Regional policies after the EU enlargement

Introduction In this chapter, I try to address the following question: which, among the structural policies currently in place should the EU maintain, which should it reform and which should it altogether abandon in order to fuel real convergence at the national and regional level? My focus will be on economic convergence, but, in the EU, convergence is seldom addressed at the national level. For the EU, and the European Commission in particular, economic convergence is a regional issue and must be addressed at that level. The word ‘regional’, here, refers to NUTS-2 territorial units or lower, as this is the level at which EU structural policies are designed and evaluated. I have argued elsewhere (see e.g. Boldrin and Canova (2001)) against the choice of such policy objective, as NUTS-2 units are too small and too varied in size for convergence to make any sense. Taking this policy objective at face value, I ask how Structural and Cohesion Funds and their allocation should be modified to reach it, and what kind of policies may create the environment most conducive to economic growth at the NUTS-2 territorial level. My attention concentrates on the twin issues of economic growth and convergence, for the new Member States after joining the EU. I proceed through the following steps. In section 13.2, I show that new Member States stand, relative to the EU-15 average member, roughly in the same position in which, about twenty or so years ago, Greece, Ireland, Portugal and Spain stood in relation to the then older members of the EEC. This explains our simulations, the sombre results of which are summarised at the end of section 13.2.