation session
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The European commission has proposed a list of
potential methods:
A
separate EU-wide VAT
 A financial sector tax
 A share of profits from auctioned greenhouse gas
emission allowances
 An EU charge related to air transport
 An EU energy tax.
The European Budgetary system
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However, some member States (the UK among
other) think that self-funding powers could lead to
an overly-independent set of EU institutions.
Finally, the EU budget focuses more on added value
expenses. The idea is that the EU budget should be
a key instrument for stimulating economic recovery
in Europe (investment in research, education, green
technologies). Two trends: to cut the budget and to
have a more productive use of funds.
The ”services of general economic
interest”
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Transport, Energy, Postal services, waste and water
services, Healthcare, Telecom
Why were these sectors usually public ?
 Network industries. Industries where the fixed cost
of the capital good is so high that it is not
profitable for a lot of firm to enter the market.
 Network industries often provides necessities.
 Social and private benefits are very different
(because of externalities): important for economic
and social cohesion
The ”services of general economic
interest”
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The mixed results of past program of privatization
Example of the reform of UK railways
 Fragmentation of the rail sector with 25 train
operating companies
 Railtrack was the owner of the railway
infrastructure.
Results
 Traffic increased
 But the quality of service deteriorate considerably
The ”services of general economic
interest”
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Results
 The railway infrastructure has been poorly
maintained and managed.
 Railtrack was placed in administration on
November 2001.
 Rail fares are the highest in Europe
 No reduction of subsidies
 Another failure is safety : some serious accidents
have occured
The Common Agricultural Policy
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Of all economic sectors, community integration has
been most promoted in the agricultural sector. It is
almost the only real European policy.
It very quickly succeeded in reaching its main goals:
 It
has guaranteed food self-sufficiency in the EU
 It has guaranteed farmers’ income
 It has encouraged modernization of farms
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As a result, The EU agriculture has become
internationally competitive.
The Common Agricultural Policy
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However, the CAP has become a victim of its own
success
 Surpluses
occurred in several sectors
 The productivist model encouraged by the CAP had
harmful environmental effects
 Subsidies to European producers were criticized by the
WTO
 concentration of aid: 20% of farmers receive 80% of
the aid.
 Several member states, particularly Great Britain,
question the amount of the budget granted to the CAP
The Common Agricultural Policy
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Some substantial reforms
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link between subsidies and production was cut. Direct
subsidies were introduced by the 1992 reform. It aimed
to give farmers a guaranted minimum income
independent of the quantity produced.
 Financial incentives that encourages farmers to choose
production methods that are respectful to the
environment (30% of subsidies)
 Aid ceiling (€300 000)
 Now 90% of direct payment are classed by the WTO as
non-trade-distorting
The Common Agricultural Policy
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The CAP three new main aims
 Viable
food production
 Sustainable management of natural resources
 Balanced development of the EU’s territory (over 77% of
the EU’s territory is classified as rural: 47% is farm land
and 30% forest) and is home to around half its
population.
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These new aims justify the budget allocated to the
CAP
The Industrial Policy
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In France, in 1982, industrial output represented, 28% of
GDP. Today, this has fallen to 13,6% (Eurostat).
Over the same period, the number of people employed
in the industrial sector dropped from 5,575,000 to
3,300,000.
While the share of manufacturing industry represents, on
average, 22.4% in the Euro zone, it accounts for 30% in
Germany, 23.1% in Italy and only 10% in France.
It is for this reason that the debate on industrial policy
has come back into the fore since the beginning of the
decade
The Industrial Policy
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One out of four jobs in the private sector in the European
Union is in manufacturing industry, and at least another
one out of four is in associated services that depend on
industry as a supplier or as a client.
80% of all private sector research and development
efforts are undertaken in industry – it is a driver of
innovation
The financial and economic crisis has refocused attention
on the central importance of a strong, competitive and
diversified industrial manufacturing value chain for the
EU’s competitiveness and job-creation potential.
The Industrial Policy
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European industry faces more and more challenges:
 since
1995, productivity growth in European
manufacturing has been decelerating and has fallen
behind the US (pb of competitiveness)
 the R&D intensity of EU lags behind its major competitors,
particularly the US and Japan.
 the structure of EU manufacturing industry shows obvious
unadaptations. As for high tech industries, EU missed “the
first train” in the development of information and biology
technology, and lagged behind the US and Japan.
Concerning the traditional industries, EU is facing strong
competition from the emerging countries
The Industrial Policy
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The supranational industrial policy of the EU can be
traced back to the framework of the European Coal
and Steel Community;
However, the purpose of the policy at that time was
much more political-oriented than to promote the
development of coal and steel sectors.
Until now, there is no common industrial policy at the
EU level.
The Industrial Policy
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The European industrial policy is recent. The first
formal Communication of industrial policy of the EU
was issued in 1990, and it could be seen as the
beginning of this policy.
EU industrial policy is a market-oriented one aiming
to create favorable environment for the
competitiveness of manufacturing industry,
It prevent sector intervention; the policy is different
from traditional industrial policy. It is not one of the
EU common policies, like, for instance, the Common
Agriculture Policy.
The Industrial Policy
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The guiding principles for the Community industrial
policy are “openness”, “horizontal” and
“subsidiarity”.
 The
openness of markets can guarantee the proper
functioning of market competition inside and outside the
Community.
 Emphasizing a horizontal approach was to abandon
sectoral policies.
 The principle of subsidiarity meant that the Community
only tackles those tasks that cannot be done better at the
national level.
The Industrial Policy
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Horizontal policy
Until now, the core and main content of EU industrial
policy is horizontal policy: non selective policy aimed
at improving the environment of all firms.
It includes promoting the competition environment for
manufacturing, supporting research and innovation,
making it easier for SMEs to access credit, helping to
improve labor skills to adapt to structural changes…
Vertical approach : it focuses on one industry.
The Industrial Policy
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Since 2005, industrial policy has been more sectororiented. The idea is that horizontal policies should
be combined with the concrete features towards
different sectors.
However “sectoral policies” here are still different
from the traditional interventionist policies. Sectoral
policy are the application of horizontal policies
tailored to the needs of each sector. It also aims to
create more favorable framework conditions for
certain sectors.