An Academic and Policy Debate Riga, 4-6 February 2015 Cover illustration © University of Latvia LEGAL NOTICE Neither the European Commission nor any person acting on its behalf may be held responsible for the use to which information contained in this publication may be put, nor for any errors which may appear despite careful preparation and checking. This publication does not necessarily reflect the view or the position of the European Union. Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). More information on the European Union is available on the internet (http://europa.eu). Luxembourg: Publications Office of the European Union, 2014 ISBN (print) : 978-92-79-45233-8 ISBN (pdf) : 978-92-79-45232-1 doi (print): 10.2776/81077 doi (pdf): 10.2776/536574 © European Union, 2015 Reproduction is authorised provided the source is acknowledged. Printed in Belgium An Academic and Policy Debate Riga, 04-06 February 2015 TABLE OF CONTENTS TITLE PAGE NUMBER ANALYSING THE MAIN FACTORS OF REGIONAL ECONOMIC GROWTH: IMPLICATIONS FOR EU COHESION POLICY Paola Annoni Philippe Monfort 1 THE LONG-TERM ACHIEVEMENTS OF EU COHESION POLICY, 1989-2012 John Bachtler Iain Begg David Charles Laura Polverari 1 WHAT INSTITUTIONAL ARRANGEMENTS FOR COHERENT EU COHESION POLICY PLANNING AND IMPLEMENTATION? Liga Baltina Tatjana Muravska 2 HOW TO USE FINANCIAL INSTRUMENTS FOR COHESION AND FOR WHICH INTERVENTIONS? THEORY AND PRACTICE WITH A CASE STUDY ON THE SITUATION IN THE BALTIC STATES Daina Belicka Jorge Núñez Ferrer 3 A MORE EFFECTIVE AND EFFICIENT POLICY? ASSESSING THE IMPLEMENTATION OF THE REFORM OF COHESION POLICY. Peter Berkowitz 3 BETWEEN SMART SPECIALISATION AND MACROECONOMIC MODELLING Andries Brandsma 3 THE USE OF EVALUATION AS A RESULT-BASED MANAGEMENT TOOL: LITHUANIAN CASE Danute Burakiene 4 THE JESSICA INITIATIVE 2007-2013 – WHAT HAVE WE LEARNED?” Gianni Carbonaro Francesca Medda 5 ASSESSING – FROM THE EUROPE 2020 MACRO PERSPECTIVE – THE RIS3 OF THE EU 28 REGIONS AND MEMBER STATES : KEY LESSONS AND POLICY IMPLICATIONS Guenter Clar 6 MEASURING DEMOGRAPHIC IMPACT OF THE 2007-2013 REGIONAL AND COHESION POLICY ACTIONS IN LATVIA Aleksandrs Dahs 7 COHESION POLICY IN THE NETHERLANDS: IS THERE A SITUATION OF GOOD ACCOUNTABILITY?’ Maaike Damen 8 EFFICIENT IMPLEMENTERS AND PARTNERS - WHAT DO WE MISS IN OUR UNDERSTANDING OF HOW COHESION POLICY ADMINISTRATORS WORK? Andrey Demidov 8 PUBLIC-PRIVATE EARLY STAGE FUNDS CO-FINANCED BY ERDF MONEY. LESSONS LEARNED Andrea Di Anselmo Luigi Amati Francesca Natali 9 QUALITY OF GOVERNMENT AND ECONOMIC AND SOCIAL DEVELOPMENT IN EU REGIONS Lewis Dijkstra 9 SMART SPECIALIZATION – THE NEW CONCEPT OF COHESION POLICY IN 2014-2020 TO BOOST REGIONAL INNOVATION. THE CASE OF POLAND. Marta Dobrzycka 10 EGTC AS A NEW FORM OF MULTILEVEL GOVERNANCE IN HUNGARY – CHALLENGES AND OPPORTUNITIES Zsuzsanna Fejes 10 TERRITORIAL CAPITAL AND THE IMPACT OF EUROPEAN COHESION POLICY Ugo Fratesi Giovanni Perucca 11 EU EASTERN PERIPHERY: AN EVALUATION OF COHESION POLICY IN ROMANIA AND BULGARIA Ramona Frunza Ramona Tiganasu Gabriela Carmen Pascariu 12 YOUTH EMPLOYMENT, MIGRATIONS AND THE CONSTRUCTION OF A NEW EUROPEAN LABOUR MARKET Joan Ganau Corinna Porsche 13 HOW DOES THE NET IMPACT OF THE EU REGIONAL POLICY DIFFER ACROSS COUNTRIES? Mara Giua Riccardo Crescenzi 14 A MACROECONOMIC IMPACT ASSESSMENT OF THE 2007-2013 EU COHESION POLICY IN TUSCANY Giuseppe Francesco Gori Lattarulo Patrizia 15 COHESION POLICY AND REGIONAL DEVELOPMENT IN POLAND – FIRST ASSESSMENTS Grzegorz Gorzelak 16 STRENGTHENING PUBLIC ADMINISTRATION AND EFFECTIVE MANAGEMENT BY WIDENING THE FOCUS OF PROGRAMMES AND CAPACITY BUILDING TO BETTER FACE THE NON-LINEAR COMPLEXITY OF DEVELOPMENTS Ulrich Graute 16 HOW TO EVALUATE INTANGIBLE ACHIEVEMENTS IN COOPERATION AND GOVERNANCE? A NEW METHODOLOGY. Silke Haarich 17 POLISH EXAMPLE: LESSONS LEARNED ON LOCAL INITIATIVES IMPLEMENTATION AND FUTURE CHALLENGES FROM THE EC PERSPECTIVE Jaroslaw Hawrysz 17 BUILDING RESILIENT ECONOMIES: LESSONS FROM THE CRISIS FOR EU COHESION POLICIES Adrian Healy Gillian Bristow 18 CHALLENGES AND PRACTICAL ASPECTS IN IMPLEMENTATION OF PLACE-BASED APPROACH Jānis Ilgavižs Ilona Raugze 18 THE MISSING LINK? CORRUPTION RISKS IN EU FUNDED PUBLIC PROCUREMENT TENDERS Istvan Janos Toth Mihaly Fazekas 20 CHANGES IN SOCIAL COHESION IN THE MEMBER STATES OF THE EUROPEAN UNION IN CRISIS CONDITIONS Ireneusz Jazwinski 20 HELIX MODEL AS A TOOL FOR IMPROVED PERFORMANCE AND ACHIEVEMENTS OF THE COHESION POLICY RESULTS Elita Jermolajeva Baiba Rivza 21 LINKING ESIF TO SOUND ECONOMIC GOVERNANCE, THE STORY OF A TRIPLE PUNISHMENT FOR LOCAL AND REGIONAL AUTHORITIES Marjorie Jouen 22 COORDINATED POLICIES (LISBON/EU2020) AND COHESION POLICY: THEIR RELATIONSHIP AND IMPACT ON THE MEMBER STATES Judit Kalman Marek Tiits 22 EU REGIONAL POLICY 2000-2020: SHIFTING IN ECONOMIC PRIORITIES? Alexandros Karvounis Domenico Gullo 24 “TERRITORIAL COHESION” IN THE EMERGING ECONOMIC GEOGRAPHY OF EUROPE: EXAMINING COHESION POLICY ARCHITECTURE FOR THE NEW FINANCING PERIOD (2014-20) Purushottam Kesar 24 THE CONCEPT OF TERRITORIAL COHESION AS UNDERSTOOD AND PRACTICED BY POLISH REGIONS Tomasz Komornicki Jacek Zaucha 25 HOW TO OVERCOME YOUTH UNEMPLOYMENT: EDUCATION VS. TEMPORARY EMPLOYMENT Olegs Krasnopjorovs 26 INSTRUMENTS: WHAT KIND OF COHESION POLICY INTERVENTIONS MAKE A DIFFERENCE? IMPROVING THE VISIBILITY OF RESULTS FROM EUROPEAN TERRITORIAL COOPERATION PROGRAMMES AND PROJECTS Iruma Kravale 27 THE POLICY CHALLENGE IN SMART SPECIALISATION Henning Kroll 28 ADMINISTRATIVE REFORM, CAPACITY-BUILDING AND COHESION POLICY Mark Langley 28 ACCOUNTABILITY OF EU FUNDS ADMINISTRATION Nata Lasmane 31 FROM "TECHNIUM" TO "EMPTIUM": INNOVATION POLICY AND STRUCTURAL FUNDS IN A WEAKER EU REGION Niall MacKenzie 32 POLICY AS A MAJOR CONDITIONALITY: CONCLUSIONS OF TWO RECENT IMPACT EVALUATIONS IN LITHUANIA Klaudijus Maniokas 32 WHATEVER HAPPENED TO GENDER MAINSTREAMING? LESSONS FOR THE 2014-20 EUROPEAN STRUCTURAL AND INVESTMENT FUNDS Leaza McSorley Jim Campbell 33 EU COHESION POLICY IN IBERIAN PENINSULA: MAIN TERRITORIAL IMPACTS (1989-2013) AND CHALLENGES FOR A MORE EFFICIENT NEW PROGRAMMING PERIOD (2014-2020) Eduardo Medeiros 34 SUPPORTING THE RICH AND THE POLITICALLY LOYAL: HOW THE STRUCTURAL FUNDS MAY CONTRIBUTE TO RISING REGIONAL DISPARITIES IN EASTERN EUROPE Gergo Medve-Balint 34 COHESION POLICY AND INNOVATION: HOW CAN RESOURCES BE USED MOST EFFICIENTLY? Jose Mella-Marquez Asuncion Lopez Juan C. Salazar 35 PUBLIC ACTOR CONSTELLATIONS IN FORMULATION OF OPERATIONAL PROGRAMMES: DIFFERENTIATION BY THE POLICY NETWORKS THEORY Josip Mihalic 36 IS A CHANGE NECESSARY IN THE COORDINATION AND MANAGEMENT SYSTEM FOR ASSISTANCE GRANTED FROM THE STRUCTURAL AND COHESION FUNDS OF THE EUROPEAN UNION IN BULGARIA? Savina Mihaylova-Goleminova 37 COHESION AND GROWTH: IS THE EU SYSTEM FIT TO FACE THE CHALLENGES BEYOND 2020? Willem Molle 37 THE RISE AND FALL OF INTEGRATED APPROACHES - ON TROUBLED WATERS FROM CONCEPT TO IMPLEMENTATION Gábor Novotny 38 THE ROLE OF FINANCIAL INSTRUMENTS IN IMPROVING ACCESS TO FINANCE IN LESS-DEVELOPED REGIONS - COMBINED MICROCREDIT IN HUNGARY Gyorgyi Nyikos 38 LINKING THE COHESION FUNDS INTO THE INTEGRATION OF YOUTH IMMIGRANTS IN THE EUROPEAN LABOUR MARKETS Gonul Oguz 39 THE ACHIEVEMENTS OF THE 2007-2013 COHESION POLICY IN THE BALTIC SEA REGION Nicoleta Carmen Olteanu 39 CREATING AN EFFECTIVE COHESION POLICY IN THE CONTEXT OF EUROPE 2020 Andrzej Paczoski 40 EUROPE AS A GLOBAL MACRO-REGION: HOW IS ECONOMIC GEOGRAPHY CHANGING THE COHESION POLICY CHALLENGE? Kathryn Pain Gilles Van Hamme 40 UNDERSTANDING THE OPERATIONAL ‘LOGICS’ OF EU ‘SMART SPECIALISATION’ AND THE IMPLEMENTATION CHOICES FOR REGIONS IN EUROPE Viktoriia Panova Lee Miles 41 ITALY’S MEZZOGIORNO: 2007-2013 EU COHESION POLICY’S MAIN FAILURE. DID WE LEARN ANYTHING USEFUL FOR THE 2014-2020 PERIOD? Biagio Perretti 42 WHAT IF REGIONS AND CITIES GOVERNED EU REGIONAL AND URBAN POLICY? Wolfgang Petzold 43 ECONOMETRIC ASSESSMENTS OF COHESION POLICY GROWTH EFFECTS - HOW TO MAKE THEM MORE RELEVANT FOR POLICY MAKERS? Jerzy Pienkowski Peter Berkowitz 44 THE IMPACT OF EUROPEAN STRUCTURAL FUNDS IN OBJECTIVE 1 REGIONS: BETWEEN COHESION POLICY AND LISBON AGENDA Nicola Pontarollo 45 COHESION POLICY IN SOUTHERN ITALY: WEAKNESSES AND OPPORTUNITIES Giuseppe Provenzano 46 POLYCENTRIC DEVELOPMENT PROJECT MICRO-ECONOMICAL ASPECTS AND APPLICATION PROCESS IN PUBLIC ADMINISTRATION IN LATVIA Emils Pulmanis 47 CHALLENGES AND PRACTICAL ASPECTS IN IMPLEMENTATION OF PLACE BASED APPROACH Ilona Raugze Jānis Ilgavižs 48 MACROECONOMIC CONDITIONALITY - THE LINK BETWEEN ECONOMIC GOVERNANCE AND COHESION POLICY FROM AN INTER-INSTITUTIONAL PERSPECTIVE Simone Reinhart 49 PATCHWORK OF PROJECTS OR COHERENT STRATEGY? EQUAL OPPORTUNITIES IN THE IMPLEMENTATION OF EU STRUCTURAL ASSISTANCE IN LITHUANIA Daiva Repeckaite 50 SMART SPECIALISATION: FROM CONCEPT & STRATEGIES TO DELIVERY Kevin Richardson David Marlow 51 HOW TO ACHIEVE SUCCESSFUL EUROPEAN TERRITORIAL COOPERATION? – LESSONS FROM THE CROSS-BORDER COOPERATION PROGRAMMES IN CENTRAL-EASTERN EUROPE Urszula Roman-Kamphaus 51 THE EVALUATION OF THE IMPACT OF CONSTRUCTION OF MOTORWAYS AND EXPRESSWAYS IN POLAND IN THE YEARS 2004-2015 ON ACCESSIBILITY AND COHESION Piotr Rosik Marcin Stępniak Tomasz Komornicki 52 WHY ECONOMIC IMBALANCES MATTER FOR REGIONAL DEVELOPMENT Ángel Catalina Rubianes 53 INTEGRATED SUSTAINABLE DEVELOPMENT IN THE HAND OF LOCAL AND REGIONAL GOVERNMENTS: THE USE OF INTEGRATED TERRITORIAL INVESTMENTS IN COHESION POLICY Marlene Simeon 54 DEVELOPING REGIONAL INFRASTRUCTURE IN THE BALTIC REGION Jurijs Spiridonovs 54 COHESION FUNDS AND YOUTH EMPLOYMENT IN LATVIA Olga Starineca 55 RE-INVERTING POLICIES AND PRACTICIES IN REGIONAL STRATEGY Theodora Stathoulia 56 ADMINISTRATIVE CAPACITY VS. GOVERNANCE – HOW TO IMPROVE THE MANAGEMENT AND IMPLEMENTATION ENVIRONMENT FOR EUROPEAN STRUCTURAL AND INVESTMENT FUNDS? EVIDENCE FROM NEW MEMBER STATES Neculai-Cristian Surubaru 57 BALANCING THE DEMANDS OF LOCALISM AND COMPLIANCE: SETTING UP THE NEW ERDF PROGRAMME IN ENGLAND Carole Sweetenham 57 THE ADMINISTRATIVE CAPACITY OF THE SUB-NATIONAL LEVEL IN IMPLEMENTING THE COHESION POLICY IN ROMANIA Septimiu-Rares Szabo 58 GOVERNING SOFT SPACES WITH FUZZY BOUNDARIES: REGIONAL POLARIZATION, DEMOCRATIC ACCOUNTABILITY, AND STRATEGIC-SELECTIVITY IN EU COHESION POLICY Stefan Telle 58 INTEGRATED TERRITORIAL INVESTMENT – A MISSED OPPORTUNITY? Ivan Tosics 59 THE ABSORPTION OF STRUCTURAL AND INVESTMENT FUNDS AND YOUTH UNEMPLOYMENT: AN EMPIRICAL TEST Jale Tosun Carsten Jensen Stefan Speckesser Jacqueline O'Reilly 60 TOWARDS A EUROPE OF THE LOCALITIES? INTEGRATED PLACE-BASED APPROACHES IN COHESION POLICY IN 2014-20 AND BEYOND Arno van der Zwet Carlos Mendez 61 MACROECONOMIC CONDITIONALITY: IN SEARCH OF A BALANCED APPROACH Stijn Verhelst 61 SMART WORK FOR SMART, SUSTAINABLE AND INCLUSIVE GROWTH IN REGIONS Alise Vitola Iveta Baltina Ilze Judrupa 62 WHERE DID THE WELL-BEING GO IN ESIF? Benedict Wauters 62 POLICY IMPLICATIONS FOR OVERCOMING BARRIERS TO CROSS BORDER KNOWLEDGE TRANSFER Adi Weidenfeld 63 NEW APPROACHES TO ADDRESSING YOUTH UNEMPLOYMENT: NEW ROLES FOR THE EUROPEAN UNION'S STRUCTURAL AND INVESTMENT FUNDS? Peter Wells Elizabeth Sanderson Ian Wilson 63 FINANCIAL INSTRUMENTS IN 2014-20: LEARNING FROM 2007-13 AND ADAPTING TO THE NEW ENVIRONMENT Fiona Wishlade Rona Michie 64 SEEING IS BELIEVING? METHODOLOGICAL IMPLICATIONS FROM THE EVALUATION STUDY ON GOOD PRACTICES IN COMMUNICATING THE COHESION POLICY. Karolina Wrona 65 MUTUAL RELATIONSHIPS BETWEEN THE EU COHESION POLICY AND ECONOMIC GOVERNANCE. Aleksandra Zakrzewska 65 THE BLIND LEADING THE BLIND? - COHESION POLICY AND MACROECONOMIC MODELLING Janusz Zaleski Zbigniew Mogiła 66 SOCIAL INCLUSION FUNDED BY EUROPE? THE IMPACT OF THE EUROPEAN SOCIAL FUND ON LOCAL SOCIAL AND EMPLOYMENT POLICIES Katharina Zimmermann 67 PERSPECTIVES ON INTEGRATED TERRITORIAL DEVELOPMENT IN 2014-2020 Piotr Zuber 68 ANALYSING THE MAIN FACTORS OF REGIONAL ECONOMIC GROWTH: IMPLICATIONS FOR EU COHESION POLICY Paola Annoni and Philippe Monfort, European Commission, DG REGIO, BELGIUM Development and growth theory have improved our understanding of how economies develop in time by identifying key factors driving economic growth. The accumulation of physical capital, human capital and technological progress are often mentioned as the main engines of growth. Together with a favourable business environment, good governance, a well-developed infrastructure and sufficient public health care, they determine the pace at which economies develop. However, understanding what triggers economic growth at the regional level is particularly challenging due to the lack of reliable data and the complex interaction between the evolution of statistical indicators and observed trends of economic growth. This complexity is also highlighted by the fact that many less developed regions have benefited from high levels of cohesion funding over a long period of time without a significant improvement of their economic situation. This has triggered many questions about the effectiveness of EU cohesion policy. The objective of our analysis is twofold. First, we carry out a comprehensive statistical analysis on a series of indicators considered to be key drivers of growth such as accessibility, human capital, innovation potential, quality of governance etc. Testing the robustness of statistical indicators is important to avoid oversimplified, unstable or contradictory interpretations at a later stage. Second, on the basis of this preparatory work, we aim to achieve better insights into the effectiveness of Cohesion Policy to foster regional growth. The present paper, after having consolidated the data, is the first attempt to answer questions like: (a) Do all regions behave in the same way in terms of growth patterns or are there substantial differences between, for example, regions located in the old EU members (EU15) and the ones located in countries which joined the EU more recently (EU13) ? (b) Has the crisis changed the relative importance of the determinants of growth? If so, is it necessary to split the time period into two periods to better describe the pre and post 2008 scenarios? The analysis makes use of a statistical method, belonging to the family of data mining tools, to describe the complexity of observed growth trends. This non-parametric approach is particularly well suited to analyse given sub-sets of regions – e.g. the dichotomy less vs more developed regions where key drivers and observed growth trends will likely be non-linear. The analysis will allow us to develop a new perspective of the key drivers boosting/limiting economic development in EU regions. In a second step, the analysis will be extended to investigate the scope and role of EU cohesion policy as one of the factors directly or indirectly influencing economic growth. Eventually, the aim is to be able to produce a body of sound quantitative analysis which could be translated into a new design of cohesion policy which will increase its impact on the European regional economy. THE LONG-TERM ACHIEVEMENTS OF EU COHESION POLICY, 1989-2012 John Bachtler, University of Strathclyde, UK Iain Begg, London School of Economics, UK David Charles, University of Lincoln, UK Laura Polverari, University of Strathclyde, UK After more than 20 years of implementing EU Cohesion policy in the EU15, the evidence for the effectiveness of the policy has been inconclusive. Academic research and evaluation studies have reached widely differing conclusions on the results of interventions through Structural and Cohesion Funds. At the same time, public debate on the performance of the policy has increased, most evidently in the discussions on the reforms of Cohesion policy in 2005-06 and 2012-13. Against this background, this paper examines the main achievements of Cohesion 1 policy programmes and projects and their effectiveness and utility over the longer term in 15 selected regions of the EU15, from 1989 to 2012. Based on an evaluation study conducted for the European Commission (DG Regio) and academic research, the paper finds major differences in the reported effectiveness of Structural and Cohesion Funds. While the ERDF has made a significant contribution to regional development, in virtually all regions the success in addressing certain needs and problems were only steps on a longer journey of transformation. Most commonly, restructuring is incomplete and employment creation insufficient. Changes in regional needs and problems were territorially uneven, and there are questions about the sustainability of capital investment and institutions established with Cohesion policy support. Also, the economic crisis and fiscal constraints are undoing some of gains. The research demonstrated improvements in the sophistication of EU-funded regional development strategies and programme management, and all of the regional case studies provided examples of successful interventions or projects, collectively spanning the spectrum of economic development support. However, there were also many examples of poor practices where regions were slow to learn from what was happening elsewhere. A major difficulty was the fragmentation of funding across too many interventions or small projects. The study provides clear evidence to support the direction of Cohesion policy in 2014-20, specifically with respect to the emphasis on conditionalities, the new results-orientation and the enhanced performance framework. It is not clear, however, where the identified deficits in administrative capacity - in the conceptual approach to programming, strategic planning techniques, analytical methods to support project selection, and the quality or focus of monitoring and evaluation – will have been resolved before the new programmes are launched. WHAT INSTITUTIONAL ARRANGEMENTS FOR COHERENT EU COHESION POLICY PLANNING AND IMPLEMENTATION? Liga Baltina and Tatjana Muravska, University of Latvia, LATVIA Achieving EU Cohesion policy goals is a challenge for each Member state and its national institutional framework, considering that it comprises all sectors and is multidimensional in its nature. Public administration reforms are often based on the need to improve operational efficiency and to create a more accessible public administration. However, in the context of Cohesion policy, changes in public administration include the effectiveness of regional and local administrative structures, emphasizing the role of coordination and cooperation as well as the development of new governance implementation tools for achieving regional development goals and growth potential, which is not only based on natural resources, accessibility and changes in external environment but also on knowledge and the skills to use them. A number of researchers recognize that there is a correlation between the effectiveness of the institutional structure and growth. Rapidly changing external environment emphasizes that the most important elements of institutional structures are the ones that provide the ability to adapt to different conditions and situations. The authors analyse the opportunities to apply a place-based approach in the Cohesion policy planning, since the planning is a key function of public administration. Given the fact that the place-based approach also could be explained as an approach used to facilitate efficiency of public administration and results to be achieved within a given geographic area. The authors analyze a place-based approach in the context of regional development planning and in close conjunction with the nature of public administration. The authors conclude that the use of place-based approach contributes to the development of results-oriented public administration and stress the need to have qualitative information and knowledge about territorial resources and development potential necessary for decision-making in public administration. In addition, the authors look at the correlation between the existing regional disparities and the effectiveness of public administration in EU Member States. 2 HOW TO USE FINANCIAL INSTRUMENTS FOR COHESION AND FOR WHICH INTERVENTIONS? THEORY AND PRACTICE WITH A CASE STUDY ON THE SITUATION IN THE BALTIC STATES Daina Belicka, Ernst and Young, LATVIA Jorge Núñez Ferrer and Federico Infelise, CEPS, BELGIUM An important debate is taking place in the EU on the role of investment in promoting growth. The required investments in the European Union for many objectives greatly outstrip the public budgets of EU member states and the size of the EU budget. Much of the investment requirements will need to be covered by the private sector, and the EU’s financial instruments (FIs) will be a key element for ESI funds to leverage funding in key areas of investment. This paper will first address to what extent public investments and financial instruments can be drivers for growth by focusing on 11 Thematic Objectives of ESI Funds. It will then discuss the challenges for implementation at local level, administrative capacities required and the current status. How can the FIs offered by the Cohesion Policy be used effectively at local level and what is required to make it operational? How can the local capacity be enhanced to make effective use of those? At the end the paper the situation in the Baltic States will be analysed by focusing on the current use of FIs by different ESI Funds. It will analyse the administrative capacities required to successfully deploy FIs to achieve Cohesion Policy objectives. A MORE EFFECTIVE AND EFFICIENT POLICY? ASSESSING THE IMPLEMENTATION OF THE REFORM OF COHESION POLICY Peter Berkowitz, European Commission, BELGIUM The Commission proposals for Cohesion Policy and the ESI funds presented in autumn 2011 set out an ambitious agenda to reform cohesion policy. Following a long period of reflection and consultation in the context of a Europe wide financial and economic crisis, the Commission sought to bring a number of wide ranging changes to (i) improve effectiveness by targeting resources to key Europe 2020 objectives, establishing a performance framework and introducing ex-ante conditionalities to ensure better investment, (ii) simplify and harmonise implementation through a common set of rules applicable to all ESI Funds, better coordination of Union instruments and measures for the reduction of administrative burden for beneficiaries; (iii) reinforce the territorial dimension of the policy through greater involvement of cities, new territorial mechanisms and reinforced territorial cooperation (iv) create closer linkages between Cohesion Policy and EU governance and semester processes. The purpose of this paper is to provide a survey of the extent to which these elements were retained in the regulatory package finally adopted by the European Parliament and Council and reflected in the negotiations of the partnership agreements and operational programmes. It will conclude by setting out a first provisional assessment of the strengths and weaknesses of the reform and of the extent to which the objectives of the reform are reflected in the programming documents of Member States. BETWEEN SMART SPECIALISATION AND MACROECONOMIC MODELLING Andries Brandsma, European Commission, THE NETHERLANDS The availability of Structural and Cohesion Funds enables individual regions to develop their capacity for improving both productivity and the standard of living. Their use requires a delicate negotiation of Member States’ choices vis-à-vis the investments at the regional level favoured by the EU. In some sense, the emphasis on smart 3 specialisation in present Cohesion policy makes room for attaching a greater weight to the preferences of the Member States, but on the other hand in formulating their regional strategies they need to pay more attention to the choices made by the other countries. It is almost inevitable that the negotiations will focus on the direct effects and, in particular, the financial contributions expected by the Member States. The EU interest lies in emphasising the advantages of the single market and in making sure that, while further opening the market, the development potential and innovation capacity of all regions is fully exploited, leaving no regions behind. In order to be able to capture the interdependencies of the choices made by the Member States and show the effect on the EU economy as a whole, this paper uses a spatial general equilibrium model in which the economies of all NUTS2 regions are represented. The spatial distribution of the impact of Cohesion policy is framed within the projections of the Commission’s macroeconomic model (QUEST3R&D). The approach is not new and has been tested with other combinations of regional and dynamic multi-country models. Two simulation exercises are presented to illustrate the implications of the choices on investment available under Cohesion policy. In the first one, the reduction in transport costs resulting from the investments in infrastructure financed with contributions from the Structural and Cohesion Funds are carefully assigned to the regions and to all bilateral connections between them. Even though the largest part of the funding in the category of infrastructure is directed towards the Member States that joined the EU in the past decade, it can be shown that the investments have positive effects on the more central regions as well, precisely because they benefit from improved connections with so many of the regions to which the funds are allocated. This reinforces the point that, although with the enhanced mobility of capital and firms it may be difficult to simulate where the demand and shares of profits will end up, it will in principle be possible to find a redistribution of the benefits of greater economic integration that leaves all regions better off. The second simulation assumes that the support to research and innovation from the Structural and Cohesion Funds will allow the less developed regions to increase total factor productivity and reduce their distance to the technology frontier. This is based on solid empirical evidence of the effect of R&D on total factor productivity and econometric evidence that domestic R&D will make it easier to absorb the knowledge from elsewhere and so help the catching up of lagging regions. The model allows for differences between sectors, and for shifts in the sectors of production in the regions, which typically depend on the extent to which the gains in productivity are translated into competitive advantages. A further analysis of the simulation results suggests that without price changes there would be little effect in the long term. It should be noted that, given the freedom of capital within the single market, it is difficult to pin down where the demand resulting from the availability and use of EU funding will end up, and no attempt to do so is made in the simulations. This does not take away that shifts in demand play a role in the agglomeration process. THE USE OF EVALUATION AS A RESULT-BASED MANAGEMENT TOOL: LITHUANIAN CASE Danute Burakiene, Ministry of Finance of the Republic of Lithuania, LITHUANIA This review paper seeks to answer the following question: to what extent and why are evaluations of EU Structural Funds used as results-based management instrument in Lithuania? These findings could be highly relevant to other Central and Eastern European countries that share similar legal-administrative system and challenges. Evaluation as a management tool has been introduced in Lithuania largely due to requirements linked with sound management of EU Structural Funds. Even to date majority of evaluations focus on Structural Funds interventions. Systematic evaluations of programmes funded from national budget are rare. Hence, EU requirements could be viewed as a major driver behind introduction and spread of evaluations. Evaluation of the EU Structural Funds in Lithuania has contributed to the improvement of the result-based management in 2007–2013. From 2008 till October 2014, 58 out of 67 evaluations were carried out, of which 32 were of an operational nature and 28 of a strategic nature. 4 Surveys of evaluation community (evaluators, decision-makers, civil servants responsible for management of evaluations) suggest that over time satisfaction with the quality of evaluations has steadily increased. Measures targeted at building evaluation-capacities, spread of evaluation culture, developments of guidelines and evaluation standards and learning-by-doing process have contributed to increasing quality. Nevertheless, several challenges remain. The first challenge is related to building a robust evidence base. To date majority of the evaluations have mostly relied on data collected through surveys, interviews and desk research. They generated useful knowledge on cases (projects, programmes) under analysis. However, the capacity of such evaluation designs to generate conclusions generalizable across programmes and sectors has been limited. Furthermore, administrative monitoring system was not designed so as to collect data for counterfactual evaluations. Therefore, only several of them have been carried out to date. This is why the impact evaluation based on rigorous approaches and methods, which should become a methodological backbone of the Cohesion policy in the programming period 2014–2020, is one of the greatest evaluation challenges in Lithuania. The country lacks experience in assessing impacts as recommended by the EC for the programming period 2014– 2020. Counterfactual impact evaluations need not only a deep knowledge and experience, but also other conditions, such as adequate financial resources for data collection and analysis, sufficient availability of proper monitoring and administrative data. A central problem of the evaluation process is accessibility and reliability of data, data managers’ close cooperation with one another and provision of administrative data for evaluation. The second challenge is related to systemic use of knowledge generated by evaluations during the decision-making process. Lithuania has set up a monitoring system that collects data on the extent to which recommendations provided in evaluations were implemented by responsible bodies. The results revealed that approx. 2/3 of recommendations are taken on board. Assessment of the use of evaluation results showed that the recommendations implemented during 2008–2012 mostly promoted: • • • • • Administration changes, i.e. improvement of administration procedures, adjustment of administration documents, introduction of new administration, supervision and control functions; Investment/ financial changes that are related to setting of financial proportions of assistance, distinguishing of priority financial areas, reallocation of funds between measures under the Operational Programmes; Monitoring improvement, i.e. elaboration of description of monitoring indicators, improvement of data collection, planning of indicator target values, development of calculation methodologies; More active coordination promotion, i.e. inter-departmental cooperation development, more active involvement of socio-economic partners, establishment of joint committees and working groups. New knowledge creation. This suggests that while evaluations have significantly contributed to improvement of operational aspects of implementation, the impact of generated knowledge on strategic decisions could be higher. THE JESSICA INITIATIVE 2007-2013 – WHAT HAVE WE LEARNED? Gianni Carbonaro, European Investment Bank, LUXEMBOURG Francesca Medda, University College London, UK JESSICA (Joint European Support for Sustainable Development in City Areas) was launched in 2007 as a EUsponsored technical assistance initiative to assist managing authorities in developing financial engineering instruments for urban development employing resources drawn from their 2007-2013 Operational Programmes (OP). Since then, several financial instruments of this type, called Urban Development Funds (UDFs), have been established in 11 EU Member States and OP resources of the order of EUR 1.8Bn have been allocated for their implementation. The rationale to justify the use of EU budgetary resources to set up these instruments, as opposed to the more conventional use of those resources as grants, has been frequently discussed in the policy debate. The main performance dimensions concern their revolving nature, which allows re-investing returned 5 resources into new waves of investment projects; their potential to attract additional financial resources, particularly from the private sector; their ability to trigger incentive effects leading to better project quality, as investments need to be capable of remunerating investors; finally their ability to attract expertise from financial intermediaries, including IFIs, and the private sector, with positive effects on the capacity of managing authorities and other stakeholders to use EU resources in a financially self-sustaining manner. Naturally, the benefits associated to any positive performance need to be weighed against the potential additional costs in setting up and managing financial instruments. The paper will take stock of the experience matured in the 2007-2013 cycle in implementing and managing UDFs, and to what extent their performance on the above dimensions can be judged on the existing evidence. It will be argued that the impact intensity and the relevant performance dimensions are likely to vary depending on the type and structure of UDF, the financial products supported and the institutional context. These factors appear to be important determinants of the successful implementation of financial instruments and their policy performance, which for UDFs should ultimately be judged on the basis of their contribution to sustainable urban development – their core objective in 2007-2013 – and more broadly to the success of European policies for competitiveness and growth. The discussion will be concluded with considerations on how the experience gained in the implementation of 2007-2013 financial instruments for urban development has informed the 2014-2020 EU policy approach. The current programming period foresees a markedly stronger role for financial instruments as cohesion policy tools and the paper will discuss what the experience gained through the JESSICA financial instruments can teach us on the opportunities and barriers to the implementation and successful deployment of financial instruments in the current programming period. ASSESSING – FROM THE EUROPE 2020 MACRO PERSPECTIVE – THE RIS3 OF THE EU 28 REGIONS AND MEMBER STATES : KEY LESSONS AND POLICY IMPLICATIONS Guenter Clar, Steinbeis-Europa-Zentrum, GERMANY At the policy level, Cohesion Policy has been more formally related to the overall Community Policy frame over the years – in the last decade to the Lisbon Strategy with the 2005 Communication Cohesion Policy in Support for Growth and Jobs. Community Strategic Guidelines, and the National Strategic Reference Frameworks 2007-2013. At present, in the framework of the Europe 2020 Growth Strategy, further integration is the objective, outlined in the 2010 Communication “Regional Policy Contributing to Smart Growth in Europe 2020”. Concentrating funds on a few priorities of EU relevance, a strong policy focus on innovation (in the broad sense) is also prominent in the European Structural and Investment Funds (ESIF). However, relating policies through open co-ordination has proven easier than synergistically co-investing from different funds. Considerable (multi)governance and operational challenges exist, and numerous “synergies guides” aim to facilitate relating investments from ESIF and other EU programmes in the real, not so cohesive world of regional decision makers. While basic structural differences are not likely to disappear soon, the 2012 Common Strategic Framework provides the basis for better coordination between the different ESI Funds, and with additional resources available, e.g., through the EU Programme for Employment and Social Innovation (EaSI), Horizon 2020, the Connecting Europe Facility or Youth on the Move. To overcome practical implementation difficulties, however, requires more than working on bureaucratic barriers and overlapping investment areas. Important is a better harmonisation early in the policy formulation process, when strategies, roadmaps and support programmes are designed. In the current programming period, this strategic alignment could indeed materialise in the context of the ESIF approach to Research and Innovation Strategies for Smart Specialisation (RIS3). In the RIS3 guide of the EC, a six-step process is outlined with strategic tools, which are in many ways similar to those applied in the Research Framework Programmes, and which there lead to, e.g., Strategic Research Agendas (SRA), Strategic Innovation Agendas (SIA) or Strategic Implementation Plans (SIP). How were, in the RIS3 submitted, these strategic elements applied? How have the main Smart Specialisation characteristics been taken up? How do the prioritised R&I investments represent concrete links, and allow the expected synergies with other EU, national and regional funds to be realised? 6 To look at these questions from the macro perspective of the totality of the EU 28 regions, the European Commission established an Expert Group to examine relations between Smart Specialisation and Horizon 2020, both in a current and longer term perspective; to assess individual RIS 3, and how they are positioned vis-à-vis the overall Europe 2020 context, and contribute to its Growth Strategy. At the time of the conference, the Expert Group has finalised its work, so that main lessons and key policy implications can be presented. Foci will be on EU 28 cohesion, the European Research and Innovation Area (ERA) and the international dimension; multi-level governance; the entrepreneurial discovery process, involving stakeholders and policy experimentation; evidence-based, outward- and forward-looking priority setting; strategic view of ESIF/Europe 2020 and trans-policy-field and trans-governance-level synergies. MEASURING DEMOGRAPHIC IMPACT OF THE 2007-2013 REGIONAL AND COHESION POLICY ACTIONS IN LATVIA Aleksandrs Dahs, University of Latvia, LATVIA From the academic studies and official reports it is well known that on the regional level, Latvia, just like many other European Union (EU) Member States and regions falling under the Convergence objective of the 2007-2013 Cohesion policy, faces significant challenges of spatial heterogeneity and divergence in terms of both economic and demographic development. Continuous depopulation of rural areas and border regions, growing influence of capital city in the internal migration and settlement processes and other region-specific demographic issues comprise the long list of the regional population development problems, which Latvian authorities have to address on the daily basis. Available national funding for directly tackling the aforementioned issues remains scarce and is reliant upon the established social support and welfare structure, which cannot provide the solution for more fundamental socio-economic issues. Therefore, relevant regional aid instruments remain largely reliant on the cofunding from the EU Cohesion policy instruments. With this in mind, this study aims to measure the regional demographic implications of the investments carried out under the Operational Programmes (OP) of the Latvian national Cohesion Policy, as well as to evaluate the significance of these effects in comparison with other forms of regional socio-economic aid measures and other forms of financial investment. By employing both classical and spatially adjusted models in conjunction with the analysis of the available data on regional and cohesion policy spending on the scale of local municipalities in the period of 2009-2013, author studies the links between specific types of investments / policy instruments and their resulting effect on key regional demographic processes. Results of the spatial econometric analysis allow author to confirm that, while the OPs of the Latvian national Cohesion Policy 2007-2013 did not specifically foresee to tackle the regional demographic issues, in comparison to all other available policy tools, investments performed under these programmes had noticeable impact (both direct and indirect) on the local population change. Although, the positive effect has been lower than predicted by some of the previous studies and national planning documents. Further, author determines that, depending on the type of investment / aid instrument used, its effect may be either localised (impacting only the target region) or spatially-lagged (having effect not only in the target region, but also having some measurable spilling-over to the neighbouring territorial units). The study results underline the need to re-evaluate some of the objectives and associated expectations of the national Population Development and Cohesion policies. From the Regional policy perspective, analytical approach demonstrated in this paper provides opportunities for better planning of the future investment / aid priorities, and allows one to identify those forms of investment instruments needed to be applied locally and those, which may be used in a more centralised manner in order to achieve the desirable level of impact and spatial coverage. 7 COHESION POLICY IN THE NETHERLANDS: IS THERE A SITUATION OF GOOD ACCOUNTABILITY? Maaike Damen, University of Twente, THE NETHERLANDS For a long time, Cohesion Policy has encountered serious problems with its accountability. These problems of accountability in Cohesion Policy relate to the effectiveness of the policy concerned, which has been doubted but also confirmed in both academic and public debate, the overall high error rate in Cohesion Policy as has repeatedly been issued in the ECA’s statement of assurance and its focus on financial management, instead of performance of the policy. Facing these problems of Cohesion Policy, this paper will focus on the accountability of Cohesion Policy in the Netherlands. Derived from agency theory and the literature on accountability, we have described five conditions of ‘good accountability’. Using the process-based approach of accountability, we will look at the Dutch situation of Cohesion Policy on European, national and regional level. We will describe the actors involved, the relationships between the actors and whether these relationships can be considered as accountability relations. We focus on three main areas: European level with all European actors, the area with both European and national actors (European Commission, management authority, certifying authority and audit authority) and the national/regional area . We then look at both the single level (actor-actor) and the system as a whole (policy level), and, according to the five conditions of ‘good accountability,’ consider whether the accountability situation in the Netherlands is satisfactory. We will analyse the situation and propose suggestions on what can be improved. Although the Netherlands is a small country in Cohesion Policy, with a budget of 1,66 billion in the 2007-2014 period out of the total €347 billion, experiences and lessons to be drawn might also have impact on other member states. Next to looking at the experiences of the 2007-2013 period, we will also look at the changes in the 2014-2020 period and consider whether these changes will lead to an improvement or deterioration of the accountability situation in the Netherlands according to the five conditions of ‘good accountability’ . EFFICIENT IMPLEMENTERS AND PARTNERS - WHAT DO WE MISS IN OUR UNDERSTANDING OF HOW COHESION POLICY ADMINISTRATORS WORK? Andrey Demidov, Central European University, HUNGARY The present paper contributes to the discussion on the role of state officials and bureaucrats in implementation of cohesion policy and, most importantly, their impact on the policy’s overall efficiency. In the existing literature inefficient public administrators lacking capacities are seen as the major obstacle to successful cohesion policy implementation. State officials are portrayed as either driven by their narrow strategic interests or badly socialized agents who improperly internalized EU norms and ideas about cohesion policy. The present paper attempts to break with these wide-spread interpretations formulated with the analytical traditions of such scholarships as Europeanization, transposition of and compliance with the EU law/requirements or public policy. It claims that such interpretations underestimate the normative saturation of state officials’ actions, essential for understanding why and how they work. The paper examines the process of contestation over the partnership principle for Structural Funds in four new member states – Hungary, Slovakia, Slovenia and Poland. Countries’ institutional traditions and ‘cultures’ of high centralization as well as low capacities of state bureaucracies or unwillingness of state officials to commit to real partnership are normally seen as the reasons behind continuous failures of partnership as a policy practice. The paper challenges these explanations through interpretive analysis of meanings of partnership shared by state officials in four countries and comparison of these meanings with the ones shared by other groups of actors. The paper argues that such policy episodes as turbulent politics of pre-accession, de- and recentralization of cohesion policy implementation and politics of democratic conditionality led to emergence and entrenchment of specific institutional identities and self-perceptions of state officials that value issues of compliance with the EU rules, transparency and neutrality and equality of treatment of societal actors. On the other hand, these understandings that feed interpretations of partnership are coupled with deeply seated and historically crystallized beliefs 8 regarding democracy and citizens’ participation. Partnership, as a result, acquired a meaning of a wide-scale consultations process. This process is meant to ensure communication with actors-representatives of the general public aimed at 1) demonstrating transparency of the policy process to societal actors through information sharing, 2) collection of the policy input from actors and 3) collection of policy demands from actors. The paper argues that understanding how actors relate to policy requirements rather than how they react to them is critical for revision and improvement of cohesion policy practice. PUBLIC-PRIVATE EARLY STAGE FUNDS CO-FINANCED BY ERDF MONEY. LESSONS LEARNED Andrea Di Anselmo and Luigi Amati, META Group, ITALY Francesca Natali, Zernike Meta Ventures Spa, ITALY Common challenges for European regions are linked to how effectively support and increase competitiveness of SMEs and profitably exploit and leverage on endogenous knowledge and talents. Financial instruments are key policy interventions to accelerate access to markets, capitalize existing companies, and boost internationalization contributing, within a sound regional ecosystem, to regional development. Their revolving nature and capability to engage on private resources allows long term sustainability, multiplier effect and orientation to market. In addition, especially when dealing with early stages, financial instruments such as coinvestment funds, are able to bring in not only financial support but also managerial competencies, access to services and fast track to global clients. The paper presents and discusses cases on seed capital funds co-financed by the European Regional Development Fund (ERDF) and in particular the practice of Ingenium venture capital funds: a family of funds launched in 2006 in Emilia Romangna and now available in other Italian regions and EU countries. Based on this experience challenges are highlighted to be further capitalized by other managing authorities in order to better understand the main issues in implementing new equity financial schemes. This is especially relevant when addressing a specific market gap and looking at public private partnerships with other investors such as Business Angels. The need to combine short-term expectations by the public and the political level, with the long term returns of venture capital investments is a key challenge for managing authorities willing to implement such financial instruments. In the 2014-2020 programming period new solutions to this trade off are available. Intermediaries, selected to manage the funds, will not only provide financial resources but also managerial support to the final beneficiaries. This increases the efficiency of interventions to sustain the growth process, from early-stage conception to the internationalization stage. Financial instruments, to ensure impact, have to be managed on a commercial base and selected with an open, transparent, and non-discriminatory call for tenders among experienced intermediaries capable not only to obtain financial returns but also able to achieve a visible socio economic impact. The possibility to launch true co-investment funds is another novelty which bring in new possibility and solutions to barriers observed so far. QUALITY OF GOVERNMENT AND ECONOMIC AND SOCIAL DEVELOPMENT IN EU REGIONS Lewis Dijkstra, EU Commission, BELGIUM This paper will argue that the thinking about quality of government has changed from an issue that will fix itself once a country or region is more developed to a key bottleneck that has to be addressed before sustainable high growth levels will materialise. The paper will describe the different measures used to capture quality of government and how the EU member states perform on these measures. It will also present a new regional quality of government index. Finally, it will describe the actions foreseen to be financed through cohesion policy to improve public administration and the implementation of Cohesion Policy and assess to what extent these respond to the biggest issues identified by the multiple measures of quality of government. 9 SMART SPECIALIZATION – THE NEW CONCEPT OF COHESION POLICY IN 2014-2020 TO BOOST REGIONAL INNOVATION. THE CASE OF POLAND Marta Dobrzycka, Warsaw School of Economics, POLAND The years 2014-2020 fall on the time when Poland was the biggest beneficiary of the EU cohesion policy. The total allocation of EU funds for Poland in the years 2014-2020 accounted for nearly 82,5 milliard EU. Nearly 40% of all funds allocated to Poland in that period is implemented locally within 16 Regional Operational Programs (RPO). In that period voivodeships in Poland will manage more than 31 miliard EUR. Implementing of those funds will be subordinate to regional smart specialization strategies as well as other european and polish documents. According to the Regulation of the European Parliament and of the Council (EU) No 1303/2013 the existence of regional smart specialization strategy in each region is the ex ante conditionality to gain access to the European Funds in the years 2014-2020. In this article author analysis smart specialisation as a new innovation policy concept designed to promote the efficient and effective use of public investment in research. Its goal is to boost regional innovation in order to achieve economic growth and prosperity, by enabling regions to focus on their strengths. It is closely related to one of the three main priorities of the Europe 2020 Strategy – Smart growth: developing an economy based on knowledge and innovation – and with one of the seven flagship initiatives of the Strategy - Innovation Union. In 2014-2020 period regions are obligated to inclusion the smart specialisation concept to their regional innovation strategies. EGTC AS A NEW FORM OF MULTILEVEL GOVERNANCE IN HUNGARY – CHALLENGES AND OPPORTUNITIES Zsuzsanna Fejes, National University of Public Service, HUNGARY The aim of my paper is to present the European Grouping of Territorial Cooperation (EGTC) in Hungary, as one of the relevant instruments for the implementation of multilevel governance. Firstly, I examine how to consolidate the bases and principles for this mode of governance within the European and national institutional and political frameworks. Hereafter, I analyse the legal framework of the cross-border cooperation at the international (Council of Europe), supranational (European Union), national and sub-national (regional and local) levels. The lack of unified legal instrument or act of the cross-border co-operations originates from the diversity of the legal and administrative orders of European countries. Regulation (EC) No 1082/2006 on a European Grouping of Territorial Cooperation is a perfect response to the lack of legal and institutional instruments, and ensures common cooperation facilities with legal personality, for the local and regional authorities and EU Member States. The EGTC signifies decentralized cooperation, and is built on the years-long experience and vertical and horizontal partnership of the formerly spontaneously organised cross-border cooperation. Therefore, the EGTC is an instrument of multilevel governance and contributes to the quality improvement of local and regional co-operations across the borders all around Europe. Secondly, I focus on the administrative system and process of institution-building of cross-border co-operations in Hungary, taking into account the perspectives the EGTC stems from the acceptance and practical adaptation of the principles of multilevel governance and good local governance. By the end of 2013, 18 EGTCs were established in Hungary. From the point of view of cross-border cooperation systems, regarding the territorial structure of Hungary and its neighbours, the basic problem is becoming clear: the cooperating organisations must build their relations within an extremely heterogenious public administrative environment. The different normative order and public administration system of cooperating countries, and their attitude towards the EU are the source of many difficulties. Moreover, the lack of competence and diversity of responsibilities of the cooperating partners present the problems. Summing up, the EGTC is competent in building up the flexible but common cross-border network system taking the sub-national levels into the multilevel governance system, and ensuring the conditions to join European 10 administration and governance network. Its working principle is the autonomy based on vertical and horizontal partnership, according to the multilevel governance. I conclude that the principle of subsidiarity plays a specific role – due to the decentralisation of central assignments – in the division of power of states at local and territorial level in the co-operations across the border. The Regulation (EU) No 1302/2013 of the European Parliament and of the Council of 17 December 2013 amending Regulation (EC) No 1082/2006 on a European grouping of territorial cooperation (EGTC) as regards the clarification, simplification and improvement of the establishment and functioning of such groupings. The revised EGTC Regulation shall apply from 22 June 2014. TERRITORIAL CAPITAL AND THE IMPACT OF EUROPEAN COHESION POLICY Ugo Fratesi and Giovanni Perucca, Politecnico di Milano, ITALY The regions of the European Union have been all eligible for Cohesion Policy support, with different objectives and different fund involvement, mostly depending on their development level and especially the levels of GDP per capita which is the main variable differentiating between convergence and competitiveness regions (in programming period 2007-13) and less developed, transition and more developed regions (in programming period 2014-20). However, beyond GDP per capita, the regions of the EU are also extremely different in structural terms, and especially they are characterized by very different systems of territorial assets of economic, cultural, social and environmental nature. These elements, included under the comprehensive concept of territorial capital, represent the development potential of places. In the words of the EU Commission itself, the regional endowments of territorial capital raise relevant policy implications, as “each region has a specific ‘territorial capital’ that is distinct from that of other areas and generates a higher return for specific kinds of investments than for others, since these are better suited to the area and use its assets and potential more effectively” (European Commission, 2005, p. 1). The regional endowment of territorial capital is therefore a factor which is an important determinant of regional growth, and also of the expected impact of Cohesion Policy at regional level, on the basis of two mechanisms: on one hand, the endowment of territorial capital can act as a filter, so that when it is abundant it can facilitate and enhance the impact of policies devoted to growth, while when scarce it can hamper the policy impact. On the other hand, cohesion policy, being devoted to building territorial structural assets, can help building territorial capital, which in the long run will be able to enhance the regional growth rate. Additionally, it is not a matter of how much, but also of which territorial capital assets are available in the regions. In fact, territorial capital assets can be classified under the two dimensions of rivalry and materiality, and assets of different types are more favourable to policies with different objectives. This paper will analyse the relationship between territorial capital and Cohesion Policy in a multidimensional way. Territorial capital, in fact, has many facets, which are sometimes related the one with the other, so that regions which are more endowed in some of them tend to be also more endowed in others. At the same time, also cohesion policy is multi-faceted, investing in a large number of axes, which are not always related the one to the other. Using, at a fine territorial scale (NUTS3), statistical data on territorial capital endowment and detailed cohesion policy expenditure on 19 axes over the period 2000-06, the paper will first identify what type of territorial capital is present in the regions of Europe, and which cohesion policy mixes have been implemented in them. The analysis will be able to demonstrate which typologies of cohesion policy are more effective under which territorial capital conditions. 11 In particular, we will be able to test whether soft territorial capital assets are a more favourable pre-requisite to Cohesion Policy investments in innovation and human capital, and which are the territorial capital prerequisites for the effectiveness of cohesion policy investments in the various axes, soft and hard. As a consequence, the paper will be able to provide indications on which Cohesion Policy mixes are more apt to different territories at European level. For example, the paper will show whether it is more impactful on growth investing in transport infrastructure in core areas, where this can help overcoming congestion, or in peripheral areas, where it may help providing a minimum level of public capital. Similarly, it will show whether investments in education and training provide more growth in intermediate areas, where it can help upgrading the industrial structure to the upper level, or in areas which are already endowed of it due to increasing returns. This analysis will be performed for all main axes of cohesion policies with a classification of actual European regions into five categories based on territorial capital. This analysis will hopefully help to develop more tailored Cohesion Policies, by concentrating investment in different axes in different types of regions. EU EASTERN PERIPHERY: AN EVALUATION OF COHESION POLICY IN ROMANIA AND BULGARIA Ramona Frunza, Ramona Tiganasu and Gabriela Carmen Pascariu, Alexandru Ioan Cuza University of Iasi, ROMANIA The current literature offers different opinions about the ways and tools that a state can intervene to mitigate the peripherality effect. Some authors pay more attention to the elements that are related to spatiality (geographical proximity connectivity, accessibility), while others support the measures strictly from the economic sphere (improving investment and employment through structural funds, the convergence of productive structures in terms of factors intensity, technological intensity and gross value added etc.). This paper will analyze by comparison Romania and Bulgaria, two peripheral EU countries, both spatially and economically, in order to capture local specificities, which accelerate/decelerate cohesion. The article will gradually answer to the following questions: - Which are the particular problems of peripheral economies? - How did the Cohesion Policy 2007-2013 answer to these problems and what impact did it have on reducing the development gaps in the Eastern periphery of the EU? - How the institutions should act to enhance cohesion through European funds? - What lessons can be learned for improving the effectiveness of future Cohesion Policy from the perspective of diminishing the Eastern peripherality of the EU? The responses to these questions will be presented in a comparative manner and also in dynamics (1990-2013), focusing especially on assessing the relation macroeconomic measures - Structural Funds - cohesion. Based on the obtained results from applying empirical analysis, we will appreciate if current tendencies are favourable or not for growth and convergence on long-term in the two countries. 12 YOUTH EMPLOYMENT, MIGRATIONS AND THE CONSTRUCTION OF A NEW EUROPEAN LABOUR MARKET Joan Ganau, University of Lleida, SPAIN Corinna Porsche, TU Dortmund University, GERMANY Youth unemployment is a current problem and a challenge for the EU’s future, and implies huge social and economic costs. More than 5,5 million young people are currently unemployed in the EU28 (23,5%), but there are relevant discrepancies among countries and regions. While in the Mediterranean countries youth unemployment rate exceeds easily 40%, in countries such as The Netherlands or Germany it does not reach 11%. During the past years, several programs have been implemented to fight youth unemployment, as the Youth Guarantee or the Youth Employment Initiative (2013). They represent valuable initiatives, but they are to be implemented by each country as part of their training and employment programs. Despite the efforts, there is still no common European policy to fight youth unemployment. Great efforts have been devoted to improve education and qualification of youngsters. The creation of the European Higher Education Area has favoured the exchange of students and the Erasmus programme has had a great success. Other programmes as Youth on the Move (2010) or EURES (European Job Mobility Portal) have been implemented to improve the mobility of young workers. Current economic crisis has generated regional disparities in unemployment rates and a great increase of labourbased migrations. This paper analyses in detail recent increasing migrations from Southern and Eastern European countries to most central ones. The intensity and quality of these flows suggests a qualitative change in the European labour. Most states are benefiting of these migration processes. On the one hand, this mobility leads to a reduction of social pressure generated by unemployment in the countries of origin (and thus, it contributes to reduce regional disparities). On the other hand, countries as Germany or UK that need labour, receive more skilled work force for lower salaries. The increasing migration within Europe also leads to a further harmonisation of the training for young people. But these benefits in the short term can have negative consequences for the future. The flows of labour mobility follow very specific corridors, usually in the same direction: from the peripheral areas of Europe to the central regions. In this way, there is a brain drain process, a loss of talent and trained workers in the regions of origin. This situation is especially acute in a context where the regional competitiveness and growth strategies are increasingly based on innovation. Far from achieving greater territorial cohesion, inequalities in EU tend to increase. From this context, the Cohesion Polices should place greater attention to these processes with actions such as: - Improving the double territorial directionality of labour migration to promote true mobility of European young workers. Apply policy measures at EU level and not depending exclusively on the employment policies of each member state. EU policies in this field should be really multilateral. Strengthen the return movements of workers. After learning new languages and experiencing new forms of labour organisation, young workers can contribute to their home regions development. Harmonise the qualification of the jobs with the education level of youngsters. In this sense, the Regional Innovation Strategies for Smart Specialization (RIS3) can play a key role. There is a real danger of creating a further dual structure centre-periphery in the European labour market with increasing costs for all EU member states (including the countries that are currently benefiting from this situation). 13 HOW DOES THE NET IMPACT OF THE EU REGIONAL POLICY DIFFER ACROSS COUNTRIES? Mara Giua, Università degli Studi Roma Tre, ITALY Riccardo Crescenzi, London School of Economics, UK The Cohesion Policy of the European Union (EU) is one of the most important regional development programmes in the world. Despite the political emphasis placed on the ‘economic convergence’ objective, and the substantial amount of financial resources absorbed, the EU’s economic development geography remains however highly uneven. At the same time, nonetheless the large number of studies provided, the academic literature has not yet reached a consensus on whether the Policy promoted economic opportunities and developmental trajectories of the EU’s most disadvantaged areas. Even though the EU Cohesion Policy follows the same set of rules and regulations throughout the EU, the literature suggests that its impact is highly differentiated across member states. Even if it has a unique design, the Policy implementation may in fact acquire different features in different countries: different levels of governance and different actors are involved from country to country. A main issue in this respect is represented by the effect of endogenous aspects such as structural cultural institutional and socio economic characteristics that are likely to be territorially-specific and that are difficult to be disentangled from the net impact of the Policy. This paper aims to test to what extent the heterogeneity across Member States (MS) depends on the different roles played by territorial ‘conditioning factors’ or whether, on the other hand, it reflects broader national-level factors, answering to the question: once the conditioning factors are removed, does the Policy’s impact turn out to be unique for all EU MS? The paper will take advantage of a Regression Discontinuity Design (RDD) based on an innovative spatial approach to estimate the effect of the Policy irrespectively of the role of territorial conditioning factors. By estimating the net Policy impact for each country separately, it will shows if the heterogeneity on the Cohesion Policy results highlighted in the classical regression framework literature is due to the different role that conditioning factors can have in different contexts or if the substantial differences across countries survive even after controlling for endogeneity bias via RDD. In the latter case, the heterogeneity of the Policy impact can be ascribed to country specific aspects originating at policy-design and implementation phases. In particular, country macro effect specifically part of the Policy, such as institutions, composition of the expenditure, governance‘s structure, thematic and territorial concentration of the resources would emerge to be crucial in determining the ultimate policy impact. According to the methodology exploited, which leverages within countries’ spatial discontinuities (namely, administrative boundaries between “Objective 1” and “non-Objective 1” regions) the analysis is forced to focus on the EU MS that in the policy programming periods of interest (until 2000) were divided into “Objective 1” and “non-Objective 1” regions presenting so that a comparable “Objective 1”/”Non-Objective 1” spatial boundary discontinuity: Italy, Spain, Germany and the UK (England and Scotland). The paper shows that a large part of the heterogeneity across member states disappears when appropriate counterfactual methods are adopted. The Policy impact coefficients estimated by the RDD models by comparing areas increasingly closer to the policy-change boundary are positive for all countries except for Germany. For this country, however, results need to be interpreted with caution and within a broader framework accounting for the unification process dynamics in place during the 90s. The largest part of heterogeneity characterizing the majority of cross-country impact analyses is eliminated by the exogenous RDD models. That means that the lack of consensus of the literature can be largely due to the differences in country specific conditioning factors not removed by endogeneous analyses. However, since the results remain slightly different and grouped according by MS characterization, other aspects, apart from the elements that compose each territory, may be shaping the policy outcome across space. Country specific governance and policy implementation are likely to play the most important role in this respect. Several elements can have a determining influence: the different scale and scope of funding; the distribution of funding among different priorities; the role played by national governments; the relationship between regional administrations and sub-regional actors; the distribution of funding according to different level of disadvantages; the 14 characterization of public-private partnerships in the management of the policy. In other words, the degree of “place-based-ness” that each country gives to the policy. The resulting policy implications are particularly significant with respect to the current debate on the EU Cohesion policy, grounded on the concepts of governance, specificities and conditionality. They both support the predominant role played by the policy within the 2014-2020 budget and highlight the need to reform the policy by giving it a stronger ‘place-based’ perspective. A context-specific approach can maximize the benefits for territorial cohesion also in a limited resources perspective. Greater concentration upon priorities; key changes to the governance system; increased leverage effect of investments; simplifying management rules; greater concentration have a key relevance for a reformed Cohesion Policy. A MACROECONOMIC IMPACT ASSESSMENT OF THE 2007-2013 EU COHESION POLICY IN TUSCANY Giuseppe Francesco Gori and Lattarulo Patrizia, Irpet, ITALY We empirically investigate the region-wide economic effects exerted by the implementation of the 2007-2013 EU Cohesion Policy in Tuscany. To this regard, we consider the total actually allocated amount of resources of the ROP-ERDF, ROP-ESF, EAFRD and EMFF programmes. The resulting integrated budget–which relies on European, National, Regional and Municipal resources –amounts to 2.2 billion euros and represents the 2.3% of the 2013 Tuscan Gross Regional Product. In order to ex-post assess the Cohesion Policy overall economic impact, we resort to a structural macroeconomic model (Remi-Irpet model) in which New Economic Geography (NEG) linkages play a major role as a dynamization mechanism. Our approach combines a high degree of geographical realism and a simple and clear modelling of the interactions among economic agents, thus allowing us to capture different types of feedback in a general spatial equilibrium framework and, therefore, to translate into exogenous shocks a wide range of economic policies, including the highly heterogeneous policy mix of the EU Cohesion Policy in Tuscany. Our impact analysis delivers clear-cut results. In particular, the 2007-2013 Cohesion Policy has implied (i) an increase in the overall regional productive capacity, (ii) a decrease in prices and increase in productivity, driven by increases in the firms’ accessibility to capital, labour and intermediate inputs and (iii) an increase in the overall competitiveness and export propensity of the regional economic system. Finally, in order to complete the analysis, we have assessed the potential effects of alternative policy mixes, implemented under the same budget constraint. To this regard, we conclude that a less balanced mix of policies, especially if in favour of direct infrastructural investments, would have had a smaller positive effect on the Gross Regional Product in the short run. Thanks to the dynamic features of the adopted analytical model, we can also provide estimates of the medium-run (2014-2020) predicted effects of the 2007-2013 Cohesion Policy. These are shown to be significative and positive partly due to the indirect effects of exogenous demand shocks occurred in 2007-2013, partly due to the structural changes of the economic system induced by the CP. For what instead concerns the alternative policy scenario, exclusively based on infrastructural investments, we find that a yearly 0.1% increase in regional inward and outward accessibility caused by the new infrastructures suffices to ensure a better medium-run performance with respect to the implemented 2007-2013 policy mix. 15 COHESION POLICY AND REGIONAL DEVELOPMENT IN POLAND – FIRST ASSESSMENTS Grzegorz Gorzelak, University of Warsaw, POLAND The paper estimates the real (net) inflow of the EU funds to Poland in the period 2007-2012 and related these funds to other economic categories. It also examines the influence which the Cohesion policy had on Polish regional development. The main thesis is that the demand effects appeared to be much stronger and visible than the supply effects. This has also been proved by the opinions of local governments expressed in a survey performed at the end of 2013. STRENGTHENING PUBLIC ADMINISTRATION AND EFFECTIVE MANAGEMENT BY WIDENING THE FOCUS OF PROGRAMMES AND CAPACITY BUILDING TO BETTER FACE THE NON-LINEAR COMPLEXITY OF DEVELOPMENTS Ulrich Graute, Consultant and Senior Advisor, GERMANY Cohesion policy targets all regions and cities in the EU in order to support job creation, business competitiveness, economic growth, sustainable development, and improve citizens’ quality of life. It is one of the most complex policies considering that it addresses all citizens, the entire territory of the Union, many sector policies and this on all policy levels. In addition, the domain is full of actors each having own orientations and capabilities. These actors interact in specific constellations and develop own modes of interaction inside and outside Cohesion policy. Thus, achieving policy goals in Cohesion policy requires from managers excellent skills in complexity management and coordination of often non-linear processes. Of course, Cohesion policy since long strives to strengthen the management of its interventions. A lot has been achieved over the years: evaluations and other studies on earlier funding periods contribute to the development of new regulations and interventions, manuals are developed to ease project and programme management, and numerous private and public institutions offer training on funds and project management. In addition, the many conferences, seminars and other meetings in context of Cohesion policy and its individual interventions offer ample opportunity for exchange of experience. In spite of all efforts and achievements, progress is still slow and success limited. Day-to-day administration and management of programmes and projects often seems to be absorbed by the challenge to prove that each Euro is spent according to relevant regulations. To keep control and assure a sound use of funds it deems easier to focus on linear activities and to prevent complex and dynamic (non-linear) activities. Unfortunately, this brings Cohesion policy in a catch-22 situation where the highly ambitious development goals are in a constant conflict with the requirement of a more conservative funds management. The objective of the paper is to discuss an alternative to the current trends of including a stronger focus to programmes and to reduce red tape in their administration. Instead of narrowing the focus it should be widened. Cohesion policy is not a closed system and thus it can be successful only by considering every relevant impact factor inside and outside of the circles of Cohesion policy. Facing the complexity of dynamic developments while keeping an eye on rules and regulation requires a new approach also in capacity building of managers and committee members. It will be necessary to better promote systemic learning, adaptive strategies and dynamic change not only by individuals but also by teams and institutions. The experience of other organizations like the UN with its Leadership and Management Development Programme may be inspirational also for capacity building in the context of Cohesion policy. 16 HOW TO EVALUATE INTANGIBLE ACHIEVEMENTS IN COOPERATION AND GOVERNANCE? A NEW METHODOLOGY Silke Haarich, Independent Evaluator, GERMANY Policies to strengthen cohesion and regional development are increasingly subject to evaluation in order to present specific results and socioeconomic impact. However, in most processes related to economic development, there are hard factors as well as intangible social and organizational assets involved (see Grabow et al. 1995). Usually, hard factors such as infrastructure, etc. can be identified and measured quite easily, if basic tools at the level of statistics, information management, and indicators are in place. On the other side, there is still a challenge if we refer to the soft factors or intangible assets needed to support regional development and innovation, such as networking, leadership, trust, cooperation, capacities to learn, manage processes or communicate etc. (Suriñach/Moreno 2011). There are different levels of intangible assets as well as different scopes of intangibles (economic, social, public management etc.). In the framework of this article, I refer especially to the intangible assets at organizational level in the context of regional development which are increasingly in the focus of public policies (networking, learning capacities, cooperation, knowledge transfer and management). The requirements, especially in the EU Cohesion Policy, make it more and more necessary to measure results and impacts at the level of the intangible assets. Although the intangible assets are partially quantifiable (e.g. the number of networks), it is still quite complex to assess the quality and non-quantifiable impact of these factors. There are some successful examples of how to measure intangible assets, being the most important the approach to study social capital (e.g. Putnam 1993, Woolcock/Narayan 2000), social networks (e.g. Burt 1997) or the systems view (e.g. Lundvall 1992). However, most approaches are based on complex scientific research, requiring time-consuming field work and analysis, which makes them less useful for EU cohesion policy evaluation. The challenge is to find a methodological approach to measure intangible assets that do not ignore the complex environment and the systems dynamics of regional development processes, but are simple and handy enough to permit a use in evaluation and a rapid and meaningful feedback into decision-making processes. This article presents a new method that could add to common Cohesion Policy evaluation practice, with direct application e.g. in the evaluation of Smart Specialisation Strategies, Territorial Cooperation, or helping to create a European Index for the Assessment of Regional Governance and Cohesion Capacities. POLISH EXAMPLE: LESSONS LEARNED ON LOCAL INITIATIVES IMPLEMENTATION AND FUTURE CHALLENGES FROM THE EC PERSPECTIVE Jaroslaw Hawrysz, European Commission, BELGIUM During 2007-13 financial perspective, the Polish authorities implemented local initiatives under the European Social Fund paving a path for linking bottom-up approach and strategic programming. However, conclusions were challenging and following a thorough analysis, the new provisions have been introduced in the Partnership Agreement signed between Poland and the Commission in May 2014. The presentation will be dedicated to analyse the Polish lessons learned from local initiatives implementation under the ESF 2007-14 financial perspective and from the World Bank project implemented in the 500 poorest local communities in Poland – Post-Accession Rural Support Project. Moreover, first observations from the strategic programming process of the ESIF intervention for 2014-20 in Poland will be shared with the audience. The local initiatives seem to be very promising in successful implementation of social inclusion measures, but how to assure concrete results? The European Commission intends to cooperate with the World Bank to further increase more effective planning and prioritization, monitoring and evaluation, learning and beneficiary engagement through CLLD approach, under ESF, ERDF and Rural Areas Development Operational Programs. 17 Close cooperation between different instruments co-financed by the European Structural and Investment Funds should provide many synergy effects and high added value for people at risk of social exclusion and poverty. Thanks to that expected concrete results should be better defined and should be clearer for all stakeholders as from the beginning of the programming process. Therefore, this presentation will offer an occasion to discuss the challenges that are faced by local initiatives in Poland and the EC expectations linked to this approach. Results of streamlining CLLD under ESF and other EU Funds, focus on development of community based care and on growth of social economy sector are of special interest of the Commission. BUILDING RESILIENT ECONOMIES: LESSONS FROM THE CRISIS FOR EU COHESION POLICIES Adrian Healy and Gillian Bristow, Cardiff University, UK The economic crisis of 2008 dealt a fundamental shock to the economies of the EU, from which many are still struggling to recover. At a time of widespread fiscal austerity, the EU’s Cohesion Policy provided one of the few sources of funds that did not suffer cutbacks and reductions as authorities’ sought to mitigate the worst effects of the crisis. However, this did not mean that resources remained accessible to all parties. To date, Cohesion Policy debates have tended to centre on one of two questions. Either the more politicized question of scale and efficiency – who gets how much, who gives how much, whether the money is well spent and whether the budgets would be more effective if ‘repatriated’ to Member States; or more academic work focusing on the effectiveness of the EU’s only – explicit - transfer policy. One area that has featured less strongly in the debate is the role that the European Structural and Investment Fund programmes can play in supporting regional economies through economic crisis. The last budgetary period began in 2007 and ended in 2013. Thus, it neatly spanned the period from the start of the economic crisis. This paper seeks to examine how Structural Fund programmes were affected by the economic crisis in a number of regions and how they, in turn, responded to the changing economic circumstances in the regions concerned. In doing so the paper sheds a light on the role that European Cohesion Policy can play in supporting the resilience of European economies. As Cohesion Policy moves into a new programming period it is now appropriate to look forward and to ask questions of the role and purpose of Cohesion Policy into the future. Reflecting on the lessons from the crisis the paper considers whether the new policy framework for 2014-20 addresses the lessons, how it does so and if not why this might be the case. The paper argues that whilst much of Cohesion Policy will remain concerned with strengthening the economic foundations of economies, some consideration should also be given to the role that it might play in assisting economies to react and respond to economic shocks, and so promote territorial and economic cohesion. The paper concludes with reflections on the future role of Cohesion Policy in addressing the lessons of the recent economic crisis and the challenges of the current long stagnation. CHALLENGES AND PRACTICAL ASPECTS IN IMPLEMENTATION OF PLACE-BASED APPROACH Jānis Ilgavižs and Ilona Raugze, The Ministry of Environmental Protection and Regional Development, LATVIA During the 2007-2013 planning period Latvia for the first time implemented a place-based support program for municipalities as addition to traditional support tools according to a sectoral approach. A single territorial priority ‘Polycentric development’ was implemented with co-financing of the European Regional Development Fund, in which the 35 largest municipalities containing national and regional development centres had the opportunity to implement investment projects according to priorities of their development strategies. The aim of this support was 18 to promote polycentric development, improving living and working conditions, creating preconditions for business development, mobility as well as availability and high quality of public services. Implemented projects provided complex solutions for local development issues, addressing multiple local needs regarding development of public infrastructure in a single project and ensuring coordination in time and space of investments related to different sectors. Most projects provided investments in transport infrastructure, energy efficiency of municipal buildings, infrastructure for education and culture. Yet very few municipalities chose investments in public infrastructure necessary for business development and creation of jobs (partly because of limitations related to state aid rules), which would have been beneficial at time when regions experience economic difficulties as a consequence of economic crisis. Based on this experience, in the 2014-2020 planning period Latvia has elaborated new EU funded place-based support programs for municipalities. Local development strategies will remain as an essential precondition to attract EU funding. However the new measures are going to have a much stronger emphasis on the promotion of entrepreneurship and the creation of jobs in order to increase impact of this support on economic development in regions. Latvia is already working on the necessary preconditions for this change, including considering terms for application of state aid rules in these support programs, as well as building capacity and skills of municipalities in cooperation with entrepreneurs. Latvia is also going to use the new Integrated Territorial Investment tool for the nine largest urban areas. This support will cover six support measures under several thematic objectives that are going to finance integrated actions to tackle economic, environmental, climate, demographic and social challenges that these municipalities face, at the same time developing also functional links between the surrounding area and the city or town. Place-based measures are more and more promoted in the EU regional policy and have a significant contribution to development of territories. Yet in implementation of place-based support programmes still a number of issues arise that need further discussions at the EU level. Firstly, how to ensure that as a result of EU funds investments for territorial development both national and EU goals are met still maintaining the discretion for municipalities regarding the opportunity to choose priorities for EU funds investments at local level? Secondly, how to balance public investments in areas that show the best return in terms of highest development indicators in the country and investments in other areas promoting balanced regional development? One of the areas with a significant development potential is small and medium-sized urban areas. In the context of discussions about an EU Urban Agenda Latvia during its presidency is going to emphasize the crucial role of small and mediumsized urban areas in regional development, which has been underestimated in EU policies and studies so far. Development of small and medium-sized urban areas is closely linked with the overall regional development since these areas are crucial in providing the necessary availability of job opportunities and services of general interest to residents of surrounding rural areas, yet they also contribute to development of metropolitan areas being connected in a joint polycentric network. Thirdly, it is clear that successful territorial development requires synergy between different sectoral policies as well as cooperation between different levels of government. Since coordination of public investments in 20072013 has not been sufficiently effective, in the 2014-2020 planning period Latvia is introducing two new policy coordination tools – investment mapping and wider application of territorial principles in implementation of various EU funded sector support programs. Consequently, another important issue worth discussing and exchanging good practise at the EU level is: how can the contribution of sector policies to territorial development be maximised? Which tools are the most effective in strengthening territorial dimension of sector policies and providing genuine, not formal policy coordination on the ground and what are the preconditions for their success? This paper is going to discuss the aforementioned issues based on the experience of Latvia from the implementation of EU funds support in 2007-2013 and preparation of support measures for 2014-2020. 19 THE MISSING LINK? CORRUPTION RISKS IN EU FUNDED PUBLIC PROCUREMENT TENDERS István János Tóth, Hungarian Academy of Sciences Centre For Regional Studies, HUNGARY Mihaly Fazekas, University of Cambridge, UK There is an intense public debate about whether EU Structural and Cohesion Funds reach their primary goal: to lift growth rates is poorer regions. The academic and policy debates have centred on the amount of spending, contextual factors such as human capital, and government quality influencing spending effectiveness and growth outcomes. However, prior evidence predominantly derived from the macro level, hence could not directly evaluate the performance of EU funded projects at the micro level beyond a few selected case studies. This paper offers for the first time a large scale assessment of EU funded public procurement contracts compared to nationally funded ones. It concentrates on corruption risks deriving from the apparent lack of competition which is one of the key factors behind poor spending effectiveness. It makes use of a unique database of over 2.2 million contracts awarded in 2009-2013 across the EU28. The underlying data derives from the EU’s Tenders Electronic Daily (TED) recording most large contracts awarded in the EU (e.g. for construction publication threshold is about 4 million EUR). The measure of corruption risks is a composite indicator deriving from the incidence and causal structure of ‘red flags’ in public procurement tendering. It has been subject to wide ranging validity tests indicating its value for measuring high-level corruption in public procurement. Preliminary findings point at substantial variability by country in terms of relative corruption risks of EU funded public procurement contracts with Ireland’ EU Funds spending performing the best (i.e. lowest corruption risks) and central and Eastern European countries such as Poland or Austria performing the worst. The overall effect seems to be negative, that is lifting corruption risks across the EU. While results confirm usual stereotypes about spending effectiveness and corruption risks, some surprising results indicate that older member states such as Austria and France may not be considerably better in spending EU Funds. While fully accounting for the diversity of corruption risks is a long way off, concentration of spending in public organisations appears to be a powerful explanatory factor. That is, public organisations with EU Funds share in total public procurement spending above 25-30% face drastically higher corruption risks than organisations with much lower EU Funds spending concentration. The results have wide ranging ramifications for EU Funds spending effectiveness and future policy reform. They suggest that the European Commission should rely more extensively on domestic and local accountability mechanisms and should try to avoid any domestic actor’s extensive reliance on external funding. The European Commission could impose an upper cap on the share of EU Funds in any single public organisation’s total spending. In addition, it could explicitly involve domestic and local civil society in designing and monitoring EU funded projects. Further work is in progress to better decipher determinants of cross-country variation in corruption risks manifest in EU Funds and to directly link growth effects and spending quality. Nevertheless, preliminary findings already highlight the need for carefully balancing EU Funds’ corruption risks with their expected positive effects. CHANGES IN SOCIAL COHESION IN THE MEMBER STATES OF THE EUROPEAN UNION IN CRISIS CONDITIONS Ireneusz Jazwinski, University of Szczecin, POLAND The development of social cohesion should be recognized as one of the key challenges in contemporary public policy. Social cohesion is an important factor influencing socio-economic life, including the processes of development of the European Union and the individual member states. Increasing its levels is rated among the main objectives of the European Union policies. 20 The purpose of the paper is to present the changes in social cohesion in the European Union member states in the context of the crisis after 2007, taking into account the most important implications for public policy. The work includes a concept of the use of income difference indicators to determine the levels and changes in social cohesion. The initial part of the study introduces the essence of social cohesion. The results presented in the next part of the paper indicate that the issues regarding to social cohesion take a very important place in the European Union treaties and strategies. In the next part of the work selected indicators are used to analyse and evaluate changes in social cohesion in all member states of the European Union in the period of 2007-2012. The final part of the study includes many conclusions and recommendations for public policy. HELIX MODEL AS A TOOL FOR IMPROVED PERFORMANCE AND ACHIEVEMENTS OF THE COHESION POLICY RESULTS Elita Jermolajeva, Latvia University of Agriculture, LATVIA Baiba Rivza, Latvian Academy of Sciences, Latvia University of Agriculture, LATVIA Economic and social cohesion – as defined in the 1986 Single European Act – is reducing disparities between the various regions and the backwardness of the least – favoured regions. The Lisbon Treaty adds another facet to cohesion, referring to economic, social and territorial cohesion. The idea is that the cohesion policy should also promote more balanced, more sustainable “territorial development”- a broader concept than the regional policy, which is specifically linked to the European Regional Development Fund and operates specifically at regional level. In this regard it is interesting to refer to the Territorial Agenda 2020 that suggests to strengthen cohesion by using “the territorial potential”. The results of Cohesion policy may be achieved through the interaction of several forces, the dynamic interaction of which is depicted by the five forces or the Quintuple Helix Innovation Model that gradually developed from the Double Helix (academia and industry), Triple Helix (academia, industry and government) and Quadruple Helix (academia, industry, government and culture- and media-based public) innovation models, introducing the natural environment factor as the fifth element in the interaction network. For this reason, the Quintuple Helix Innovation Model may be interpreted as an appropriate approach to sustainable development and social ecology. The organisation of Quintuple Helix Model emphasizes the importance of people, skills, relationships, interactions and media, as well as the role of basic research, workplace development and low technology sectors. Social networks have become the basic units of modern society. These units still are individuals, groups, organizations and communities, though they may increasingly be linked by networks. Although new knowledge and new discoveries themselves are values, yet, the wealth of the new economy is created only through converting inventions into commercialised innovations – new goods or services, technologies, solutions and processes. It emphasises eco-innovations and eco-entrepreneurship. It has to be noted that these emphases, just like the other elements, are specific to the innovative solutions offered by the Technology and Knowledge Transfer Centre of Latvia University of Agriculture. For example, Ltd ‘Lat Eko Food’ offers high quality Bio vegetable puree for babies from high quality raw materials of Latvian biological products. Vegetable Puree for Children ‘Rūdolfs’ was created in the cooperation between the entrepreneurs and scientists of the Faculty of Food Technology at Latvia University of Agriculture. The cooperation was going on in all the production cycle – from an idea to the ready product in the packaging with the fixed expiry date, quality testing, the selection of the necessary production equipment and advice on technological process. In Latvia, the problems of technology and knowledge transfer are tackled using European Union Structural funds, the Cohesion Fund etc. and such successful examples are crucial important for Cohesion policy realisation. 21 LINKING ESIF TO SOUND ECONOMIC GOVERNANCE, THE STORY OF A TRIPLE PUNISHMENT FOR LOCAL AND REGIONAL AUTHORITIES Marjorie Jouen, Notre Europe, FRANCE Despite constant opposition of the local and regional authorities and mixed feelings of the national governments,the so-called macro-economic conditionnality has been introduced in the 2014-2020 regulation for the European Structural and Investment Funds. The Commission recently adopted guidelines to implement measures establishing the link between ESIF effectiveness and good economic governance. However, in the 6th Cohesion Report published in last July, far from giving evidence to this new tool, the story of the crisis and its impact on subnational authorities show its irrelevance. Beyond the political discourse , what is the real purpose of macro-economic conditionnality? Has it something to do with economic governance or with (against) multi-level governance? COORDINATED POLICIES (LISBON/EU2020) AND COHESION POLICY: THEIR RELATIONSHIP AND IMPACT ON THE MEMBER STATES Judit Kalman, Hungarian Academy of Sciences, HUNGARY Marek Tiits, Institute of Baltic Studies, ESTONIA The institutionalized relation of territorial focused EU cohesion policies and the coordinated policies (Lisbon Strategy, EU2020) went through many changes in the past 10-15 years. Expectations in 2005-2006 indicated that the “Lisbonization of Cohesion Policy” could on one hand promote the fulfillment of comprehensive Lisbon goals , while shift the focus of cohesion policy from traditional alleviation of regional disparities to enhancing human resources and the knowledge intensive production in prospective competitive parts of the economy. This relationship however, has hardly been investigated, either in theoretical or in empirical terms. Despite the fact that many Lisbon targets have not been met, these still got re-initiated as EU2020 goals and cohesion policy has been also a mixed success in the European Union in the last decades. Some cohesion countries, often the poorest, were catching up fast in GDP per capita terms, but domestic demand led growth and excessive wage growth have led to the erosion of competitiveness in such economies in 2000s. While this has been the case, a number of other countries have not experienced meaningful growth for a decade or even longer. Social situation, which improved prior to the global financial and economic crisis, has worsened significantly thereafter. However, there are some evidences that the crisis cannot be blamed for all. We investigate the reasons behind these changes and processes, their implementation and impact on Lisbon/Eu2020 targets and cohesion outcomes, putting special emphasis on governance and institutional issues in explaining if the link of Lisbon/Eu2020 and Cohesion Policy has been effective. We consider the evolving and often conflicting targets (such as competitiveness and technological development on the one hand, and employment and social inclusion on the other hand). Methods used in the research are investigation of official documents (at both the EU and national level), evaluation studies, analysis of national and Eurostat data on main Lisbon and other indicators, earmarking shares etc. and interviews with government officials and national stakeholders. The country coverage of the research is a selection of CEECs, such as Hungary and Estonia, but also old Member States, such as Austria, from which generalizations can be made. We find that while we witness an ‘assymetric integration’ in Europe today, the various macroeconomic conditions, including global financial flows (incl. portfolio investments and loan financing) have been much more powerful in fuelling the unsustainable domestic consumption led growth than the combined efforts of co-ordinated policies (Lisbon and EU2020 strategies) and cohesion policies have achieved in improving competitiveness of the cohesion economies in the 2000s. In connection we have identified, a number of blind spots in the EU economic policy mix, which have allowed this to happen. There seems to be still no effective policy mechanism for co-ordination of production and employment levels in the different parts of the European Union. Neither co-ordinated policies, nor euro convergence criteria or the Stability and Growth Pact for the co-ordination of national fiscal policies in the European Union has fulfilled this role. 22 Moreover, we find that some elements of the EU economic policy framework, such as foreign trade policy, monetary policy or even R&D and innovation policy, continue to face major challenges in meeting the realities and needs of the 28 member states with very different levels of competitiveness. Specialisation on low-income activities such as low- and medium-tech manufacturing, and non-knowledge-intensive services along with the slow industrial change are also the key reasons that do not allow for closing structural cohesion gap within the European Union. The paper concludes that the real strategy question that presents the potential of greater living standards and socio-economic cohesion is the identification of new major areas of growth that Europe could focus on, and of the steps to be taken across Europe for meeting these future opportunities. Europe 2020 strategy needs a more stringent and actionable vision. This, in turn, allows for better re-alignment of research, education and labour market policies, etc. Setting the incentives right is crucial if the execution of a strategy is to be a success. Lisbon Strategy was originally a strategy without any financial resources , soft policy co-ordination, such as OMC, applied prior to the crisis have proven insufficient, ‘Lisbonisation’ of Cohesion from mid2000s has helped somewhat, but this has been too little and too late. The adoption of cohesion funds has, however, a history of focussing too much on the absorption and less on impact and results. Recent reform of cohesion policy, the introduction of the element of performance contracts for the 2014-2020 period will hopefully improve the situation with this respect. It is yet to be seen whether new and more stringent methods – macro and initial conditionalities, EU semester taken more seriously – introduced for 2014-2020 EU financial period will work or need further reinforcement. ASSESSING THE IMPACT OF COHESION POLICY PROGRAMMES 2014-2020: WHAT DOES RHOMOLO TELL US? D'Artis Kancs, European Commission - DG Joint Research Centre, SPAIN Philippe Monfort and Alexandra Rillaers, European Commission – DG for Regional and Urban Policy In this paper the Rhomolo model has been used to simulate the impact of Cohesion Policy programmes on the main macro-economic variables for the period 2014-2020. Based on the simulation results policy implications for the current and future programming periods of Cohesion Policy can be derived. The Rhomolo model, contrary to other models such as Quest and Hermin which have been previously used to assess the impact of Cohesion Policy, is a regional model which incorporates several elements borrowed from economic geography. These features allow taking into account spill-over effects which are due to interregional trade linkages as well as to the spatial dissemination of technology through well-known processes of diffusion and imitation. It allows taking stock of the fact that Cohesion Policy interventions typically have an impact not only in the region where they are implemented but also in other regions. The geographical distribution of the observed impact reflects in the first instance the fact that regions located in Eastern and Central Europe as well as a number of regions in Southern Europe reap the largest benefits from Cohesion Policy. This is explained not only by the fact that these regions typically receive large shares of the Cohesion Policy resources, but also by the fact that they lag behind in terms of infrastructure, human resources and technology implying investment in these fields being particularly productive. This also explains why the size of the impact of some types of expenditure can vary considerably across regions which is particularly true for investment in infrastructure. Indeed, this type of investment displays a much higher rate of return in the lagging regions compared to more economically advanced regions. This corroborates the pertinence of the current Cohesion Policy orientation according to which lagging regions, contrary to the more developed ones, are not prevented from allocating an important share of their cohesion policy resources to infrastructure. The simulation results further also show that the impact of Cohesion Policy spending is not limited to the region receiving the money, but that it spreads spatially across other regions due to the above mentioned spill-over 23 effects. Evaluations and future design of Cohesion Policy should fully take stock of this cross-border nature of its impact. EU REGIONAL POLICY 2000-2020: SHIFTING IN ECONOMIC PRIORITIES? Alexandros Karvounis, European Commission, DG Regional and Urban Policy, BELGIUM Domenico Gullo, European Commission, DG Regional and Urban Policy, BELGIUM In the last 15 years, both the economy and the European Union have radically faced historical changes. The economy has been through historical challenges such as the increased importance of the technology, the biggest and longest economic recession since 1929, and the globalisation of the global supply chains. Also the European Union and its Regional policy have faced several radical changes such as the enlargements and the establishment of the Economic Monetary Union. The economic trends and the new structure of the European Union - should in our opinion - have brought a solid shift in the way the European Regional Policy allocated its resources between economic sectors. Against this background, the aim of the paper is to investigate if there has been a shift in allocations of resources between economic sectors and during the last three periods of the Cohesion Policy; therefore, starting from 20002006, 2007-2013 and ending in 2014-2020. The research questions that the paper aims to answer are the following: 1) Has there been a change in the allocation of Structural Funds among the different economic sectors and groups of regions? 2) What kind of shift has been registered between the periods and is it possible to define a pattern? Is this shift reflects the strong link between cohesion policy and EU strategy (e.g. from Lisbon to EU2020 strategy). 3) How much the economic crisis has influenced this shift? To answer these questions will analyse the expenditures data by OP, MS and Funds in order to collect the necessary data. The analysis will be carried by group of regions and Member States (less developed vs. more developed) and by level of implementation (national vs. regional). The add value of this paper will be to shed light on the effective dynamics in the allocation of EU resources; therefore, providing an important feedback on how stakeholders have reacted to the changed economic needs and EU regulation. “TERRITORIAL COHESION” IN THE EMERGING ECONOMIC GEOGRAPHY OF EUROPE: EXAMINING COHESION POLICY ARCHITECTURE FOR THE NEW FINANCING PERIOD (2014-20) Purushottam Kesar, Radbound University, THE NETHERLANDS Cohesion policy funds accounts for one-third of the EU budget and have a considerable influence in shaping the priorities (funding priorities, project priorities, programming objectives, operational programmes, to mention a few) vis-à-vis public policy discourse within the EU. At present, much of the time is being spent in secretariats at the member states in deciphering Cohesion Policy framework and giving shape to different programmes and outlays for approval in the new cycle. Concurrent to these developments, however, there are debates among a wide range of stakeholders as whether the Cohesion Policy should stick to the treaty objectives (social, economic and territorial cohesion) in totality or respond to the emerging “economic geography” in the EU, thereby focus on one (or some) of its objectives, as has been observed in the Cohesion policy architecture over a period of time. Nonetheless, in the midst of these discussions, the Cohesion Policy for the new funding period (2014-20) guided by a Common Strategic Framework, thematic concentrations, has finally been rolled out. 24 The cohesion policy framework spells importance of an integrated approach to territorial development, including through Community-led Local Development, Integrated Territorial Investments (ITIs) and sustainable urban development, among various policy ideas and themes, under territorial cohesion. However the specifics for achieving treaty objectives are near general and in some cases can even be categorized as “confusing”. The paper analyzes how territorial cohesion would be the guiding criterion for the various programmes in light of the some of the ambiguities (such as "strategic coherence, territorial scale, relationship between thematic concentrations" etc.) in its specificities which has not been spelled or addressed in the Cohesion Policy framework. The paper also looks into some of these specificities to understand how far Territorial Cohesion (7 years, since, being part of Lisbon Treaty) has been understood and incorporated in the current cohesion policy. A case of six German transnational programmes (Interreg) have been studied as base casees to arrive at some of the answers to these wide ranging questions. THE CONCEPT OF TERRITORIAL COHESION AS UNDERSTOOD AND PRACTICED BY POLISH REGIONS Tomasz Komornicki, Polish Academy of Sciences, POLAND Jacek Zaucha, Institute for Development and University of Gdańsk, POLAND In the paper, the results of research on integration of various aspects of development in Polish voivodships are shown with a particular reference to territorial capital. An answer is sought to the question, “to what extent and how the Polish regions managed to successfully follow/implement the paradigm of territorial cohesion. For this purpose the findings of a questionnaire survey study, conducted with the offices responsible for a broadly understood development of voivodships (primarily with departments of Marshal Offices), were made use of. Theoretical papers dealing with territorial cohesion (e.g. Camagni 2010 and Medeiros 2012), as well as the theory of five territorial keys (accessibility, services of general economic interest, territorial assets, city networking, functional regions) – presented during the Polish Presidency in the EU (Zaucha et al 2014), provide a background for this analysis. These keys were assumed to tie the goals of a document Europe 2020 with priorities of EU Territorial Agenda 2020. Some of the keys are utilized in the current paper to present empirical results of intraregional policy (in the main “the key” defined as transport accessibility). The current research study reveals that representatives of regional authorities are relatively well acquainted with issues relating to territorial cohesion, but their understanding of this concept is generally narrower than that found in theoretical studies. Territorial cohesion is rightly associated with conducting spatial policy, as well as with utilization of endogenous development factors. A narrow understanding of this concept is to a certain degree determined by its use in the projects and programs of European Union. At the same time, in the definitions quoted by representatives of regional authorities, superior goals of egalitarian character appear (such as reducing gaps in development and level of life). This, in a way, put the territorial cohesion in an subservient position to social and economic cohesion. As far as the level of definition is concerned the majority of voivodships underline the role of endogenous factors for growth, but as regards the shape of their intraregional policy more traditional approach is widely prevalent. Regions see their internal spatial policy as nothing but delimitation of areas. This takes place based on negative criteria (referring to “problem areas” that were formerly identified). A lack of integrative approach is also typical. Territory fails to be treated as a subject of integrative policy, and, as well, as an opportunity that can be used to overcome the sectoral divisions. It is rather treated as a tool for achieving other goals. Polish regions turn out to be diversified in terms of the extent and the way they tend to embrace the territorial cohesion approach in their activities. Some of them achieve this objective to a greater degree in the way they choose to conduct the current policy (place-based approach) and others only through introducing territorial categories into Strategy of Development. To sum up, concerning the practice of Polish regions’ internal policy, a territory is seen more as a problematic issue than an asset. Simultaneously, however, an evolution in approach (forced by the EU regulations) is clearly visible, which forms the basis for more territorial-based policy on the regional level. 25 The paper draws on the findings of the project of the Polish agency, National Science Centre, entitled “Territorial cohesion category in cohesion policy. Implications for economic growth” (no. 2012/05/B/HS4/04212). HOW TO OVERCOME YOUTH UNEMPLOYMENT: EDUCATION VS. TEMPORARY EMPLOYMENT Olegs Krasnopjorovs, Bank of Latvia, LATVIA Media headlines dedicated to high youth unemployment rates almost everywhere in the world, particularly in the EU. The contribution of this article is twofold. First, it shows that basic youth unemployment rate statistics is in fact a tyranny of numbers and not capable to reflect regions with a real problem. Second, it questions the efficiency of the first remedy that comes to mind – creation of easy, temporary, freelance jobs or subsidizing youth employment and encouraging youth to enter the labour market as soon as possible. All these solutions may indeed have negative long-term consequences. Instead, the preferred policy option is raising the education quality and youth motivation to develop their professional skills. Two contributions are important for the EU Cohesion Policy: how to define the problem regions and how youth unemployment problem should be resolved. The situation with the youngsters' position in the labour market is much less clear than it seems at first glance. What lies behind the dismal unemployment numbers? The dismal media headlines rely on two figures that form a common base for the youth unemployment debate. First, the job seekers' rate among youngsters in Latvia (22%) is twice as big as among other age groups. Second, a similar story applies to other EU countries as well. On the one side, Greece and Spain are leaders with a 50% youth unemployment rate, leading to breaking-news headlines "every second youngster without a job". On the other side, there are three countries where the youth unemployment is below 10% - Germany, Austria and the Netherlands - we will see the sources of their "miracle" shortly afterwards. Normally these two arguments are the only ones in the politicians' portfolio regarding youth unemployment, followed by emotional speeches on "the lost generation", etc. In reality, however, unemployment is no more widespread among youngsters than among other age groups. The ratio of job seekers to economically active youngsters is the dismally famous 22% unemployment rate. However, only 90 of 225 thousand Latvian youngsters are economically active. I wonder, however, whether due to 20 thousand youngsters seeking for a job (of which only 8 thousand are registered with the Latvia's State Employment Agency – NVA), the misery label could be attached to all 225 thousand Latvian youngsters. Quite often we hear (mainly from low-skilled labour employers) innocent calls to integrate 150 thousand pupils and students into the labour market since "everybody is studying useless things while we have a labour shortage". If studies really were useless (and even were not a positive signal to employers) we would see similarly high unemployment rates among high- educated and low-educated people. In reality, however, education does improve performance in the labour market by significantly reducing unemployment risk (much more than low-skilled job experience). So I would disagree with the opinion that authorities should somehow stimulate Latvian pupils and students to enter the labour market at the expense of studies. Let's look at a hypothetical example. If only 1% of youngsters were studying, the remaining 99% would be rather successful in the labour market. First, if the majority of population would be uneducated, being low-educated would not be a disastrous signal to the employer. Second, many capable and talented young people would obviously be among the 99%. Conversely, if 99% youngsters were studying, the remaining 1% would definitely be out of work since employers would be free to hire educated workers. In the EU context, this example could explain "the miracle" of the Netherlands, and partly also the low youth unemployment rates in Germany and Austria. For instance, if Latvia had similarly high youth participation rate as the Netherlands do, the youth unemployment rate would not exceed 10% either. The relation between the youth participation and unemployment rates is even stronger in the longer term. 26 Moreover, in some countries (e.g. the Netherlands) it is common for youngsters to work part-time so they can continue studies after entering the labour market. Unsurprisingly, the youth employment rate in these countries is higher than in Latvia where the society is not accustomed to a flexible job schedule, thus many youngsters have to choose between studies and a full-time job. So we may conclude that "the youth unemployment problem" is not a problem per se in Latvia. It is simply a combination of low skilled unemployment and regional unemployment problems. Youngsters suffer from these problems just like people in other age groups do. Problem regions should be defined based on NEET (youth not in employment, education or training) statistics, not on youth unemployment statistics. Redistribution of EU funds to combat the youth unemployment could still be beneficial if these measures improve education and/or skills of young people (rather than result in employing one group of youngsters to excavate a trench and another group to fill up the trench in order to obtain a short-term improvement in youth unemployment figures). New job places for youngsters should not be low-skilled since such would only demotivate them from developing their professional skills, thus increasing the number of social benefit recipients in the future. Moreover, many practical skills (for real life, not only for grade) should be obtained at school. It may look funny if after 12 years at school a young person needs computer proficiency, foreign language and CV writing courses in order to enter the labour market. INSTRUMENTS: WHAT KIND OF COHESION POLICY INTERVENTIONS MAKE A DIFFERENCE? IMPROVING THE VISIBILITY OF RESULTS FROM EUROPEAN TERRITORIAL COOPERATION PROGRAMMES AND PROJECTS Iruma Kravale, Ministry of Environmental Protection and Regional Development, LATVIA Joint efforts and years of negotiations finalized with Cohesion policy regulation for the 2014-2020 programming period where a number of new instruments help to improve visibility of results from European Territorial Cooperation (hereafter - ETC) and European Neighborhood Instrument (hereafter - ENI) programmes and projects, mainly they can be divided into 3 general blocks: I. Programming instruments : focused thematic concentration on not more than four thematic objectives per Program as well as joint partnership agreements per Member State with analysis on synergy with other investment instruments, macro regional and EU, national, regional level strategies. II. Monitoring instruments: common ETC indicators, performance framework including milestones, unified Interact harmonized Program implementation tools, which provide joint project applications, information systems, check lists, project assessment criteria etc. III. Spill-over effect: enlarged cooperation scope outside EU (Norway, Switzerland, Belarus, Russia etc.), focus on knowledge transfer and improvement of EU Cohesion policy efficiency through shared experience and good practices (Interreg Europe), joined logo and Europe wide recognition, joined development objectives in the cross-border regions, macro regional solutions, joint instruments for developing EU competitiveness towards other markets . It is crucial to start discussions on the approach to analysis of ETC/ENI results already now to ensure the collection of necessary data at the very beginning of the programming period. At the moment most of the ETC programs are submitted to the European Commission and will be approved in the first half of 2015 when the first calls for project proposals will be organized, where new joined instruments will be incorporated into ETC processes. The most important is to change the way of thinking that ETC programs are of small critical mass towards big investments of mainstream programs. The 2007-2013 experience proved that they have very important transregional and trans-border effects of sharing best practices and knowledge transfer among EU member states. 27 Results of mid-term, follow-up, result dissemination evaluations of ETC cross-border cooperation and transnational programs (e.g. Estonia-Latvia, Latvia-Lithuania, Central Baltic Sea region, Baltic Sea region etc.) in 2007-2013 demonstrate that specific outputs and results were successfully achieved at each program level, however there is a challenge to make cumulative or comparative analysis at macro or EU level. Among good practices and supporting tools for raising visibility and capitalization of the results of ETC programs can be mentioned publicity activities, including annual EU cooperation days and events with involvement of different stakeholders and institutional levels. The questions to be discussed at the beginning of the new 2014 – 2020 programming period implementation: - What could be an influence of ETC/ENI programs in the development of EU regions in the future? How to use potential of ETC/ENI programs’ contribution to achieve macro regional and EU 2020 objectives? What are ETC/ENI opportunities for improvement of Cohesion policy interventions? THE POLICY CHALLENGE IN SMART SPECIALISATION Henning Kroll, Fraunhofer ISI, GERMANY In recent years, the concept of Smart Specialisation (RIS³) has developed from an academic concept into a policy trend with substantial momentum and widespread practical implications. While rightfully, some of its key proponents describe the approach as an “idea which had been in the air for some years” (Foray et al., 2011) many regions were substantially challenged when the European Commission decided to turn the definition and implementation of evidence-based regional innovation strategies into a legal requirement. About one year ago, the author conducted a survey and interview based analysis with policy makers across Europe to determine how regions dealt with the early stages of the RIS3 process. At the time, the focus was on regional policy makers’ perception of the new ambitious agenda as well as their perceived scope to effect changes in this regard. In particular, most regions were seeking to come to terms with the requirement to launch an “EDP”, a broad-based stakeholder consultation process previously unknown to many regions’ administrative traditions. In sum, the analysis underlined that European regions expected and were likely to obtain quite different benefits from the RIS3 process, in line with their different predispositions. One year onwards, the perspective has shifted towards implementation, with more and more regions approaching the finalisation of their RIS3 strategies and seeking ways to translate those into policy practice through operational programmes. In parallel, RIS3 indicator systems are being developed to monitor the extent to which policy actions are actually focused on defined RIS3 priorities. With these developments in mind, a new survey based analysis was launched in June 2014 on the results of which the proposed presentation will report. Building on last years’ findings it will seek to determine, whether: • RIS3 strategies are now finally in place and translated into implementation documents, • Policy makers’ perception as regards their scope of action has changed for the better, • The perception of the process as such and its main benefits has evolved, and • The diversity of perceived benefits of RIS3 across Europe has diminished or not. ADMINISTRATIVE REFORM, CAPACITY-BUILDING AND COHESION POLICY Mark Langley, Project Management Institute, BELGIUM For the period 2007-2013, it has been identified that good governance and capacity building are key issues that required to be addressed, especially in less developed regions and EU Member States, in order to improve institutional capacity To boost the absorption rates of possible EU Funds and to strengthen institutional capacity 28 and the efficiency of public administrations and public services at national, regional and local level, and where relevant, of the social partners and non-governmental organisations, with a view to reforms, better regulation and good governance – EU devoted funding from ESF. However, it still remains at the top of the agenda for possible improvement in the upcoming period. The new rules, which govern the next round of EU Cohesion policy investment for 2014–2020 support, marked the end of two and a half years of negotiations among the EU institutions last December 2013, and for the first time in EU history, the regulation within the package entitled as the Common Provisions Regulation (CPR) for EU Cohesion and Structural Funds, increases the importance of applied project management skills and methods as criteria for selecting beneficiaries of EU funds and advance uptake of Project, Program, Portfolio Management (PPPM) skills as part of the solution to the lack of administrative capacity. It falls under human resources category which is one of the three key elements to be addressed when considering the implementation system put in place for the management of the EU Funds and when defining administrative performance. Project Management Institute’s assessment of various studies related provided by Research Department shows that the application of program and project managements practices can enhance the performance of public authorities . Furthermore, as the CPR has been established in order to improve coordination and harmonise the implementation of EU Funds, it is expected that it will simplify its use by recipients and reduce the potential risk of irregularities. However, building the capacity of local actors to develop and implement operations including fostering their project management capabilities, should be taken into account as a one of the effective management of the EU Funds though drivers. Managing EU Funds requires unique skills, capabilities, processes and practices, particularly project and program management. The above mentioned critical disciplines that can be applied to EU Funds may ensure effective implementation success on the ground in the EU Member States. Furthermore, PMI’s research carried out shows that organizations need to focus on the development and training of their talent in order to achieve superior project performance, successful strategic initiatives and become high performers in order to avoid high cost at the end. In addition, not only must focus on development of people and practices by which they do that, but also need to focus on managing people through rapid changes - strategic focus on people, processes and outcomes are crucial items. However, institutional capacity is not just a technical matter of training civil servants in the European Union and other markets across, but should be seen as component of good governance which is a basis for institutional capacity building, creating trust and social capital. As per mentioned, recently (September 2014), London Economics (LE) together with Project Management Institute conducted a study of success factors in public sector and programme management, in the United Kindgom. This study forms part of PMI’s ongoing effort to understand what works in project management globally (whether it’s EU Funds financed projects’ management or other) and to make these insights available for policy makers, academic community, the wider public. The success of projects undertaken by public sector bodies is a sensitive topic, as such, however the majority of interviewees (project managers and senior responsible owners involved) agreed to participate in the research. One of the interesting comment received from the person involved in the area of management of the project that received the funding: “You can undertake some training into how to deliver a process, and you can undertake that process, but it does not mean that you can convert this into successful process into successful delivery. Converting the process into successful delivery requires you to be able to differentiate between undertaking the process as a means of ‘ticking the box’ and undertaking the process to meet the intent of project management of getting all parts of your organisation, and other stakeholders to work towards delivering your objective, and making them want to deliver this objective because they understand how they and the organisation will benefit from delivery. ‘People and their capability and engagement is what delivers success’.” Increasing complexity of projects and the ever increasing pace of change, organizations / institutions recognize that it is no longer enough to focus their talent hiring and development on only technical project management skills. Organizations / institutions need project management talent that has the ability to deal with ambiguity and can lead strategic initiatives that drive change in an organization / institution . This principle may be applied within the management of EU Funds accordingly. Ideally, an organization’s / institution’s approach to talent management is designed and executed to meet broader strategic needs. Moreover, it has been revealed by PMI’s research that high-performing organizations / institutions are more than twice as likely than low-performing organizations / institutions (69 percent and 31 percent) to have talent 29 management programs aligned to organizational strategy . Organizations in which talent management is aligned to organizational strategy have an average project success rate of 72 percent, while organizations in which talent management is not effectively aligned to organizational strategy have an average project success rate of 58 percent. The difference of 14 percentage points in project success rates equates to risking 50 percent more project money when talent management is not effectively aligned with strategy . Effective management is clearly linked with processes and the research has confirmed that organizations / institutions can clearly benefit from maturing their project, program and portfolio management processes. It demonstrates that process maturity leads to success, and despites this, PMI’s latest findings reveal that many organizations are not taking sufficient action to mature their processes – as evidenced by the trends in the perceived value of project management, the growth of project management offices (PMOs ), the use of standardized project management practices throughout organizations, and the maturity levels of project, program and portfolio management. A study on "Implementation of cohesion policy, 2014-2020: Preparations and administrative capacity of EU Member States" revealed that the efficient and effective management of the Funds in 2014-2020 is expected to be a major administrative challenge, with increased demands on administrative capacity compared to 2007-2013 . Moreover, a further challenge to capacity would be the reform of administrative structures, involving varying degrees of change to institutions, procedures and human resources. EU Funds effective management vs focus on the outcomes. Successful organizations have a continued focus on the outcomes of the intended benefits of their projects and programmes . Based on the mentioned, it’s clear that once the organizations developed and deployed three focus areas (people, processes and outcomes), it would lead to increased success of both projects and strategic initiatives on the ground. And the research proves that organizations that develop these competencies lose 12 times less money and mitigate the high cost of low performance . Why project management practices are important for this theme? Because it gives analysis, competitive intelligence, market analysis and information gathering outcomes that EU Institutions not necessary are able to capture while analysing the efficient implementation of policy objectives. PMI’s research methodology includes investments in both quantitative and qualitative research, which meet globally-accepted standards of rigor. This primary research is carried out independently or in partnership with credible research and consulting entities, with a goal to capture deeper information and insight on all aspects of the profession, but especially on its evolving practices and value to business success. Our surveys pursue respondents from diverse industries, departments, and geographies (North America, Asia-Pacific, EMEA, and Latin America). Respondents answer a series of questions, either through an online survey for quantitative research or in an in depth telephone interview format for qualitative research, which are designed to capture the respondent’s perspectives around topics, practices, and activities critical to the professional at any point in time. The research conclusions are based on analysis of the quantitative data, which includes metrics relating to cost, quality, and time, which are the hallmarks of project success. Research representatives look at what practices correlate to performance improvement. And they compare the data of survey respondents to identify patterns of success and the practices that align with that success. Measures for reinforcing the administrative capacity of the authorities involved in the management and control of the programmes in EU Member States will now finally be given the priority they deserve. And it is essential and timely to address it respectively. The new Juncker Commission is standing for change, and that reform means change and Juncker wants to show to the world that EU is open to change and ready to adapt to it. When the EU will start thinking about effective Cohesion policy objectives delivery ? And why good strategies whether they are linked within the policy objectives or within the organizations fail ? Background note on PMI and its Research Department: The Project Management Institute (PMI) one of the world’s largest non-for-profit membership associations and the single largest body for the project management profession. Our professional resources and research empower more than 700,000 members. Starting from 2014 PMI is investing in research to identify factors contributing to project and programme success in the European public sector. With a particular focus on those EU Member States that are net recipients of EU Cohesion and Structural Funds. 30 Additionally, PMI is highly regarded for its extensive research capabilities. PMI maintains and supports a very active research arm whose mission is to act as the catalyst for the expansion of the project management body of knowledge. The PMI Research Department shares knowledge with the project management community and other communities involved to enable more effective project execution and achievement of success. The Department helps to cultivate the project management body of knowledge though global research initiatives. ACCOUNTABILITY OF EU FUNDS ADMINISTRATION Nata Lasmane, Ministry of Finance, LATVIA Since Latvia has started to implement the EU funds, we are participating in discussions on the EU funds administration cost efficiency, sound financial management, reduction of administrative burden, process simplification, the availability of money, purposefulness of spending of money, investment sustainability. Simultaneous realization of these measures is a real challenge because, for example, reducing administration costs while maintaining confidence in the proper purpose and proper use of funding, requires real effort. EU funds are not money that someone has donated or gifted. They are essentially the EU Member States, including Latvia’s, contributions, it is taxpayers' money. Taxpayers want to know how their earned money is spent and whether the funds are invested in accordance with its intended purpose. Accountability of the EU Funds is an important element in order for the accepted Cohesion policy to be successfully implemented and in order for the spent funds to have positive long-term effects. In order to achieve the proper utilization of funds in the Member States, the European Commission has drawn up a detailed mechanism for the monitoring and control of the use of those funds. Despite the fact that the enormous resources invested in the socalled EU funds management and control system maintenance, improvement, and monitoring, the EU citizens' confidence is quite volatile. For example, the institutions administering the EU funds are listed as one of the less positively valued institutions in the Bureau organized opinion poll - people believe that this is the sixth most dishonest group of Latvian institutions, with a tendency for the people’s view to deteriorate. One of the reasons could be a lack of awareness, lack of availability of information, which leads to a variety of myths about the distribution of the EU funds. Public opinions quite often could be extreme opposite. One part of the public believes that the absorption of the EU funds involves too much bureaucracy, which makes the project implementers to spend too much administrative capacity and makes the EU funds unattractive. Various organizations, which express the EU public opinion, requires reducing the administrative burden of spending controls, allowing more resources to be spent for achievement of the purpose of the project. At the same time there is the extreme opposite public opinion, which is concerned that the EU funds money is being spent in an uncontrolled manner, in the interests of a small groups and not generally available. Media often initiates discussion on the problems of the EU funds project procurement, construction issues, and accounting failures. Mentioned problems actually exist in other spheres - the basic rules are created for a specific sector as a whole, rather than for specific projects financed by the EU funds. EU funds projects more clearly illuminates these issues and points to the need for various improvements, as the problems in the EU funds projects lead to the financial consequences which in turn lead to a more active response from the side of the project promoters. In her presentation, the author will examine lessons learned from previous programming periods. The references will be made to the controls which in the opinion of the author have produced the greatest effect, as well as those which in the Latvian case were unduly costly without the proper effect. The author will explain the meaning of the complex pyramids of controls, as well as pointing out the problems that can be solved by the EU funds management and control system, in addition to those issues, which could be solved by the active engagement of other sectors or even the investigating authorities. Cooperation between authorities, exchange of information and experience could play a significant role in reducing cost and improving effectiveness of resources invested. 31 The European Commission as one of its objectives has raised the simplification of implementation of the EU funds. In her presentation, the author will mention the foreseeable elements of simplification, as well as expressing her view, whether these elements will provide an immediate positive effect. The single audit concept model is highly supported, it could have a system simplification and administrative burden reduction effect, but the practical implementation of it is not entirely clear. Cost-benefit assessment and finding the right balance is not only the aim of the European Commission, but also of each Member State. This requires a deep analysis, risk assessment and reflective action. FROM "TECHNIUM" TO "EMPTIUM": INNOVATION POLICY AND STRUCTURAL FUNDS IN A WEAKER EU REGION Niall G MacKenzie, University of Strathclyde, UK Dylan Jones-Evans, University of the West of England, UK Rhiannon Pugh, Lancaster University, UK This paper examines the use of EU structural funds to support the development of innovation within Wales during 2000-2009. Drawing on data from the Welsh Government, it examines how these interventions have made an impact on the development of innovation within Wales as a peripheral EU region during this period. It then focuses specifically on the Technium programme; a high-profile innovation intervention that took a predominantly high-technology and supply-side approach to supporting innovation. Consistent within this is an analysis of the efficacy of supply-side policies using EU funds to support research and development activities to aid economic growth in peripheral, weaker regions. The paper challenges the notion of high-tech based approach to innovation policy in such regions, suggesting that this may not be the most appropriatE route for governments of such regions to take. An in depth analysis of Welsh policy interventions is developed relating to innovation, entrepreneurship,and economic development using a mixed-methods approach. The argument presented is that economically weaker regions in the EU may not have the relevant absorptive capacity and innovation eco-systems for a highly technology based policy approach. It calls for more focus on supporting other forms of entrepreneurship and innovation in weaker regions and a move away from an apparent fixation with the high-tech to a more holistic understanding of innovation and economic development. POLICY AS A MAJOR CONDITIONALITY: CONCLUSIONS OF TWO RECENT IMPACT EVALUATIONS IN LITHUANIA Klaudijus Maniokas, ESTEP VIlnius, LITHUANIA On the basis of two recent evaluations in Lithuania the paper will explore the link between the public investments and other policy measures necessary to achieve policy results. This is relevant for at least two novelties of the Cohesion policy – a focus on results and the instrument of conditionalities. The two evaluations were both impact evaluations. One was about the impact of the SF on the poverty reduction and social exclusion undertaken for and together with the Ministry of Finance. Another was about waste management undertaken for the Ministry of Environment. Both were completed by the consultancy ESTEP in 2014. Both concluded, among other things, that an appropriate mix of public investment, regulatory measures, tax incentives and and other instruments is key in achieving a desired result. In the waste management field it was explored through the analysis of the Lithuanian case, which is characterised by relatively high amounts spent on waste management and modest results achieved so far. A range of methods including benchmarking against neighboring countries were used. It revealed an important role played by the existence and consistent application of administrative sanctions. Investment alone was not the sufficient motivating factor. As for the poverty reduction, a high number of interventions financed from the SF were identified in this evaluation. Their contribution to the poverty reduction at the national level 32 though was limited due to major changes of macroeconomic and fiscal environment during the financial crisis and inappropriate mix of policy instruments. The very goal of poverty reduction measured by the poverty rate reflects a relative situation, which is better targeted through taxation than through investment or subsidies. At micro level, the results of interventions were mixed. Counterfactual impact evaluation was carried out with the aim of assessing the impact of EU-funded active labour market policy measures on participants’ (unemployed people) employment situation and income. Analysis showed that those measures which included the acquisition of new skills had a positive effect on participants’ employment situation and income after the intervention. However, wage subsidies were not as effective as expected. The lesson for the European Commission and the Member States is to apply the conditionality framework looking deeper into the policy content. Instead of asking for an increasing number of strategies, it should look whether a coherent sectoral policy based on a right mix of instruments is in place. WHATEVER HAPPENED TO GENDER MAINSTREAMING? LESSONS FOR THE 2014-20 EUROPEAN STRUCTURAL AND INVESTMENT FUNDS Leaza McSorley and Jim Campbell, Glasgow Caledonian University, UK Gender mainstreaming was adopted by the EU in the mid-1990s and became a requirement for European Cohesion Policy delivered through the 2000–2006 Structural Funds programme, which continued into the 2007-13 period. Gender mainstreaming implied that it was no longer acceptable to assume that additional resources targeted at stimulating economic development and growth benefited men and women equally. In other words, that the intervention was gender neutral. Therefore, in order to maximise the economic impact of policies designed to stimulate regional development they needed to be more ‘gender aware.’ The rationale for pursuing gender mainstreaming via the Structural Funds was as much about promoting economic efficiency as it was about promoting equity. If the poorer regions are to improve their economic performance then they have to make a more efficient use of the resources available to them, particularly human resources; within the EU, women account for the majority of the labour market that is economically inactive and unemployed. In addition, there was a recognition of the need to expand the total number of people of working age in paid employment in order to accommodate the ageing population and the resulting fiscal consequences. The desire to increase women’s participation in the formal labour market was a key feature of the European Employment Strategy and if the EU is to meet its employment target of 75% by 2020 then more women need to be encouraged to enter the formal labour market. The European Structural and Investment Funds (ESIF) have been designed to support the Europe 2020 targets and therefore will have an important role to play in encouraging an increase in the female employment rate from its current level of 62.5% (European Commission 2014). This paper evaluates the European Structural Funds policy of gender mainstreaming, as applied within the Scottish Structural Funds Programme 2007-13. A cross-section of ESF and ERDF funded projects which supported labour market participation were evaluated. The main issues examined included the extent to which the projects understood and were aware of gender mainstreaming and whether they undertook any gender based monitoring and evaluation. The Scottish case is then contextualised within the experience of the EU as whole, highlighting similarities and differences in member states’ approaches to gender mainstreaming. Finally the paper will discuss what lessons we can learn from this experience and whether gender mainstreaming can deliver in terms of increasing female employment opportunities. 33 EU COHESION POLICY IN IBERIAN PENINSULA: MAIN TERRITORIAL IMPACTS (1989-2013) AND CHALLENGES FOR A MORE EFFICIENT NEW PROGRAMMING PERIOD (2014-2020) Eduardo Medeiros, University of Lisbon, PORTUGAL By the time the Kingdoms of Portugal and Spain signed the Tordesilhas Treaty, in 1494, with the goal of dividing all the discovered and non-discovered territories outside Europe, both Iberian countries were at the beginning of an epic empire expansion phase, which lasted for several centuries. When these empires finally collapsed, with the loss of the last colonies (mid 1970s), both countries also saw the end of a long period of dictatorship, which had drastic negative effects on their territorial development. It was time to make a change. And the only possible solution was to join forces with the other western European countries, in this new political-economic project, which we now know as the European Union. Right from the start, and even before the official date of their accession (1 January 186), both Iberian countries received financial aid to modernize their infrastructure and productive system. Since then, almost three decades have passed, and the more than 240 billion euros (160 in Spain and 80 in Portugal), financed under the umbrella of the EU Cohesion Policy, had a significant impact in the territorial transformations witnessed in Iberian Peninsula until the present moment. But the questions are: • • • • Were these EU investments used in a smart, efficient and strategic way, in order to promote territorial development, and explore the territorial capital of this vast, polycentric, and cultural and environmental rich European peninsula? What were indeed the main territorial impacts of the EU Cohesion policy in both Iberian countries? Is the Iberian Peninsula a more cohesive territory? How should the European Structural and Investment Funds be spent in the next programming period? In synthesis, and regarding the first question, two conclusions can be drawn. Firstly, the priority given to the infrastructural modernization (transports, social and environmental infrastructure) as a pivotal pillar for the territorial attractiveness was clearly justified, due to the Iberian negative baseline scenario, in this domain. Secondly, the support to the economic activity was not strategic and efficient enough to put the Iberian economies alongside the most productive and innovative European ones. However, the Structural and Cohesion funds do not act in isolation and represented less than 3% of the annual GDP in both Iberian Countries. Even so, the use of the TARGET_TIA procedure concluded that their territorial impacts were positive (more in Spain than in Portugal), mainly to the socioeconomic cohesion and the environmental sustainability dimensions of territorial cohesion. Notwithstanding, the construction of two territorial cohesion indexes (1990-2010) also show that the EU investments were not sufficient to achieve the goal of territorial cohesion in Iberia Peninsula. Finally, for the next programming period (2014-2020), we propose the concentration of the EU investments in the renewable energy (mainly solar) economic cluster, as a strategic territorial development investment to reduce fossil fuel imports, promote economic activity, employment, research and innovation, and to help the shifting to a low-carbon economy. SUPPORTING THE RICH AND THE POLITICALLY LOYAL: HOW THE STRUCTURAL FUNDS MAY CONTRIBUTE TO RISING REGIONAL DISPARITIES IN EASTERN EUROPE Gergo Medve-Balint, Hungarian Academy of Sciences, HUNGARY The Structural Funds aim to decrease internal regional disparities in the EU member states and at the same time they are also expected to narrow the development gap between the relatively poor and the wealthier countries. These policy objectives are especially relevant for the Eastern European members which rank below the EU average in terms of GDP per capita and also face high territorial disparities. However, this paper shows that the simultaneous pursuit of internal and external convergence through the Structural Funds has promoted neither of these goals in the East. It argues that the inappropriately designed regulatory environment and certain domestic 34 political influences on fund allocation have jointly determined that the spatial distribution of the funds has been almost diametrically opposite to the originally stated goals. By employing advanced quantitative techniques (multi-level linear and Tobit models), the paper tests the effects of both regional and local economic and political factors on the territorial distribution of the 2007-2013 Structural Funds in two Eastern member states, Poland and Hungary. In this period, both countries were among the top beneficiaries of EU funds but their domestic institutional environment differed: while the territorial administrative system in Hungary is strongly centralized, in Poland, which has one of the most decentralized systems in the new member states, the regional governments (województwo) possess notable decision-making powers. Moreover, the Polish units of local government (gmina) are far bigger both in terms of size and population than the municipalities in the highly fragmented Hungarian system. In spite of these differences, the paper shows that the two countries’ common mechanisms for distributing Structural Funds have produced very similar outcomes. On the one hand, the paper reveals that in both countries the lack of a sufficient differentiation between the more and the less prosperous regions in terms of fund eligibility generated unequal internal competition for the funds, which primarily benefited the wealthier regions and localities. On the other hand, central governments have enjoyed notable control over the funds which involved that political preferences and lobbying significantly influenced their distribution. Both in Poland and Hungary political loyalty towards the central government has been positively associated with the per capita amount of Structural Funds spent at the local and the regional level which was not necessarily advantageous for the backward areas. Based on these results, the paper concludes that the Structural Funds have promoted neither internal nor external convergence. In the future, this may be avoided with a stricter application of the partnership principle to reduce central government control over fund distribution. This also needs to be accompanied with a stronger emphasis on building local and regional institutional capacity. Furthermore, the paper suggests that instead of applying a European benchmark, the fund eligibility of the Eastern regions should be determined according to their internal development positions. This would allow for a greater differentiation between the more advanced and the less prosperous areas. COHESION POLICY AND INNOVATION: HOW CAN RESOURCES BE USED MOST EFFICIENTLY? Jose Mella-Marquez, Asuncion Lopez and Juan C. Salazar, Autonoma University of Madrid, SPAIN This paper aims to unveil the links among public funds-which include Cohesion Funds- and the R+D expenses, the innovation expenses, the sales of new products and the weight of the technological sectors where companies work. The data source is PITEC (Spanish acronym which means Technological Innovation Panel), which provides the follow-up of the innovation activities of the Spanish companies in the period 2003 to 2012. PITEC supplies a high number of variables for 12.000 companies which allow measuring the impact of public policies on innovation and to identify the different innovation strategies used by the Spanish companies. We test an econometric model to estimate how Spanish companies use the cohesion funds- and in general the public funds- when utilizing their own resources with or without public resources. Our preliminary results show that, first, both public and private resources are not substitute, but complementary; second, the use of public resources are associated with better innovation results; and third, there is a sort of “spillover or spread effect” by which the companies do an extra innovation effort in terms of more intensive outsourcing, new intangibles assets, and training. Finally, we will make an additional analysis, comparing the results obtained for the main regions of the country and the Spanish average. This paper will be focused on policy recommendations for CP on how Spanish companies use the cohesion funds. Our policy recommendations are: 35 • • • • • • • CP should be coordinated with the national reindustrialization policy in a well-designed territorial approach. CP should have differentiated strategies by regions according to their patterns of smart specializations and innovation paths (Different regions, different policies). It will be emphasized to pay much more attention to incremental or adaptive innovations as an important dimension of regional growth. CP should take into account that to organize clusters is not enough, because not all “clusters" are sources of innovation and growth. Policy instruments-such as Scientific Parks, Technological Parks, incubators, etc. - should develop the networking capital of firms with customers and suppliers, companies in the same and different sectors, research centers, and foreign partners. CP should be oriented to enhance the enterprise survival capacity by investing in innovation and human resource training. Enterprise survival in the current deep economic crisis is much higher when CP is focused on those aforementioned policies. CP funds are complementary (not substitute) of private funds. Enterprises with public funds for R + D + I have a multiplier effect on innovative investment, sales of new products and specialization in strong technological sectors. Public/private interventions should be selective. Subsidies and loans instruments of CP for SMEs will be debated in different types of regions and companies. Risk capital will be also considered and public procurement rules as well. Public procedure simplification and adaptation to the innovative firm profiles are highly recommended for achieving an efficient CP. These proposals for CP are supported by the Spanish empirical evidence, which comes from official surveys, entrepreneurs and policy-maker opinions obtained from meetings held on purpose for writing the coming full paper. PUBLIC ACTOR CONSTELLATIONS IN THE FORMULATION OF OPERATIONAL PROGRAMMES: DIFFERENTIATION BY THE POLICY NETWORKS THEORY Josip Mihalic, Government Office for Development and European Cohesion Policy, SLOVENIA This contribution is derived part of a master's thesis proposal, which examines policy networks theory in the process of EU cohesion policy implementation. The aim of theme which will form the basis for Second EU Cohesion Policy Conference is to offer the clarification of the basic concepts and processes of public actors constellations in (re)formulation of operational programme within the EU cohesion policy implementation. Drivers of public actors participation (especially European Commission and Managing Authority) are offten linked to the EU cohesion policy normative requirements, the importance of bureaucracy and in the last period to the financial and economic crisis’ impact. Pre-designed construction of the basis for Second EU Cohesion Policy Conference represents theoretical approaches of policy networks and its usefulness in the context of studying the EU public policy implementation. In this regard, the (re)programming of the national ERDF operational programme 2007-2013 in Slovenia is used as an example of qualitative construction. However, ideas developed on the basis of example from the period 2007-2013 can be extended to other examples in the period 2014-2020. However, to conclude that normative requirements in the initial stage are not essential but at the final stage condition, that bureaucracy play decisive role and that the financial and economic crisis impact can also be exploited to achieve the objectives that are not associated with it. General implications of public actors’ (EC and MA) constellations in the (re)formulation of operational programme within the EU cohesion policy implementation directing attention to the future constellations such as: formally and informally before non-transparent; concluding alliances for the exclusion of other partners; equalization competences of national and European bureaucracy; the impact of changes in governments; confrontation with the fact that there is no expressed need for tailored strategic basis that guide programming; programming in simple terms means the member states budget debate by the bureaucracy for the whole programming period; there are no established mechanism to verify the correctness and consistency of (re)programming run of bureaucracy; 36 IS A CHANGE NECESSARY IN THE COORDINATION AND MANAGEMENT SYSTEM FOR ASSISTANCE GRANTED FROM THE STRUCTURAL AND COHESION FUNDS OF THE EUROPEAN UNION IN BULGARIA? Savina Mihaylova-Goleminova, Sofia University, BULGARIA The present report aims to review several current issues related to problematic areas in the system of public funds from European Union (EU) funds in the Republic of Bulgaria. Does the coordination of EU funds management in the Republic of Bulgaria require streamlining and optimization? Is a legislative change necessary in the regime of grant provision? Are the relations between Managing Authorities/Intermediate Bodies arising in the course of grant agreement performance based on equality or are they regulated by means of authoritative exercise of public powers? Should grants be awarded to beneficiaries on the basis of an individual administrative act within the meaning of Article 21 of the Administrative Procedure Code rather than a grant agreement? And should protection of beneficiaries against unlawful acts and actions by state authorities within the system of SCF management be regulated by law? What should the role of the Supreme Administrative Court be in the resolution of practical issues? Several of these problematic areas were addressed in the letter of the EC Commissioner for Regional Policy in July 2013. COHESION AND GROWTH: IS THE EU SYSTEM FIT TO FACE THE CHALLENGES BEYOND 2020? Willem Molle, Erasmus University Rotterdam, THE NETHERLANDS In the past years, the European cohesion policy has been thoroughly overhauled. It has been integrated in a European balanced growth policy; defined in the Europe 2020 strategy. To keep focus it is elaborated as a place based policy. To keep consistency it is using increased conditionality. The effectiveness of this new set up has still to be confirmed by the expected results during the present programming period. The EU growth and cohesion policy is a structural policy that addresses very long standing problems. So the outlook of the policy needs to be a very long term one too. It implies analysing sufficiently long time in advance whether adaptations will be needed. So assuming that the new set-up is going to be reasonably effective, one can assess the type and magnitude of the problems that will still obtain in 2020. To this can be added new problems that are likely to emerge in the future. Together they define the challenges the policy has to face beyond 2020. The question that we ask ourselves in this paper is: ‘Is the new EU policy set-up fit to face these challenges?’. In order to answer this question we analyse for each of the stages of the policy cycle two elements. In a first (largely empirical) approach we check in how far the inadequacies that have become visible in the past do lead to pressure for change. In a second (more speculative) approach we explore what new challenges are likely to emerge in the period beyond 2020. We will also explore the alternative policy set ups that have to be envisaged to face the new challenges. The combination of both analyses will indicate which elements of the policy set up will be marked by continuity and what adaptation is needed to keep the policy fit for the future. In the last category one factor stands out particularly. Successful integrated policy making is critically dependent on the quality of the national and regional administrations. The convergence countries (that are the largest beneficiaries) cope with big problems as to the quality of their governance and are likely to still suffer from this problem around 2020. On the contrary, the competitiveness countries perform on average rather well on this score. So it seems that the chances for success are highest for those who least need EU support, while those who need EU support most cannot realize success. We therefore suggest to introduce a conditionality check on quality governance before funds are committed, coupled with a considerably stepped up effort by the ESI funds to improve quality government in convergence countries. 37 THE RISE AND FALL OF INTEGRATED APPROACHES - ON TROUBLED WATERS FROM CONCEPT TO IMPLEMENTATION Gabor Novotny, HU Ministry of National Economy, HUNGARY As one of the concrete implications of the territorial cohesion objective enshrined in the Lisbon Treaty the reinforced integrated approach will be examined through different layers of governments and types of municipalities/administrative units. Bottom-up and top-down initiatives in the Hungarian programming exercise are contrasted focusing on coordination and budgetary risks, interest conflicts, conditionalities. The special case of a developed capital region, Central Hungary is also addressed both from a territorial and a budgetary viewpoint. THE ROLE OF FINANCIAL INSTRUMENTS IN IMPROVING ACCESS TO FINANCE IN LESSDEVELOPED REGIONS - COMBINED MICROCREDIT IN HUNGARY Györgyi Nyikos, National University of Public Service/Permanent Representation of Hungary, HUNGARY Purpose of the paper: Access to financing is certainly one of the most important components for the creation, survival, performance and growth of SMEs. The combined microcredit is a unique financial development tool where micro-credit and non-repayable assistance can be requested within one construction (other type of combined microcredit is delivering both micro-insurance and micro-credit products). The paper analyzes the Hungarian practice using this financial instrument, both looking at the empirical evidences and seeking for answer to the question whether this form of support is effective, useful or not. Design/Methodology/Approach: The paper focuses on the Hungarian experiences using micro-credit in the 20072013 financial period. The primary source of data is on one hand information from the Managing Authority for Economic Development OP and a survey carried out by the Fejer Enterprise Agency. The paper explores also the legislation on the new financial instruments proposed for the 2014-2020 programming period and responds to the question, if the new tools can be able to achieve the top priority in practice: supporting SME competitiveness. The paper uses sources of information based on desk research (studies, evaluation, official documents and adopted regulation) and experiences from managing and implementing operational programs and projects. Key results: The findings showed that to enhance impact of microfinance and to make the efficient use of the sources available, it is crucial to strengthen complementarities and synergies between different instruments. The use of financial instruments complementing with the more traditional delivery instruments (grants and support services) can be a solution to improve access to finance in less-developed regions. However, providing the adequate mix of access to finance and guidance is crucial. Financing needs to be complemented by intelligent support services tailored to the needs of businesses at their different stages of development and for the beneficiaries – especially for micro-entrepreneurs - the “one stop shop” for the access to different sources is the best solution. Providing this is not so easy for the institution system because of the different regulations (state aid, different funds…etc.), but necessary for the simplification and reduction of the administrative burden. Value: Combined microcredit (micro-credit and non-repayable assistance together) is a “new” unique tool, which is completely in line with the priority of using synergies and integrated approach in the field of economic development. Few studies evaluate the combined microcredit, which can become one of the products to provide a more comprehensive response to existing market failures often leading to a lack of access to financial services for excluded populations. The Hungarian experience shows a strong needs of using combined microcredit which indicates that the tool can meet primarily the need of access to finance for those excluded from conventional financing. 38 LINKING THE COHESION FUNDS INTO THE INTEGRATION OF YOUTH IMMIGRANTS IN THE EUROPEAN LABOUR MARKETS Gönül Oguz, TURKEY Trends in international migration show that the integration of foreign-born youth in host countries has proved a diffucult task due to the labour market policies of the European Union (EU). The integration of the immigrants into the labour market continues to be a top priority for the member states. Even so, the EU is still far from developing more comprehensive integration strategies, especially for less skilled youth immigrants. Compared with the nativeborn population, labour market outcomes are much weaker on average. There remains substantially limited labour market opportunities. In terms of concrete actions within their respective spheres of competence, the member states and the European Commission are called to ensure that the EU funds available for promoting youth employment, in particular the European Social Fund (ESF), are effectively used. Mobilisation of finance to tackle the social exclusion may be the best policy for labour market participation of youth immigrants. It may help to increase their adaptability and to make the transition from school to work, as well as to support training for lessskilled foreign youth. This study focuses on the importance of allocating of a much higher share of the Cohesion Fund to the ESF in order to improve youth immigrants’ access to the European labour markets. Its main goal is to highlight the responsibility of the EU that should use all available means to remedy this situation, although tackling unemployment is mainly the responsibility of the member states. Having said that, funding is a key instrument through which the EU can shape the integration policy developments in the member states, a particular attention is given to an analysis of policy implications. So the combined findings gathered from the sources (i.e. the European Commission, as well as other individual studies) are formulated into practical recommendations to assist the EU decision-makers and the national governments in their support of immigrant youth integration process. THE ACHIEVEMENTS OF THE 2007-2013 COHESION POLICY IN THE BALTIC SEA REGION Nicoleta Carmen Olteanu, University of Bucharest, ROMANIA As rather recent members of the European Union, the Baltic Sea Region countries have been among the most effective when it comes to turning European funds into tangible initiatives, through their high absorption rate. During the 2007-2013 budgetary framework, the Cohesion Policy has been successfully implemented within a variety of areas in the Baltic Sea states. The total Cohesion Policy budget allocated by the European Commission for 2007-2013 in the region, has been of €112.013 billion. The Eastern Baltic States are among the EU members with the highest funds absorption rate, Lithuania being the first one, using 48% of its allocated funds. Behind these results, there are a variety of accomplishments that each country in the region has reached. The goal of this paper is to find out what progress has been made throughout the past budgetary framework, in line with the priorities of each Baltic Region country. The Cohesion Funds have brought a significant increase in GDP as well as a higher rate of expenditure in research and development. Furthermore, transportation and communication networks have been improved. Environmental protection initiatives have been launched. Education and training programmes have been implemented in order to adapt to a changing labor market. New businesses and jobs have been created throughout the region. The Lisbon Strategy has also been successfully applied, to enhance competitiveness, create more jobs and drive progress. This paper finds that the Operational Programme on Human Resources and Employment has been particularly successful in the region. Within the funds allocation process, a higher priority has also been given to areas such as research and development, technology and innovation, education, entrepreneurship, employability, as well as transport infrastructure, accessibility or environment. Furthermore, the EU encourages transnational, regional and interregional cooperation, particularly through its European Territorial Cooperation Objective and the European Regional Development Fund. Each country in the 39 Baltic Sea Region has been part of cross border cooperation programmes, with their neighboring countries, as well as of interregional programmes. Along with the European Strategy for the Baltic Sea Region, the EU’s structural and cohesion funds have helped shape a region that fosters innovation and progress, a region that turns itself into an invaluable source of lessons and best practices. However, Europe is facing new challenges that will require future adjustments to the current policies. Estonia, Latvia and Lithuania are still depending on energy supplies from Russia and require further measures on enhancing their energy efficiency, sources and links with other countries, such as Poland and Sweden. Increased mobility could require tackling a multicultural society and labor market, by encouraging inclusive and non-discriminatory measures, through education and training. Furthermore, the EU Strategy for the Baltic Sea Region could be better synchronized with, or even funded, through the Cohesion Policy, to facilitate region branding and encourage cross-border cooperation between the countries in the area. CREATING AN EFFECTIVE COHESION POLICY IN THE CONTEXT OF EUROPE 2020 Andrzej Paczoski, University of Gdańsk, POLAND The paper evaluates Cohesion policy in the European Union, based on examples of the last perspective for 2007 – 2013 and the new perspective for the 2014 – 2020 period. It will make comparisons between these two periods. The effectiveness of the European Funds depends on the kind of investment and better institutional control. From the other point of view, the distribution of financial resources should be easier and simpler. One of the most important steps should eliminate the bureaucracy. This consensus may bring better development effects. The target is to overcome territorial inequalities, what should be done for dynamic convergence is a big challenge for Cohesion policy. It’s concerned on the fields like peripheries territories, rural areas and cities which decrease their position cause the fall of industry. Lots of activity may improve on the national level, not only on the central – EU level. It’s difficult to predict the effect of the Cohesion policy. A possibility the failure of Cohesion policy determined that convergence process will not work. The visible effect was the last financial crises which had significant influence on the EU. The negative involvement of the financial crisis was on countries called PIIGS. Countries like Portugal, Italy, Ireland, Greece and Spain have economic problems (Portugal, Greece and Spain were the poorest countries in core the EU, Ireland in the 80s was one of the poorest countries in Western Europe, now it’s a rich and developed country) which absorbed lots of money from the Cohesion Policy. The last crises decreased the tempo of economic growth and GDP per capita most than other countries. One of the important factor is an evaluation of the ability of structural funds to longevity economic development in EU regions. The considerations of the role of the Lisbon Strategy and the Europe 2020 Strategy is the way to get the future goals for a competitive economy in Europe. EU countries should discuss about division responsibility between national and multinational level (EUstructural fund) in accelerating convergence, cohesion, sustainable growth, creating more jobs (high skilled), competitiveness, building an economy based on knowledge and innovation. It may therefore be claimed to support structural reforms in the EU countries. EUROPE AS A GLOBAL MACRO-REGION: HOW IS ECONOMIC GEOGRAPHY CHANGING THE COHESION POLICY CHALLENGE? Kathryn Pain, The University of Reading, UK Gilles Van Hamme, ULB Free University of Brussels, BELGIUM Recent European research has addressed the pressing priority identified by the European Spatial Observation Network (ESPON) to “analyse the space of flows at the world level and understand its meaning in terms of territorial development and new territorial structures”. The 2010-12 ESPON Applied Research Project ‘TIGER – 40 Territorial Impact of Globalization for Europe and its Regions’ has innovatively combined and compared quantitative data on city networks and their flows with that on regional trade to inform the ESPON theme: Continental Territorial Structures and Flows (Globalization). The results have great significance for the development of European Cohesion policy in the context of increasing global economic integration and competition from emerging economies. The study identifies for the first time a new European functional phenomenon, the ‘global macro-region’, which is a space of intense economic and social interaction that is larger than the EU, and so distinct from the European territory as a political entity. Its emergence illustrates that, contrary to predictions of the ‘death of geography’ and ‘time-space compression’ (Harvey, 1989) with the development of new communication technologies, distance effects and agglomeration economies are actually playing an increasingly central role in shaping contemporary European relations. Alongside this intensification of European relations at a macro-region scale, ‘increasing returns’ in global ‘new’ economy specialized knowledge-based production and trade (financial and linked business and professional ‘advanced producer services’) are an ongoing stimulus to functional centralities, boosting the concentration of global functions, related services and employment in Europe’s ‘gateway’ (global and globalising) cities. Flows of labour, knowledge and finance that pass through the transnational firms with worldwide operational networks located in these cities are integrating Europe in global production networks and determining the location of strategic functions in worldwide value chains (Hopkins and Wallerstein, 1986; Gereffi and Korzeniewicz, 1994; Coe et al., 2004, 2008). So the increasing fluidity of international finance capital facilitated by these global network organisations, has actually been a spur to the “reterritorialization of socio-economic activity in the form of subnational, regional and supranational economic zones, mechanisms of governance and cultural complexes” (Held et al. 1999, p.28) and the ‘fixing’ of capital in the real estate infrastructure of Europe’s cities. A counter-trend is increasing competition between territories to attract mobile international capital flows at EU Member State, regional and metropolitan levels. The policy challenge presented for the attainment of EU 2020 Cohesion objectives is therefore how to support agglomeration-dependent necessary economic growth on the one hand while achieving more balanced development for territorial cohesion on the other. The results suggest that given the diversity of European regions in terms of economic strengths and vulnerabilities, policy initiatives are required to combat territorial competition and promote functional complementarities between global and globalising cities across the macro-region, and to assist smaller towns and cities in benefiting from specialised roles in its globally integrated system of cities. UNDERSTANDING THE OPERATIONAL ‘LOGICS’ OF EU ‘SMART SPECIALISATION’ AND THE IMPLEMENTATION CHOICES FOR REGIONS IN EUROPE Viktoriia Panova, Karlstad University, SWEDEN Lee Miles, Loughborough University, UK In the next planning period of the EU Cohesion Policy (2014-2020) a stronger emphases has been placed both on the importance of the Europe 2020 Strategy and the operational background of financial crisis and austerity that may influence the implementation of Cohesion Policy objectives in the rest of this decade. In particular, in the new period, Cohesion Policy is an integral part of the Europe 2020 strategy with a strong focus on employment, innovation, sustainability, as well as reducing poverty and social exclusion to which a third of the EU Budget will be invested under Cohesion Policy to help address disparities between regions while at the same time contributing to the achievement of the Europe 2020 goals. It should also Strengthen the Union’s capacities to increase the competitiveness of European regions in the wake of the 2008 financial crisis, and a means of sustaining the EU’s aspirations towards ‘smart, sustainable and inclusive growth’. At the same time, implementation of the EU Cohesion Policy agenda implies that regions will have key choices to make on where, when and how they will prioritize and translate the EU’s aspirations according to their own local contexts and conditions. Drawing upon a major ongoing study of stable (Sweden) and unstable (Ukraine) regions and taking account of the differing choices for regions in the EU and its surrounding neighborhood, this paper examines and maps out the operating paradigms and logics that shape the EU’s policy priorities towards the EU’s Cohesion Policy. In particular, the paper addresses several aspects. First, the authors present current findings of research work, aimed at 41 revealing the prevailing ‘logics’ of EU Cohesion Policy. Second, the paper maps out how these logics affect the implementation choices at the regional development level in view of the different interpretations of ‘smartness’ within regions. Preliminary investigation results will be presented suggesting the existence of several key logics, such as, the ‘competition’ and ‘innovation’ logics, the ‘development’ logic, the logic of Europeanisation and institutional capacity building as a background and a context for specialization. Third, further analysis is presented relating these preliminary findings to the respective operational capacities of specific policy tools applied via the implementation of ‘smartness’ by regions and regional actors; and thereby introduce the concept of ‘smart implementation’ in order to help analysts understand the application of EU Cohesion Policy in practice. More precisely, the work will provide conceptual reflections on how the ‘logics’ of ‘smartness’ are turned into ‘smart implementation’ which will inform future reviews of the EU’s smart, sustainable and inclusive growth agendas in the future. ITALY’S MEZZOGIORNO: 2007-2013 EU COHESION POLICY’S MAIN FAILURE. DID WE LEARN ANYTHING USEFUL FOR THE 2014-2020 PERIOD? Biagio Perretti, Università Della Basilicata, ITALY In this note two main points will be elaborated: the first is about the reasons why Italy’s Mezzogiorno (the lagging behind Regions in the South of Italy) can be considered the main failure of the EU cohesion policy in 2007-2013. The second, based on the information presently available, is the risk that most of the lessons that could be learned from that failure, will not produce a significant positive impact on the strategy devised for the current programming period. For the first point, the analysis will be mainly based on the information provided by the Open-Cohesion Data Base, of the Italian Ministry of Economic Development, and by European Sources, in particular the Sixth Report on Economic, Social and Territorial Cohesion. For the second point, the information available on the Italian Partnership Agreement and on the Operational programmes for the 2014-2020 period will be considered. Many elements support the statement about the failure of Structural funds in Italy’s Mezzogiorno. Southern Regions have suffered the strongest impact of the global crisis, and showed the slowest rate of recovery among the European Regions, apart from a few extreme cases, both in absolute terms and in relative terms compared to the Northern regions of Italy, regardless of a huge allocation of EU funds. Compared to other European Regions included in the convergence objective, the performance of Italy’s Mezzogiorno has been the worst, and at the end of the 2007-2013 period the distance in the level of economic development from the most developed regions in Italy and in Europe increased more than in any other country of the EU. Demographic indicators of Mezzogiorno are the worst in Europe, with a new growth of emigration rates, comparable only to the first decades after the Second World War, and a fertility rate largely below the minimum needed for demographic stability. Looking at the implementation of the Operational Programmes, a very low rate of absorption of the European Structural Funds is still observable in all Southern Regions, for all Funds. Still now, less than a yearsince the end of the implementation period, in some regions the largest share of allocated funds are still to be spent. Furthermore, repeated revisions of the programme’s financial allocations were approved to mitigate the risk of automatic decommitment generated by the n+2 rule, gradually reducing the consistency of the programme’s strategies. Looking at the financed operations, a very strong fragmentation can be observed, with thousands of micro projects, with very limited if not null lasting impact on economic and social development. At the same time, a wide dispersion of interventions in all sectors and areas was planned and/or resulted in practice, missing in most cases 42 the possibility to reach the critical mass needed to make a lasting impact. The new regulatory framework approved for the 2014-2020 programming period has already faced some of the same difficulties in Italy that hampered the success of the cohesion policy in the previous programming period in Italy. A first misstep was the much delayed approval of the Italian Partnership agreement. This Partnership agreement is supposed to establish the global framework for the programme’s strategy at national level. By approving it much later than in most of the European Countries, Italy has already lost the first year of implementation to programming. A second example of recurring issues from the previous period is that of excessive fragmentation. The concentration principle, is one of the pillars of the new programming strategy: unfortunately, however clearly established in theory, it has been translated in to roughly 300 different actions, that quite probably will replicate the weaknesses of the 2007-2013 programmes. The SMART specialization strategies, one of the main innovations of the new period, that are supposed to help European regions to concentrate resources on innovations capitalizing on the main natural, industrial and social assets, have been translated at Mezzogiorno level in broad and unbinding lists of issues, often simply replicating a static description of the regional economies. The reduction of the National co-financing, proposed by the Italian government mainly to reduce the risk of low and delayed absorption, if implemented without addressing the structural factors that have multiplied the time needed for the execution of public investments in Italy, could increase the risk of a further decline in the investment rate in Mezzogiorno, and of a divergence of its growth compared to the Northern regions. WHAT IF REGIONS AND CITIES GOVERNED EU REGIONAL AND URBAN POLICY? Wolfgang Petzold, Committee of the Regions, BELGIUM The recent reform of EU Cohesion Policy presents a remarkable success in that its institutional supporters at EU level, namely the European Commission and the European Parliament (EP), managed to safeguard a major share of the EU budget to be allocated to it for the period 2014-2020. This success came at a certain price: never before has it been so complex for regions and cities to spend EU funds. While the longest ever negotiations on the regulatory framework can be partly explained as a result of difficult budget negotiations at the level of the European Council and increased powers of the EP over Cohesion Policy’s general regulation, the increase in size and complexity of the legal framework indicates an “explosion of conditionality provisions” following the “audit explosion” of the previous period. Moreover, despite the European Commission’s attempt to speed up 2014-2020 programming, it seems that only a small amount of the planned funding will be committed in 2014 including a necessary adaption of the 2014-2020 Multiannual Framework (MFF), thus increasing the risk of a very low level of payments from the European Structural and Investment Funds (ESIF), when it comes to the MFF review in 2016. It may well be that a situation emerges, in which EU Cohesion Policy could appear as not delivering, which could result in seriously questioning its foundations and mode d’emploi. With a view to the reform of EU Cohesion Policy post-2020, this paper aims at contributing to a discussion on simplifying the ESIF implementing through increased proportionality. It will be assumed that during the legislative process at EU level, the knowledge of national, regional and local authorities to which ESIF rules and funding are finally targeted, is systematically unused. In addition, it seems that budget and Cohesion Policy negotiations at EU level follow a logic, which has only little to do with what local authorities (should) know about regional and urban development policies and their successful implementation. On the contrary, the application of EU rules might come at a cost, which is finally not only unnecessary at local but as well at EU level. The paper will attempt to answer the following questions: 1) How do actors at national, regional and local level perceive the results of the recent reform of EU Cohesion Policy, namely as regards new provisions such as thematic concentration, ex-ante and macroeconomic conditionality and evaluation? 43 2) What ideas do the same actors have about efficient regional, urban and rural development and labour market or social inclusion policies? 3) In terms of institutional arrangements for such policies, do the actors recognise an EU added value through the implementation of ESIF and if so, for which arrangements? 4) Can these actors imagine to become more directly involved in the post-2020 reform debate on EU Cohesion Policy and what would be their vision for its future design? How would the process of taking account of regional and urban development knowledge in the context of the post-2020 reform of EU Cohesion Policy look like? 5) The questions will be answered through (a) (b) an online survey among ESIF Managing Authorities in all member states (target: 50-100 filled-in questionnaires, broadest possible geographical and ESIF coverage); a series of structured direct/phone interviews with ESIF managers in different member states (target: 10 interviews). Conclusions will be drawn against the background of actor-centred research on EU Cohesion Policy implementation. Recommendations for a more active involvement ESIF Managing Authorities and a more proportional implementation system will be presented as a result. ECONOMETRIC ASSESSMENTS OF COHESION POLICY GROWTH EFFECTS - HOW TO MAKE THEM MORE RELEVANT FOR POLICY MAKERS? Jerzy Pienkowski and Peter Berkowitz, European Commission, DG REGIO, BELGIUM In recent years, a considerable literature has accumulated on the extent to which the European Union’s Cohesion Policy has contributed to its treaty objectives of reducing disparities in the level of development of its various regions and the backwardness of the least favoured regions. It has faced, in particular, three criticisms. The first criticism is that it is unnecessary, or worse distortive. Within a neoclassical growth framework, free markets and competition lead to uniform distribution of productive factors between regions and to regional convergence; therefore regional aid would in principle be ineffective as it would lead to misallocation of factors. A second criticism is that it is inefficient. From the perspective of new economic geography, economic integration sends productive factors towards the advanced regions where returns are higher, at the expense of peripheral areas. This implies that if the goal of the policy is to minimize interregional inequalities, cohesion policy could be effective; but such interventions will not lead to an optimal allocation of resources from the point of maximizing EU-wide growth. A third criticism is that the policy is not effective – put simply, it is not achieving its objectives. These criticisms raise important issues that need to be addressed by policy makers. The purpose of this paper is to assess the contribution of a number of key papers which make use of econometric approaches to address the impact of cohesion policy on economic growth and convergence. We focus, in particular, on three issues. The first issue is the relevance of the theoretical framework for the analysis. Most of the studies are based on a neoclassical growth model, which in most cases has been enriched substantially. In particular, spatial econometric methods have been used to capture spillover effects between regions. Progress has also been made on the issue of endogeneity of variables. The use of regression discontinuity design analysis provides strong econometric evidence of the impact of cohesion policy funds on growth in less developed regions. However, in almost all cases, policy intervention remains significantly underspecified The second issue regards the data used for analysis, which is crucial for achieving meaningful results. Our review shows that only a number of studies use good quality and consistent data series for analysis. Many of the studies 44 do not apply the actual amounts of transfers in the regressions, but a dummy variable indicating whether a given region receives cohesion policy transfers or not, or make strong assumptions about the distribution of resources which do not correspond to real expenditure at regional level. The third issue is the link between the econometric analysis and the conclusions for cohesion policy drawn by these studies. Most of the studies focus on the details of their econometric methodology and on the statistical robustness of the results. At the same time, the complex economic mechanisms behind these relationships are not sufficiently investigated nor explained. This leads to oversimplified and sometimes contradictory suggestions for cohesion policy. The paper concludes with an assessment of issues that need to be addressed to make future research more relevant for policy makers. These conclusions might be relevant for the econometric research in the coming years which will be able to make use of data about cohesion policy transfers in 2007-2013, which will be made available by the European Commission in 2015. THE IMPACT OF EUROPEAN STRUCTURAL FUNDS IN OBJECTIVE 1 REGIONS: BETWEEN COHESION POLICY AND THE LISBON AGENDA Nicola Pontarollo, University of Verona, ITALY The aim of the paper is to evaluate the effects of European regional support in increasing productivity of 434 NUTS3 Objective 1 regions of EU-25 over the period 2000-2006 . These regions, below the 75% threshold of the European Union (EU) average Gross Domestic Product (GDP) per capita, absorb the majority of the development funds whose aim is achieving greater economic and social cohesion and reducing disparities within the EU. The programming period 2000-2006 was characterized from the Lisbon Agenda, an action devised in 2000 that aimed to make the EU “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion” (European Council, 2000), by 2010. The priority of the Lisbon Agenda is, then, to increase the aggregate rate of growth in the European Union, and it is in contrast, at least partially, with the objective of the Structural Funds, that is cohesion . These funds have an important spatial dimension since they support a balanced development among regions concentrating resources in areas defined either by relative poverty, peripherality or structural economic weaknesses. Furthermore, the formulation of operational objectives of Lisbon Agenda is mainly centralized but with weak governance instruments because of its non-binding character. At the contrary, the operational objectives of the Structural Funds are decided at a decentralized level and operationalized with strong governance instruments. The two approaches, if not coordinated, can lead to uneven results in term of economic growth and, in general, of economic performances. If we consider that convergence is in act also because a 17% of these regions show a negative labour productivity growth, we can consider this result as a lack of success for both Lisbon Agenda and European regional policy. Under the first point of view we have that, among Objective 1 regions, many are not able to increase their productivity levels and then their competitiveness, and, with respect to cohesion dimension, we observe that convergence is due, at least partially, by a negative growth of some territories. The question that surges from this evidence is if Lisbon Agenda and European regional support have really sustained regional development and in which extent they have worked in the same or opposite direction. At this regard, the apparent trade-off between the two policies (i.e. efficiency vs. equity) can be bridged by maximizing the growth effects of the European financial support, which means the determination of the composition and geographical allocation of the investments in such a way as to focus on the growth potentials of the regions to which they are devoted. In order to reach this aim a heteroscedasticity robust fixed effects panel data analysis is used. The analysis focuses on the evaluation of the impact of funds for Objective 1 devoted to three precise axis: productive environment, human capital and infrastructure . The evaluation is performed with respect to the growth of labor productivity, defined as Gross Values Added (GVA) per employee, because this is conceived as the main source of a durable economic development. In order to know how much the link between the regional structure and the Structural 45 Funds is strict, to contextualize the results of the analysis of the effectiveness of the Structural Funds, a cluster analysis in which various regional characteristics are considered is performed. At this regard, a first set of variables is related directly to the Cohesion Policy and/or to the Lisbon Agenda, while another set, the context variables, to the general economic structure. The first results show that for the Objective 1 regions, despite the low concentration of funds on human capital, the returns are positive and strongly significant and last over time. Support to infrastructure, despite the large amount of resources, is less significant than the previous funds and its effect deeply depends on the characteristics of the regions to which it is devoted. Finally, support for productive environment shows affect only in industrialized regions. The reasons of these inhomogeneous findings have to be sought in the allocation of the funds and then in the failure, or success, to balance the requirements of the cohesion approach and Lisbon Agenda. This demonstrates that, to exploit the growth potentials of each territory, it is essential to understand deeply its socioeconomic structure to tailor policies with respect to its particular necessities. In this extent, in the new programming period, to fulfill the Europe 2020 objectives, we need to construct a modus operandi that, looking at the general policy objectives, has to be flexible enough to fit the needs of each region, starting from its endogenous potential. This approach requires to do not fall into the paradigm “one size fit to all”, which is the easier approach, but surely, as demonstrated, not the most effective. COHESION POLICY IN SOUTHERN ITALY: WEAKNESSES AND OPPORTUNITIES Giuseppe Provenzano, SVIMEZ, ITALY My paper is focused on Cohesion policy is Southern Italy, which represents an unicum in the European scenario. As a matter of fact, Italian Southern Regions are not involved in the convergence process which other European regions have undergone (both in Eastern Europe and in the traditional “cohesion countries”). During the last recent crisis, the economy of Southern Italy has lost ground compared with other European regions, both richer and less rich ones. Nowadays, Southern Italy with its 20 million inhabitants is a sort of “Great Greece”. Thus the situation might become particularly grim for Italy, which still shows a territorial dualism, which Germany and Spain have already overcame. In the eyes of the other European countries, the evidence of Southern Italy is that of an area unable to throw off the yoke of its chronic underdevelopment, where a waste of resources has occurred. In any event, a question still remains: why have Cohesion policies failed in the area? A growing body of literature suggests that Cohesion policies for Southern Italy, the so-called Unitary Cohesion Policy, on both the National and the EU funds, suffer from several criticalities. In more recent years, SVIMEZ Reports have shown that additionality has not been respected: therefore, the unity of strategic framework has been affected too. The cuts of public investment spending (due to economic and financial crisis) and the diversion of funds originally destined to territorial redistribution, caused a strong crisis of regional development policies. In summary, first, there are ‘quantitative’ problems concerning the amount of resources and the way in which both European and national spending programs are implemented. We have national funds, the so called “Fund for the development and the cohesion” (FSC), integrated in the National Strategic Framework for 2007-2013, which would have guaranteed a double additionality, one with respect to European Funds and the other with respect to the current investment expenditure of public administrations. Indeed, since 2008 almost all public finance’s manouvres use FSC as a way to balance the public debt and the economic system in the context of anti-cyclical policies. Concerning the European cohesion policies for the 2007-2013 programming cycle, the certified spending proceeded so slowly to set up the risk of losing the European resources for Italian Southern regions. The spending delay was due not only to the low “administrative quality” and to the scarce planning ability, but largely to the financial expenditure constraints for public administrations as emerged from the Fiscal Stability Pact. 46 ‘Quantitative’ problems of strictly financial nature aside, it is worth noting that past programming cycles in Southern Italy showed also deeper “qualitative” problems. Such problems arose in each and every cycle of financial programming plan of the last decade. Looking at the 2007-2013 cycle, it is commonly shared that delays in financial advancement were firstly caused by governance weaknesses, in terms of “administrative capacity” and “actuative deficit”. Still the same acceleration in the spending process started in 2012 has not had a relevant positive impact on regional development, because of general fragmentation and because such projects have not been developed within the framework of a coherent development strategy. In the first part of my paper, I explore such argumentations more in details. The second part is mainly focused on the new programming cycle. The main aim is to understand how a reformed Cohesion Policy 2014-2020 could promote a better use of funds and a recovery in efficiency and effectiveness of their interventions in Italian southern regions. First, it will be crucial to explore the link between EU Economic Governance and Cohesion policy. Under this view, the paper will highlight the several criticalities of the “macroeconomic conditionalities” mechanism, especially from the perspective of Italian less developed regions. With respect to instruments of the reformed Cohesion policy, strategic questions and analytical weaknesses aside, remarked by EU Commission observations, the Italian Partnership Agreement is still characterized by a “methodological” and theoretical approach. Consequently, most regional operational programmes drafts are formulated employing a bureaucratic approach and an theoretical scheme, without a clear identification of real intervention plans. On the other hand, Partnership Agreement, in order to address the main priorities of the European strategic framework, identifies a wide range of actions (more of 300) which might be a sort of “to-dolist”. The risk of fragmentation is still present. I think we need a stronger discontinuity in cohesion policies implementation. Finally, it is important for my research to understand how the governance reform in Italy, in particular through the creation of the newly-enacted “Cohesion Agency”, will play a role in overcoming previous weaknesses in actuative capacity. Also in the light of the European best practices, I would like to analyze how operational modality of a Development Agency, which the Italian government is still defining, could work to overcome past weakness. POLYCENTRIC DEVELOPMENT PROJECT MICRO-ECONOMICAL ASPECTS AND APPLICATION PROCESS IN PUBLIC ADMINISTRATION IN LATVIA Emils Pulmanis, State Regional Development Agency, University of Latvia, LATVIA The economic potential of all regions of the European Union (EU) can only be utilized through the further development of a more polycentric European settlement structure. Municipalities present several types of economies but effects are not limitless, diseconomies might arise. A polycentric approach to the development of region territories is one of the ways to move EU finance resources to investments of infrastructure and establish an attractive environment both for inhabitants and investors. Latvia has several methodological documentations to evaluate the possible benefits from infrastructure but still there is a need for improvements as the only clear defined methodology is for the transport sector and those which have been provided by the European Commission, but not always have been practically used in local municipalities’ project evaluations. Polycentric development projects (financed by European Regional Development Fund under stated cohesion policy), and planning for such projects, generally have the following characteristics: 47 • • • • • • • Such projects are inherently risky due to long planning horizons and complex interfaces. Technology is often not standard. Decision making and planning are often multi-actor processes with conflicting interests. Often the project scope or ambition level will change significantly over time. Statistical evidence shows that such unplanned events are often unaccounted for, leaving budget contingencies sorely inadequate. As a consequence, misinformation about costs, benefits, and risks is the norm. The result is cost overruns and/or benefit shortfalls with a majority of projects. The paper examines public project management applications in the context of the underlying structure that adverse dynamics and their application to specific areas for micro-economical level of project management, synthesizes the policy messages, and provides directions for future research. Public sector project management in Latvia has become popular in recent years as there are different types of public funding sources available. The paper describes the public sector polycentric development project management practice in Latvia at microeconomics level. Research is based on project management and planning issues in the frame of implemented and ongoing projects of EU cohesion policy. The study shows the evaluation of impact factors in public sector projects of efficiency and sustainability, as well as management practice impact factors to implemented cohesion policy. Involved institutions should be aware that due to complexity of the system, it is very hard to reconcile top-level strategic considerations with technical, micro-management issues, whose burdens and problems are well understood only by the "final beneficiaries" - it is only through such interaction however, that the need as well as direction of change can be determined. The research period covers the time period from May 2013 – November 2014. CHALLENGES AND PRACTICAL ASPECTS IN IMPLEMENTATION OF PLACE-BASED APPROACH Ilona Raugze and Jānis Ilgavižs, Ministry of Environmental Protection and Regional Development, LATVIA During the 2007-2013 planning period, Latvia for the first time implemented a place-based support program for municipalities as addition to traditional support tools according to sectoral approach. A single territorial priority „Polycentric development” was implemented with co-financing of European Regional development fund, in which 35 largest municipalities containing national and regional development centres had the opportunity to implement investment projects according to priorities of their development strategies. The aim of this support was to promote polycentric development, improving living and working conditions, creating preconditions for business development, mobility as well as availability and high quality of public services. Implemented projects provided complex solutions for local development issues, addressing multiple local needs regarding development of public infrastructure in a single project and ensuring coordination in time and space of investments related to different sectors. Most projects provided investments in transport infrastructure, energy efficiency of municipal buildings, infrastructure for education and culture. Yet very few municipalities chose investments in public infrastructure necessary for business development and creation of jobs (partly because of limitations related to state aid rules), which would have been beneficial at time when regions experience economic difficulties as a consequence of economic crisis. Based on this experience in 2014-2020 planning period Latvia has elaborated new EU funded place-based support programs for municipalities. Local development strategies will remain as an essential precondition to attract EU funding, however the new measures are going to have much stronger emphasis on promotion of entrepreneurship and creation of jobs in order to increase impact of this support on economic development in regions. Latvia is already working on the necessary preconditions for this change, including considering terms for application of state aid rules in these support programs, as well as building capacity and skills of municipalities in cooperation with entrepreneurs. Latvia is also going to use the new Integrated Territorial Investments tool for nine largest urban areas. This support will cover six support measures under several thematic objectives that are going to finance integrated actions to tackle economic, environmental, climate, demographic and social challenges that these 48 municipalities face, at the same time developing also functional links between the surrounding area and the city or town. Place-based measures are more and more promoted in the EU regional policy and have a significant contribution to development of territories. Yet in implementation of place-based support programmes still a number of issues arise that need further discussions at the EU level. Firstly, how to ensure that as a result of EU funds investments for territorial development both national and EU goals are met still maintaining the discretion for municipalities regarding the opportunity to choose priorities for EU funds investments at local level? Secondly, how to balance public investments in areas that show the best return in terms of highest development indicators in the country and investments in other areas promoting balanced regional development? One of the areas with a significant development potential is small and medium-sized urban areas. In the context of discussions about an EU Urban Agenda Latvia during its presidency is going to emphasize the crucial role of small and mediumsized urban areas in regional development, which has been underestimated in EU policies and studies so far. Development of small and medium-sized urban areas is closely linked with the overall regional development since these areas are crucial in providing the necessary availability of job opportunities and services of general interest to residents of surrounding rural areas, yet they also contribute to development of metropolitan areas being connected in a joint polycentric network. Thirdly, it is clear that successful territorial development requires synergy between different sectoral policies as well as cooperation between different levels of government. Since coordination of public investments in 20072013 has not been sufficiently effective, in the 2014-2020 planning period Latvia is introducing two new policy coordination tools – investment mapping and wider application of territorial principles in implementation of various EU funded sector support programs. Consequently, another important issue worth discussing and exchanging good practise at the EU level is: how can the contribution of sector policies to territorial development be maximised? Which tools are the most effective in strengthening territorial dimension of sector policies and providing genuine, not formal policy coordination on the ground and what are the preconditions for their success? This paper is going to discuss the aforementioned issues based on the experience of Latvia from the implementation of EU funds support in 2007-2013 and preparation of support measures for 2014-2020. MACROECONOMIC CONDITIONALITY - THE LINK BETWEEN ECONOMIC GOVERNANCE AND COHESION POLICY FROM AN INTER-INSTITUTIONAL PERSPECTIVE Simone Reinhart, Greens/EFA group in the European Parliament, BELGIUM One of the most important links between the Union's economic governance and Cohesion Policy is the macroeconomic conditionality (MEC). In the context of the economic and financial crisis, this mechanism became increasingly attractive as leverage for the assertiveness of emerging Union's economic policies. First experience A MEC was applicable in the funding period 2007-2013 to the Cohesion Fund only and set out that in case of an excessive deficit procedure in a given Member State, its commitments concerning the Cohesion Fund could be suspended. This mechanism has only been applied once for Hungary. Doubts, however, remain whether the event triggering the suspension should be rather linked to the overall situation in Hungary at that moment (e.g. constitutional affairs etc.) than to the excessive deficit procedure alone. More excessive deficit procedures were on-going, but did not lead to a suspension of moneys in other Member States. Finally, the proposal for suspension of funds in Hungary was withdrawn, as Hungary took corrective steps. The conclusion drawn from this experience, that disassociated factors played an important role for the use of this instrument, leaves uncertainty about the consistency of its future use. 49 Inter-institutional negotiations on macroeconomic conditionality For the new programming period, the Commission proposed to extend the scope of MEC to all funds under the Common Provisions Regulation (CPR), the elements triggering a suspension and the possibility to suspend payments as well as commitments. The new proposal for MEC was meant to align with the new Stability and Growth Pact enforcement measures. The European Parliament (EP) fundamentally rejected the MEC in several resolutions by large majority. The European Council insisted on MEC and introduced a two strand approach comprising a preventive and a corrective arm. In the course of the negotiations, the EP gave up its fundamental opposition and worked on a "MEC light". Several compromise options have been tested: full legislative involvement of the EP in the decision on suspension; reduction of the level of suspension with the option for zero suspension; introduction of an investment clause which excludes the co-financing means from the calculation of the deficit. None of these options was supported by the Council. At a certain point it became obvious, that the margins of negotiations have been exhausted and both co-legislators had reached their limits. A final compromise line has been agreed and confirmed by vote. What happened since then? Although the legislative text had been adopted in December 2013, this was not the end of the story. All institutions involved were about to fine-tune or even re-consider their positions and determining the future application of MEC. - In July 2014, the Commission published a communication for guidance on the application of the provisions on MEC. The scope of this guidance provides information on how the Commission intends to proceed in case of reprogramming and suspension requirements. Concerning suspension, then-Commissioner on Regional Policy, Johannes Hahn, repeatedly underlined that MEC will be applied as ultima ratio only. - The EP decided to draw-up a report in response to this communication including its expectations towards the structured dialogue which will be the most important tool for the EP to get involved in a decision on suspension. The EP might try to stretch the margins of this provision and to conquer the interpretation sovereignty with the ultimate aim to hinder suspension. - The Italian Presidency might try to put the investment clause on the Council's agenda with the view to promote its application. That minority position inside the Council became increasingly popular the longer the crisis lasts and with the importance of public investments broadly acknowledged. During the hearings of the Commissioners-designate in the EP, the room for interpretation and margins of flexibility led to diverging statements: whereas Commissioner-candidate for Regional Policy, Corina Cretu, followed the ultima ratio-approach of her predecessor, Vice-President-designate for Jobs, Growth, Investment and Competitiveness, Jyrki Katainen, made clear, that investments must be based on sound budgetary grounds thus expressing unconditional support for MEC. The MEC will only be applied from 2015 onwards; however, several factors determining its use are still on the negotiation table. PATCHWORK OF PROJECTS OR COHERENT STRATEGY? EQUAL OPPORTUNITIES IN THE IMPLEMENTATION OF EU STRUCTURAL ASSISTANCE IN LITHUANIA Daiva Repeckaite, Vytautas Magnus University, LITHUANIA Taking gender equality and non-discrimination into account is compulsory in all programs and projects financed by EU structural funds, yet it is up to the member states to choose appropriate methods to do so. In Lithuania, where legislation is rather restrictive with regard to any affirmative action for disadvantaged and under-represented groups, institutions have found themselves insufficiently informed as to how exactly these horizontal priorities are 50 relevant in their sector. Thus, the 'work' with equal opportunities was mostly left to the responsibility of the Ministry of Social Affairs and Labor, which funded a broad range of competitive projects for NGOs and other actors while many other authorities continued 'business as usual.' This way a number of NGOs working on similar issues found themselves competing where they could be cooperating. Using unique data from a recent interim evaluation of the contribution of EU structural funds to fostering equal opportunities in Lithuania, this paper looks into the governance aspects of the matter. Although the author was the coordinator and researcher working on this evaluation, this paper only utilizes the data that has been made publicly available by the Ministry of Finance. Still, a deeper, academic analysis of the data allows a more critical re-assessment of the findings. How were responsibilities for implementing equal opportunities distributed? Were inter-ministerial coordination bodies effective? Finally, can the recent surge of initiatives, funded by EU structural funds, to foster women's entrepreneurship be attributed to growing awareness of these aspects in other ministries, or to preparations for the new programming period? SMART SPECIALISATION: FROM CONCEPT & STRATEGIES TO DELIVERY Kevin Richardson, Higher Education Funding Council for England, UK David Marlow, Third Life Economics, UK The concept of Smart Specialisation is increasingly understood. All regions seeking to use ERDF to support research, development & innovation are required by the new regulations to submit Smart Specialisation Strategies. But, more importantly, what are the prospects now the concept and strategies need to move into in the practise of delivery? This paper will explore the application of Smart Specialisation in England - a large Member State with a very new and unique institutional architecture of 39 local areas. Strategies supporting local growth are led by Local Enterprise Partnerships - informal bodies often with no statutory status, often with a focus on a level of economic geography that does not fit well with Smart Specialisation. This paper will set out the proposed functions and form of the emerging Smart Specialisation Advisory Hub. It will also assess its prospects for real impact at national and local levels. Transferable lessons will be identified. HOW TO ACHIEVE SUCCESSFUL EUROPEAN TERRITORIAL COOPERATION? – LESSONS FROM THE CROSS-BORDER COOPERATION PROGRAMMES IN CENTRAL-EASTERN EUROPE Urszula Roman-Kamphaus, University of The West of Scotland, UK European Territorial Cooperation (ETC) objective is an important but still underappreciated part of Cohesion policy. Research dealing with the effectiveness of Cohesion policy tends to focus on national and regional programmes, as a result assessing the successful management of EU funds in ETC, namely in cross-border cooperation programmes, remains underresearched. In 2014-2020 EU will spend €351.8bn on cohesion and regional policy in comparison to €347bn in the previous programming period. Despite the fact that ETC will have potentially the largest impact upon European integration only €9.62bn has been allocated towards this programme. The ETC is comprised of three specific programmes: the interregional co-operation programmes, transnational co-operation programmes, and cross-border co-operation programmes along internal EU borders. Of the three of them, the cross-border cooperation programmes receive the greater resources and play a significant role in promoting regional development across European borders. Nevertheless, still little is known about the mechanisms of successful European Territorial Cooperation especially in the context of new member states. Therefore, this paper seeks to identify and explain the variables that contribute to successful cross-border cooperation. It will do so by focusing on the Polish-Slovak CBC Programmes and provide empirical evidence from the 2000 Phare CBC programme until now, with special emphasis put on the latest 20072013 period. This paper is built around three questions regarding the successful cross-border cooperation: What is 51 a success in the context of cross-border cooperation programme? How can we measure it? How does the local context affect the successful management of funds? The paper will use the concept of multi-level governance to provide a framework through which to analyse the governance structures which underpin the CBC programme. However, as this paper will argue restricting the analysis to structure of governance fails to capture the complexities evident in the ETC. As such, it is important to combine a governance analysis with the theory/model of integrated borderland which acknowledges such variables as: local culture, local political clout, and the socio-economic ties of the border region. Both of these concepts combined create a framework that captures fuller picture of the programmes’ relations, interdependencies and factors all of which impact the cross-border cooperation and must be considered in order to provide a full insight into the reasons why these programmes can claim to be successful or not. The paper will present the preliminary findings of on-going research and policy implications for future programming period. It reveals that various levels of governance differently understand the meaning of ‘successful cooperation’. Important element of the ETC for European Commission is the added value for the European integration, while national governments like to see more spectacular effects and effective cross-border cooperation, thus pressure on more effective quantitative evaluations and improved measures showing progress and purposefulness of this kind of programmes. However, European objectives translated onto national, regional and local levels begin to be multidirectional, thus hard to capture by standard measures. Initial findings show that visions of real purpose of CBC differ significantly from European through national and regional/local level which result in i.e. only formal adoption of partnership principle, lack of sufficient communication between various levels of governments, ad hoc partnerships and domination of certain actors at particular stages of programmes’ design and implementation. Whilst my research is based on a specific case study of one border region, the findings improve a framework which can help to assess the ETC in other EU border regions. THE EVALUATION OF THE IMPACT OF CONSTRUCTION OF MOTORWAYS AND EXPRESSWAYS IN POLAND IN THE YEARS 2004-2015 ON ACCESSIBILITY AND COHESION Piotr Rosik, Marcin Stępniak and Tomasz Komornicki, Polish Academy of Sciences, POLAND A modern network of collision-free roads is a feature characteristic of developed countries. The process of balancing the distribution of high quality transport infrastructure can lead to greater territorial cohesion at different spatial levels. The improvement in accessibility came to be seen as an increasingly important criterion in evaluation and it is inseparably supplemented by the treating of an improvement in cohesion as a prerequisite for a change of policy in the next financial perspective. Thanks to the possibility of using EU funds under two programming periods: 2004-2006 and 2007-2013, development of motorways and expressways gained particular momentum in Poland, resulting in four-fold increase in higher-class roads. When a decade elapsed after commencing first investment projects financed with the support of the Cohesion Fund or under Sectoral Operational Programme Transport (SOPT) in 2004-2006, as well as later under Operational Programme Infrastructure and Environment in the years 2007-2013, an attempt was made to evaluate the effects of a decade of efforts to create a network of motorways and expressways with the assistance of EU funding in the context of socio-economic and territorial development of Poland including the impact of ‘big push’ to roads on accessibility and territorial cohesion. We propose ex-post evaluation of changes in the road potential accessibility of Polish municipalities as a method for Cohesion policy evaluation. We provide an overview of the methodology of the potential accessibility indicator with particular emphasis on two accessibility dimensions: the spatial scale and the variation of the distance decay function. The road potential accessibility indicator (RPAI) used in the analysis is implemented in the context of national (travel destinations within Poland) and international accessibility (destinations throughout Europe). 52 The net effect of investments co-financed from EU funds on changes to the national accessibility in 2004-2013 was presented. Relative and absolute changes in accessibility within voivodeships were illustrated with a graph. Furthermore, authors attempted to evaluate the impact of EU investment on Poland’s territorial cohesion, using an indicator of road territorial cohesion. The impact on territorial cohesion is measured using the Potential Accessibility Dispersion (PAD) index, which takes into account the standard deviation of the potential accessibility values across municipalities, using the population as the weighting variable. This was followed by a simulation of changes in national and international accessibility as a result of eight investments within selected case studies. Conclusions drawn from experience and empirical knowledge gained in the years 2004-2013 are of key importance for relevant presentation of recommendations. Also, they are important for the most efficient implementation of EU funds in the subsequent programming period, i.e. in the years 2014-2020. The evolution of national transport policy in the years of 2004-2014 may be treated as a good prognostic sign for future strategic decisions. Nevertheless, greater emphasis is needed on policy consistency in the next programming period to overcome the obstacles to making infrastructure development more cohesion-oriented including the construction of the comprehensive TEN-T connections or secondary networks, particularly in the peripheral regions. WHY ECONOMIC IMBALANCES MATTER FOR REGIONAL DEVELOPMENT Ángel Catalina Rubianes, European Commission, DG Regional Policy, BELGIUM The suspension of the trend towards convergence observed until the onset of the economic crisis owes mostly to the dramatic impact of the crisis in the South of the EU. Despite being among the main historical beneficiaries of the European cohesion policy, five Member States (Cyprus, Greece, Spain, Italy and Portugal) have lost more than one decade of economic and social convergence. The paper will show that this group is characterised by the accumulation of large macroeconomic imbalances in the period before the crisis compared to the rest of the EU; the growing accumulation of public and private debt, the concetration of the economic activity in low value-added sectors and the gradual loss of competitiveness vis-àvis their main competitors made them more vulnerable to the impact of the economic crisis than the rest of the EU. Moreover, economic recovery will depend to a significant extent on overcoming these imbalances because they are major bottleneck for investment and export performance, which should be the main engines of growth in this countries. After the national setting-up of the problem, which will be carried out by comparing different groups of countries in terms of macroeconomic imbalances, the analysis will go down to the regional level to analyse regional trends in Southern EU in a number of indicators critical for sustainable economic growth such as export performance, capital stock, investment in the regional economy or the ratio between labour costs and productivity. It will show that despite the bleak national performance some regions of the South of the EU were relatively well endowed and have been more resilient to the impact of the crisis. The conclusion that the paper will defend is that understanding the composition of growth is critical to determine whether the reduction of disparities is sustainable over time. The process of convergence is not sustainable if it builds on excessive debt and access to credit, growing unit labour costs, disproportionate imports or rapid growth of some non-tradable sectors. In other words, the nature of economic growth matters as much as economic growth itself. A complete analysis of disparities between Member States and regions must pay attention to macroeconomic imbalances and to the differences observed between Member States and regions because of their high correlation with economic growth and unemployment over the medium-term. On the basis of the analysis, the paper will end with a number of open conclusions and questions regarding the relationship between regional development policies (in particular, European cohesion policy) and macroeconomic imbalances. 53 INTEGRATED SUSTAINABLE DEVELOPMENT IN THE HAND OF LOCAL AND REGIONAL GOVERNMENTS: THE USE OF INTEGRATED TERRITORIAL INVESTMENTS IN COHESION POLICY Marlene Simeon, Council of European Municipalities and Regions (CEMR), BELGIUM The Council of European Municipalities and Regions (CEMR) is the broadest organisation of local and regional authorities in Europe. Its members are 57 national associations of municipalities and regions from 41 European countries. Together these associations represent some 150 000 local and regional authorities. Together with its members, CEMR carried out a study to take stock of the use of Integrated Territorial Investments (ITI) by Member States and Managing Authorities. The evidence presented in the study shows that 15 Member States out of the 22 covered may use the ITI as an instrument to address territorial challenges. This is the case in Finland for instance, where there will be one ITI covering the six largest cities (which represent about 30% of inhabitants) to enhance and to improve the use, the quality and the access to information and communication technologies supporting city regeneration; one Regional Council will be nominated as an intermediate body to act as managing authority. The study reveals that some countries will use the integrated concept part of ITI but will not implement it with this instrument as such. In fact, several difficulties have been highlighted by our members as the main obstacles to properly use this territorial development instrument: the late national decision for using the ITI instrument or the lack of clear vision on what an ITI should be and how to use the multi-fund approach. The Commission, Member States and the European Parliament should continue to further encourage the use of this place-based instrument as it may be a very powerful instruments for developing innovative integrated urban and non-urban development strategies. The involvement of local governments from the beginning in the conceptualisation phase is key for the success and ownership of the integrated territorial strategy that will be implemented at the local level. The aim of such a study was to provide the EU institutions and Member states with information on the state-ofplay of the implementation of the new Cohesion policy in this programming period. DEVELOPING REGIONAL INFRASTRUCTURE IN THE BALTIC REGION Jurijs Spiridonovs, University of Latvia, LATVIA With total financial resources of €347 billion for the 2007-2013 planning period and the fact that overall, the reformed cohesion policy the period of 2014-2020 will make available up to EUR 351,8 billion to invest in Europe's regions, cities and the real economy, European Cohesion policy is the important topic of research for many. Present planning period follows previous programming periods, which are described as successful in making difference to standards of living across European Union (European Commission, 2007), not very effective (de la Fuente, 2003) and failed to deliver a satisfactory growth performance (Sapir et al., 2004). Some researchers note that no evidence is found that the policies adopted are the most appropriate (Boldrin, Canova, 2001) and the Cohesion Funds should be terminated with the end of the previous spending cycle (2006) (Boldrin, Canova, 2003). Early empirical work by Aschauer (1989) and Munnell (1990) identified the significant impact that public infrastructure has on economic growth. The public sector has gradually lost influence in the productive activity of most developed economies since 1960. Although total public outlays have represented meaningful shares of GDP during the last four decades, public investment-to output ratios have generally declined over the same period. By 2000, public investment represented 3.7% of total real GDP in the OECD and 3.1% in the U.S. These figures fall well below the optimal public investment-to-output ratios predicted by most recent studies under a standard calibration (Marrero 2008). 54 Regional development of any region hugely relies on the infrastructure available for ensuring economic development. The Baltic region is a particular example of substantial development of regional infrastructure by attracting significant financial resources also from EU funds and programmes. Since the raising awareness on environmental topics and the fact that most of the European states (particularly in EU) as one of the funding priorities mark environmental issues as part of sustainable development strategy, one of the specific issues considered is the impact of the Cohesion policy on developing the regional infrastructure in the field of environment. Being defined as an EU wide investment priority the sector of environmental infrastructure frequently faces the issue of efficiency. This issue largely arises from the lack of theoretical and practical concepts on how the evaluation techniques could achieve rigorous estimations of the investment impact on the state of environment or other processes. Present paper discusses different aspects of policy’s evaluation with particular accent on environmental infrastructure (in this paper particularly in water & wastewater management: construction of iron removal plants, waste water treatment plants, networks). Additionally this paper includes discussion on other aspects of development of regional infrastructure such as energy infrastructure, waste management infrastructure and transport systems. COHESION FUNDS AND YOUTH EMPLOYMENT IN LATVIA Olga Starineca, University of Latvia, LATVIA To stimulate economic growth governments should to recall the relationship between unemployment, money and prices defined and described by John Maynard Keynes almost a century ago. Employment stimulation sometimes not that easy implemented activity, however a topical one in many European countries. Latvian unemployment rates are decreasing after the economic crises in 2009, however they are not satisfactory, e.g. seasonally adjusted unemployment rate in August 2014 was 10.8%, youth (15-25 years) unemployment rate in June 2014 was 21.8% (Eurostat, 2014). One of the Cohesion policy goals presumes promotion of employment. In September 2014 Latvian government supported the European Union funds for 2014 to 2020 planning period, the operational program “Growth and Jobs” that mark the Cohesion policy funds priority directions, goals and deliverables. “Agreement was also reached on the allocation of funding for social inclusion allocating money to reduce unemployment; for youth work experience gaining, and for job places creation” (LETA, 2014). In frames of Cohesion Policy 2014-2020 one of the key priorities is support for small and medium-sized enterprises (SME). There were registered 348120 of SMEs and microenterprises in Latvia in 2014 (Uzņēmumu registrs, 2014). From the period of time from 2007 till 2013 there were a lot of success stories and good achievements in field of entrepreneurship development especially among youth. Youth entrepreneurial initiative is supported by several programs, business incubators at Latvian high schools and subsidised in frame of an ESF partnership programme’s part called ‘New Start’. Sometimes SME and microenterprise are called as Latvian ‘economy driver’ (Euronews, 2014). Entrepreneurship development has a positive impact on many areas, e.g., it stimulates new job creation accordingly leads to the higher employment level. Young people become entrepreneurs and employ other specialists. ‘Introduced in Latvia in 2009, the New Start programme has already enabled Latvian entrepreneurs to create 700 new businesses and 1300 new jobs’ (European Commission, 2014). EU will invest € 29 million for the Youth Employment Initiative in Latvia from 2014 till 2020 as one of the main investment priorities for Latvia is a high employment rate in inclusive society for this period. (European Commission, 2014) There are other investment priorities that are connected to each other; however, they not always focused on some other context issues. A major part of young enterprises that are established by young people are the service sector business. European Social Funding helped State Employment Agency (SEA) to train unemployed and job seekers in Latvia also according to the labour market requirements (State Employment Agency, 2005.-2014). However, SEA can help only on that stage when it is hard to improve the situation fundamentally. In case of youth unemployment, it would be easier to help young specialists, if they were demanded on the labour market, got according background. Investment and Development Agency of Latvia (IDAL) 55 outlines that there is a lack of young specialists in such areas as metalworking, mechanical engineering and electronics, transport and logistics, life sciences, health care, green technologies, treatment of foods, etc. (IDAL, 2014). It could simply mean that funding is allocated to the solving of problems that are laying on the surface. Latvian society is aging (Central Statistical Bureau, 2014) and many areas needs new specialists to replace aging ones. Therefore allocation of Cohesion Funds needs to be more precise and more focused on depth of economy issues. Some interrelated spheres are already mentioned as priorities of investments in people, i.e. employment, mobility, education, social inclusion, public administration (European Commission, 2014). The research gathers and summarizes good examples of the Cohesion funds usage for youth unemployment reduction in Latvia for years 2009-2014 outlining possible risks of the tendencies. The period of time was chosen to evaluate the recovery in the field after the economic crises in Latvia in 2009. RE-INVERTING POLICIES AND PRACTICIES IN REGIONAL STRATEGY Theodora Stathoulia, Hellenic Parliament/Parliamentary Political Group, GREECE EU's policy for the new financial period 2014-2020, is based on the theoretical framework of the strong convergence hypothesis that providing state of the conditions for the free market and embedding technology will lead to the creation of a competitive environment, to reduce intraregional disparities and maximizing the results of Community funding regardless of the internal conditions, income levels, and the inherent factors of absorption and use of new technologies. For the period 1995-2001, there was an assumption that the positive performance in areas benefiting from the Structural Funds for the 15 countries of the EU been reflected in the position that if the change in price between the Structural Funds and GDP changed by 1%, the growth in GDP is higher by 0.32%. In this issue of convergence, the state's role is limited to creating conditions to remove the existing sectoral distortions, enhance extroverted competitive sector of the economy, to reduce the technological barriers and to create competitive conditions for the regions. Contrary to the hitherto basic assumption of convergence, there is a clear shift from new dynamic intraregional systems to create local collaborative schemes (clusters) with strong technology and innovation oriented. This new "economic geography" is -among others - in line with the theory that correlates the stability of the common monetary policy by more specialized and diversified industrial structure and production regions. Therefore, economies that require less intervention in the commercial sector will be more resistant to any asymmetric shock. Also, over time the logical structure of the regional policy of the EU has been supported by theories that emphasize the importance of "geography" of funding. But the policy of "differentiated regional and sectoral approach" cannot not construct the axis enhancement and significant strengthening of a region to be significant variation in the overall factors that will make funding adequate tool for shaping a significant advantage to it. Particularly, in terms of technology and infrastructure, the horizontal multi-faceted approach could function as a dynamic element in the overall configuration of regional and local advantage as far as it is linked to very specific technological and innovation means of growth. Finally, to connect the case of technology with the theory of "smart specialization", we should underline that creates a strong basis for the differential regions, since a region with faster performance and diffusion of technological infrastructure and openness to new investments prevent the convergence of other regions, since it will gather new productive resources at the expense of others. In this paper, I argue that, in the EU today due to the deep crisis it is imperative to reconstruct the theoretical and the methodological arsenal of regional development by re-inverting policies and practicies in regional strategy. The model of convergence should be reserved for horizontal collaborative patterns rather than labor intensive methods, excellence schemes and isolated production shapes. Social, historical, economic and geographical factors should be united under the concept of regional development. The 'smart specialization' should relate to the condition of the combination of all these factors and not to highlight one. 56 ADMINISTRATIVE CAPACITY VS. GOVERNANCE – HOW TO IMPROVE THE MANAGEMENT AND IMPLEMENTATION ENVIRONMENT FOR EUROPEAN STRUCTURAL AND INVESTMENT FUNDS? EVIDENCE FROM NEW MEMBER STATES Neculai-Cristian Surubaru, Loughborough University, UK How to strengthen the capacity of central and local level actors in managing European Union (EU) funding? How to ensure that capacity building processes are more effective? These are questions that both academics and policymakers have with regard to the governance of EU cohesion policy and EU funds. Administrative capacity has been pointed to as a key feature of a successful management and implementation of European funds. Administrative capacity is a key concept for understanding the implementation of Structural and Cohesion Funds. Its theoretical development may enable policy-makers and practitioners to further understand why some managing institutions or beneficiaries have been more successful than others in implementing EU funded projects. With all this, the term possesses various, at times divergent interpretations. In addition, it has become clearer in recent years that administrative capacity cannot fully explain gaps and difficulties in the management of the funds. As pointed by the 6th Cohesion report the role and the quality of governance in each member states plays an important role in ensuring sound delivery systems for the policy. Yet, the issue of governance is very much ill defined in relation to administrative capacity. In addition, we can also speak of different informal practices used in the governance of the funds. This paper argues that we need to understand much more the role of domestic political factors and that of informal practices as to determine how they can the management of EU Cohesion policy. Opening this Pandora’s box is necessary in order to take bold steps for improving the effectiveness of the policy during 2014-2020. First, the paper draws on extensive empirical evidence collected in Bulgaria and Romania, for 2007-2013. It finds that, in light of the redistributive nature of Cohesion policy and the politically centralized management of the funds, the process of absorption has become a highly politicized, attracting considerable attention from central and local level politicians. Second, based on this evidence it formulates different hypotheses that may be empirically verified in other Central and Eastern, as well as in Southern European member states. Third, in addition to this, the paper sketches several concrete recommendations for policy-makers on how to enforce administrative capacity in order to mitigate the influence of domestic political factors. The paper concludes by inquiring on the relationship between the formal and informal governance of the funds and how this may affect the impact of the policy. BALANCING THE DEMANDS OF LOCALISM AND COMPLIANCE: SETTING UP THE NEW ERDF PROGRAMME IN ENGLAND Carole Sweetenham, Department of Communities & Local Government, UK England has a long history of setting up and running ERDF programmes. The new 2014-20 programme has been set up with several aims: maximum local involvement in how the Fund is used, a tight focus on compliance and performance, and closer working with the European Social Fund. These perspectives are informed by what we have learnt from previous rounds of ERDF about what projects have the greatest impact on local growth and are most likely to deliver. The paper will describe how we have drawn on previous programmes to inform the design of the new programme, what we hope to achieve and some initial thoughts about how we will monitor and evaluate. It also reflects on some of the wider lessons for Cohesion policy in 2014-20. 57 THE ADMINISTRATIVE CAPACITY OF THE SUB-NATIONAL LEVEL IN IMPLEMENTING THE COHESION POLICY IN ROMANIA Septimiu-Rares Szabo, Bucharest University of Economic Studies, ROMANIA In 2006, Romania designed a very centralistic system for implementing the Cohesion Policy in the 2007-2014 framework with almost no delegation to the sub-national level. Managing Authorities were created only within ministries which still follow utterly bureaucratic procedures and have relied almost exclusively on civil servants which are difficult to hold accountable for their performance on the job. Unlike some other countries from Central and Eastern Europe, Romania decided not to create specific programmes for each of the eight NUTS 2 regions within the country. Instead, seven national programmes were designed, managed directly by the central government. Nevertheless, in the setup of the regional programme some responsibilities have been delegated to eight Regional Development Agencies. These entities, acting as Intermediate Bodies, were created as non-governmental organisations with public utility status localised in each NUTS 2 region. While financially dependent on the Managing Authority, these institutions were created outside the bureaucratic apparatus and therefore allowed to apply some private sector management practices, especially regarding recruitment and result-based management approaches. As of 2013, these agencies also act as Intermediate Bodies for the Economic Competitiveness Programme, a role previously held by a public institution which did not manage to deliver the expected results. All the other Intermediate Bodies set up in the NUTS 2 regions are directly subordinated or part of the ministries acting as Managing Authorities and therefore obliged to follow bureaucratic public sector rules and procedures. While Romania has, and always had, the lowest absorption rate in EU27 at almost 40% at the end of 2014, the (national) regional programme managed to pass 50% and has always been one step ahead of the others in terms of implementation. In this regard, there have been several debates about its perceived success versus the inertia observed in the other major programmes. While some implied that the programme was managed by a politically powerful ministry which, unlike some of the others, was able to pull in the resources needed, others suggested that the different administrative setup involving the Regional Development Agencies made most of the difference. The current paper tries to assess the capacity and the impact the sub-national level has had in implementing the Cohesion Policy in Romania. It also presents some of the lessons learnt as regards the administrative capacity to implement the Cohesion Policy of the whole Romanian apparatus. Finally it looks into the implications of these results for the 2014-2020 framework in light of the recently adopted Partnership Agreement between Romania and the European Commission. The research suggests that the establishment of the Regional Development Agencies contributed significantly to the implementation of the Cohesion Policy in Romania and can be considered a best-practice. On the other hand, the impact of the other sub-national entities was significantly lower. The research also suggests that Romania based its implementation system on a one-fits-all approach without tailoring the programmes based on regional needs. On the same time, the central level seemed reluctant to delegate many responsibilities to the sub-national levels. Thus, the paper suggests that among many other factors, the over-centralisation of the system hampered the implementation of the Cohesion Policy. As regards the 2014-2020 framework, Romania proposed a system architecture which seems to be just as centralised as before. Thus, an enhanced involvement of the Regional Development Agencies (or the creation of similar entities) in the implementation could be more than beneficial. GOVERNING SOFT SPACES WITH FUZZY BOUNDARIES: REGIONAL POLARIZATION, DEMOCRATIC ACCOUNTABILITY, AND STRATEGIC-SELECTIVITY IN EU COHESION POLICY Stefan Telle, Slovak Technical University, SLOVAKIA Particularly since the 2004 enlargement of the European Union (EU), widening regional disparities across the expanding EU territory have received heightened attention in Cohesion Policy research (Adams, Alden, & Harris, 2006). It has been argued that growing disparities have become a “striking feature” of the settlement system, 58 especially in Central and Eastern Europe (Lang, 2011, 2012). This raises the question of how successful EU Cohesion Policy is in “reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions” (TFEU, Art. 174). Indeed, aspirations of becoming the most competitive knowledgebased economy in the world (Lisbon Agenda) through smart, inclusive and sustainable growth (EU 2020) seem to challenge the Social Europe paradigm as the core rationale of Cohesion Policy. Thus, it seems to be an appropriate moment to ask what the role of EU Cohesion Policy is in the (re-)production of centrality and peripherality in Europe. To this end, the paper proposes to understand soft spaces with fuzzy boundaries (Allmendinger & Haughton, 2009; Haughton, Allmendinger, Counsell, & Vigar, 2010) as policy delivery vehicles that mediate the tensions between the inclusiveness (Social Europe) and the growth (Competitive Europe) objectives on the discursive level. However, can these “spaces of neoliberal experimentation” (Haughton et al., 2013) achieve to resolve the same contradiction on the empirical level? The aim of this the paper is to indicate the ways in which an overly optimistic logic of European integration by stealth (Majone, 2005) is producing inconsistent policy paradigms or hegemonic projects (Jessop, 2002) which are imposing a specific strategic-spatial selectivity (Brenner, 2004) on Cohesion Policy. In other words, the concentration of funds on certain thematic priorities is expected to lead to a concentration of funds in particular spaces. The decision to make Cohesion Policy a key delivery mechanism of the Europe 2020 strategy, it is argued, indicates a tendency to refocus Cohesion Policy’s rationale towards the production of spaces of global competitiveness. In this sense, the identification of urban regions as the “engines of growth” by the European Commission, is in accordance with global city scholars, who perceive urban regions as the new primary units for capital accumulation on a global scale. Viewed from the perspective of Stein Rokkan’s (1999) theory of boundary building and political structuring, soft spaces with fuzzy boundaries can be understood as being structured by a membership boundary and a territorial boundary. The relative closedness/fluidity of these boundaries conditions the structuring of the soft space. Therefore, EU enlargement can be expected to have a discernible structuring effect on the EU governance architecture in general, and on EU Cohesion Policy in particular. The paper seeks to tease out the ways in which successive enlargements have impacted on the rationale of EU Cohesion Policy. To this end, the paper analyses official policy documents and proposes that a paradigmatic change from a “Social Europe” to “Competitive Europe” discourse has occurred. In a subsequent step, a range of soft spaces with fuzzy boundaries will be analysed to shed light on the ways in which the discursive change is translated into policy practice and, thus, the (re-)production of centrality and peripherality. The central idea is that Cohesion Policy can be understood as a form of meta-governance that destabilizes regional development practices at the national level by injecting soft spaces with fuzzy boundaries, whose logic is geared toward the functioning of the single market. Cohesion Policy as meta-governance (Jessop 2004), can be understood as a calibrating mechanism in the management of complexity, plurality, and the tangled hierarchies of existing modes of governance. Likewise, soft spaces with fuzzy boundaries are understood as meta-governance vehicles that equip the “multiplying levels, arenas and regimes of politics, policy making, and policy implementation” (ibis. P. 73) with a certain operational unity. The overall intention of the paper is to show how the alignment of EU Cohesion Policy with the objectives of competitiveness and economic growth (as expressed in the Lisbon Agenda and Europe 2020 Strategy) challenges the treaty rationale of reducing disparities between regions (TFEU, Art. 174) and translates into the simultaneous (re-)production of globally competitive spaces and lagging peripheries. In this sense, it is argued that the “added value” of Cohesion Policy is increasingly reduced to economic growth with the social equality dimension being marginalized. INTEGRATED TERRITORIAL INVESTMENT – A MISSED OPPORTUNITY? Ivan Tosics, Metropolitan Research Institute, ROMAINA The increase of interest towards urban areas in the EU started around 1998, with the first Urban Forum in Vienna, where also the debates about an “EU Urban Agenda” were launched. These debates are still on going as it was 59 shown in the “CITIES: Cities of Tomorrow - Investing in Europe” conference in February 2014. During the 16 years which have passed between the two conferences there were many ups and downs and even U-turns in the EU approach to urban development. The paper aims to explore one of the last ‘battles’ in this slow policy development: the raising and partial failure of the locally lead integrated approach to sustainable urban development. The Commission suggested in the early 2010s Integrated Territorial Investments (ITI), as a new tool to manage minimum 5% of ERDF as earmarked money for this purpose. ITI was promising from many aspects: to put strategic thinking ahead of project based actions, to support functional area approaches both on neighbourhood and on city-region level as opposed to the administrative territories, to push for integration between policy fields, to acknowledge the local/metropolitan level as direct client in Structural Funds policy (delegation). No wonder that many cities became excited and raised high expectations towards the post-2014 Structural Funds. However, the brave proposal of the European Commission for the compulsory application of the ITI has been watered down substantially by the Member States and the large expectations towards integrated and strategic planning, supported by joint funding from the most important Structural Funds, turned into frustration on the side of the cities. The ITI method is very complicated and is aiming for multi-fund financing when the Commission could not achieve better cooperation between ERDF and ESF. The delegation to the city level was a wish of the EC and EP but the national and regional level was completely against it. The integrated approach would need strong regulation but the Commission is in serious delay with documents helping to operationalize ITI. Although full information about the results of the bargaining between the Commission and the member states (Partnership Agreements) is still not readily available, it is more and more obvious that the ambitious aim to base at least a small part of the future EU Cohesion Policy on multi-fund supported integrated development planning (potentially on functional urban area level) remained an exception instead of becoming the mainstream across EU countries. Some of the new Member States show promising initiatives to apply the new tools, others however, especially those where ERDF money is more limited, gave up the battle: in their evaluation they could achieve too little compared to the enormous complexity required by the regulators. The paper attempts to address the following research questions: • which are the forerunner countries and cities and which are those lagging behind in the application of the tools for integrated urban development? • what are the characteristics of the success cases and how different are the others, which can be considered as missed opportunities from the perspective of delegated integrated urban development? • which institutional levels (cities, regions, national states, the EU Commission, Parliament, Council) are responsible to what extent to the relatively meagre outcome? It is the author’s hope that such critical analysis of policy processes can contribute to the thinking on integrated urban development – and on the European Urban Agenda in a broader sense. THE ABSORPTION OF STRUCTURAL AND INVESTMENT FUNDS AND YOUTH UNEMPLOYMENT: AN EMPIRICAL TEST Jale Tosun, Heidelberg University, GERMANY Carsten Jensen, Aarhus University, DENMARK Stefan Speckesser, Institute of Employment Studies, UK Jacqueline O'Reilly, University of Brighton, UK This article addresses the role of European Regional Development Fund (ERDF) and European Social Fund (ESF) in addressing youth unemployment. The ERDF focuses its investments in the areas of innovation and research, digital agenda, support for small and medium-sized enterprises, and the low-carbon economy. The ESF addresses four key areas: increasing 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 (see 60 Mendez et al. 2014). In theoretical terms, the paper concentrates on the individual member states’ absorption behaviour concerning ERDF and ESF (see Bachtler et al. 2014; Tosun 2014) and the impact of the absorption performance on changes in youth unemployment level. Since the ESF is tailored more directly towards enhancing employment, we expect that the ESF absorption performance is more relevant for explaining changes in youth unemployment levels than ERDF absorption. Empirically, the analysis concentrates absorption behaviour of the EU member states in two programming periods: 2000-2006 and 2007-2013. The analysis of the time period allows for assessing more specifically whether ERDF and ESF absorption affected changes in youth unemployment during the economic and financial crisis (Choudhry et al. 2012). The relationship between fund absorption and youth unemployment levels is tested by econometric methods while controlling for a whole battery of factors including education and training, labour market policies, labour market institutions, and a range of socio-economic factors (O’Higgins 2010). The level of analysis is country-years. The data is taken from two projects funded under FP7 on youth unemployment: CUPESSE (Cultural Pathways to Economic Self-Sufficiency and Entrepreneurship) and STYLE (Strategic Transitions of Youth Labour in Europe). The innovativeness of the theoretical argument represents the main contribution of this paper to the literature. The second merit concerns the merging of different strands of literature, including regional studies, EU studies, comparative public policy, and labour market economics. In terms of practical implications, the paper will illuminate how coherence policy can promote youth employment. TOWARDS A EUROPE OF THE LOCALITIES? INTEGRATED PLACE-BASED APPROACHES IN COHESION POLICY IN 2014-20 AND BEYOND Arno van der Zwet and Carlos Mendez, University of Strathclyde, UK The Cohesion policy regulations for the 2014-20 programme period provide a new framework for supporting integrated territorial development approaches in the European Structural and Investment Funds (ESIF). In the context of European Regional Development Fund, some of these approaches are obligatory (i.e. ring-fenced budgets for urban development) whereas others are voluntary (e.g. Integrated Territorial Investments and Community-led Local Development). These approaches are part of a longer term shift and reflect increased awareness of place-based theory in policy aspirations, recognising that an integrated mix of policy interventions is needed to fully exploit development potential of territories. Besides finding more efficient and targeted ways to implement territorial development policies, such approaches reflect the new commitment to territorial cohesion in the EU Treaty and ambitions to give local actors greater influence and decision-making powers in local economic development plans. Drawing on cross-national evidence from across the EU, this paper examines the extent to which these place-based approaches are being implemented effectively, variations in approaches across EU countries and the underlying causal factors (including path dependence, bureaucratic politics, administrative capacity and regulatory tensions). More generally, the paper examines the potential of the new instruments to contribute to territorial development in the post-crisis period and to a re-configuration of territorial governance in Europe by increasing the role of local authorities in Cohesion policy. MACROECONOMIC CONDITIONALITY: IN SEARCH OF A BALANCED APPROACH Stijn Verhelst, Egmont Royal Institute for International Relations, BELGIUM Due to prior large opposition to linking cohesion policy and EU economic governance, macroeconomic conditionality got off to a rocky start in the 2014-2020 multi-annual framework. This paper aims to evaluate the expanded macroeconomic conditionality rules. Based on an analysis of the functioning and potential impact of macroeconomic conditionality, the paper finds that a more balanced approach can be advantageous for both cohesion policy and EU economic governance. 61 SMART WORK FOR SMART, SUSTAINABLE AND INCLUSIVE GROWTH IN REGIONS Alise Vitola, Iveta Baltina and Ilze Judrupa, Riga Technical University, LATVIA Non-metropolitan territories face significant challenges in a globalised world as the number of jobs in traditional rural sectors is decreasing and regional and urban disparities – increasing. At the same time, information and communication technologies as well as the changes in professional duties allow medium and small-sized towns, as well as the rural community to participate in the knowledge economy distantly. Thus telework, defined as a work form when the duties are being performed using ICT outside the premises of the employer, may serve as an instrument to achieve Cohesion Policy and Europe2020 regional development goals. A number of 2007-2013 regional development programmes (e.g. in United Kingdom, the Netherlands, Estonia), supported by the EU Cohesion policy, shows that one of the tools for the facilitation of smart, sustainable and inclusive growth in the non-metropolitan regions is the development of smart work centres (SWC), also called telework centres, enterprise hubs or co-working spaces. SWCs are special premises for distant working employees or companies considerably near the person’s living place. The basic facilities offered by the SWCs are a computer with appropriate programs, office equipment and ICT. SWCs offer a stimulating professional environment thus raising the productivity and satisfaction of its clients, as well as facilitating synergies among its users. Such centres bring benefits to employees, employers and local communities. Employees get the chance to live in a more peaceful, natural environment, decrease their commuting time, achieve a better work-life balance etc. Employers on the other hand can decrease personnel and operating costs and recruit better motivated employees. The local municipalities and communities can achieve an increased perception of the quality of life, advance economic activity and consequently local budget income. Based on the international experience, we propose policy recommendations in support of niche regional economic development areas in order to guide policy-makers with practical observations and evidence-based approaches on how to better exploit smart ICT-supported working forms. These recommendations could help to design new Cohesion policy instruments in Latvia and other EU countries to attract qualified workforce to less populated regions thus facilitating smart, sustainable and inclusive growth in the EU regions. Also a typology of smart work centres has been developed based on a survey of 10 SWCs across the Europe. The typology takes into account such criteria as the accessibility, user groups, opportunities to co-operate, in-house business support, infrastructure and available community services and distinguishes such types of SWCs: Economic Development SWC, Enterprise SWC, Socio-economic hub SWC and Distance Working SWC. Moreover, a socioeconomic impact of the SWCs has been evaluated based on a questionnaire distributed in 10 EU countries. Results of the evaluation can be used for evaluation of EU funds programmes and feasibility studies of EU funds projects. This work has been developed within the INTERREG IVC project Micropol - Smart Work Centres in NonMetropolitan Areas supported by the European Regional Development Fund. WHERE DID THE WELL-BEING GO IN ESIF? Benedict Wauters, ESF Agency Flanders, BELGIUM The paper will explore what could be the meaning of “well-being” of EU citizens in an ESIF context. Indeed, in 2009, the independent report “An Agenda for a Reformed Cohesion Policy” delivered at the request of Commissioner for Regional Policy, by former Italian Minister of Finance Fabrizio Barca, amongst other experts, indicated “A remarkable lack of political and policy debate on results in terms of the well-being of people, at both local and EU level, most of the attention being focused on financial absorption and irregularities.” 62 The paper will explore to what extent the response of the EU regulation for the new ESIF programming period towards this challenge, the so-called “results” orientation, consisting of targets on outputs, counterfactual impact evaluation and a performance reserve can be expected to contribute to citizen well-being. Next, the paper will provide an overview of approaches that hold great potential for reorienting ESIF towards increasing well-being, notably Jocelyne Bourgeon’s New Synthesis approach as well as Vanguards systems thinking and finally Human Centered Design approaches such as used by MINDLAB in Denmark. Finally, the paper will make recommendations as to how ESIF authorities can and should rethink their own systems within the constraints of the regulations. POLICY IMPLICATIONS FOR OVERCOMING BARRIERS TO CROSS BORDER KNOWLEDGE TRANSFER Adi Weidenfeld, Middlesex University, UK Innovation in many smaller and peripheral regions in the EU may build their competitive advantage by promoting innovation in the service sector. Most cross border regions, particularly in rural areas have not become more innovative than other regions. This is quite surprising given the on-going enormous EU financial support they receive to enhance competitiveness and innovation and their comparative advantage with respect to intercultural and international mobilities, which may stimulate knowledge transfer and diffusion of innovations amongst actors. Recent attempts to respond to the missed opportunities in cross border regional innovation policies are included in the concept of 'smart specialization' strategies. One of them refers to their unexploited potential and the lack of performance-driven policies. This strategy has a practical meaning in the 2014-2020 programming period, which includes the proposed programme for the competitiveness of enterprises and internationalisation of SMEs. The paper addresses the barriers to knowledge exchange between customers and managers in the service industries in cross border regions. The study identified cultural and cognitive differences between Swedish and Finnish customers and managers in the Eurocity of TornioHaparanda and in the cross border cities of Vasa (Finland) and Umea (Sweden). It provides several conclusions and policy implications for encouraging cross border knowledge transfer and innovation in general and in the intra- European cross border regional context in particular. First, addressing differences and similarities in values, conservatism towards new ideas, mentality, knowledge and use of technology, language, tendency to focus on specific details, ways of solving problems and historical trajectories should be considered in future policy actions and EU funded projects. Second, moderate levels of cultural and cognitive proximity are required for facilitating a successful interregional knowledge transfer and joint innovative processes between actors. Third, lower or higher levels of proximity are not necessarily advantageous or disadvantageous for this process and they both may involve barriers for cross border innovation. Fourth, the paper suggests that personnel in the service industries should be trained to improve cross-cultural communications for the purpose of cross border learning, new product development and design and marketing innovation. It shows that a more fine-grained approach is required to study the impact of cultural and cognitive proximity on knowledge transfers and learning between actors from relatively similar cultures. NEW APPROACHES TO ADDRESSING YOUTH UNEMPLOYMENT: NEW ROLES FOR THE EUROPEAN UNION'S STRUCTURAL AND INVESTMENT FUNDS? Peter Wells, Elizabeth Sanderson and Ian Wilson, Sheffield Hallam University, UK This paper explores the role of the EU funds in addressing youth unemployment. Firstly, it highlights the form post crisis youth unemployment policies may be taking, and not least the role of young people and civil society in this. Secondly, it raises concerns around what may be emergent coordination deficits at a local level, highlighting a risk to future programme delivery. Thirdly, it suggests that the traditional focus of EU funds on extrinsic factors such as qualifications and experience, may need to be extended to a more explicit consideration of intrinsic factors and in particular to wellbeing. 63 This paper presents findings from a large scale evaluation of a €130m seven year programme (called Talent Match) in England which is being funded by the United Kingdom's Big Lottery Fund (the main distributor of Lottery funding in the UK). The programme runs from 2013 to 2020. The programme differs from approaches seen in many Structural Funds and national programmes in that it is administered and delivered by civil society organisations working as part of youth led (18-24 year old) partnerships. The evaluation uses a range of methods including an extensive monitoring system (collecting far more intensive data on beneficiaries that would be the norm). The programme is clearly at an early stage. However, it is already providing rich insights into the effectiveness of different approaches. Three broad points can be made at this stage. The youth-led aspects of the programme have been found to be the most innovative and challenge in many cases delivery agencies to adopt different approaches. In particular such youth involvement has led to the redesign of outreach, mentoring and progression activities in a set of local partnerships. This is seen as a response to traditional failings of delivery models. The challenge here is whether and how EU funds may be used upon to support youth-led approaches, and indeed respond to deficits in the participation of young people in labour markets and broader society. Secondly, the wider effects of the UK government's programme of austerity is that local civil society organisations are adopting very different positions with respect to local government and other public bodies than they would have done before the financial crisis. A concern for EU funds here is that for programme delivery to be successful, funding is required to address these coordination deficits, an area which hitherto may have been a Member State responsibility. Thirdly, we have sought to explore intrinsic factors as determinants of youth unemployment. These have primarily been in the form of established psychological 'wellbeing' measures. What has been striking here have been gaps in wellbeing of the beneficiary groups compared to national averages. Whilst the interventions have tended to yield positive interim outcomes in terms of reported wellbeing, there is some evidence that wellbeing for many within the study group is far more fragile than expected. This raises questions for the role of how EU funds complement what have traditionally been Member State responsibilities, ostensibly through their primary and secondary education systems. FINANCIAL INSTRUMENTS IN 2014-20: LEARNING FROM 2007-13 AND ADAPTING TO THE NEW ENVIRONMENT Fiona Wishlade and Rona Michie, University of Strathclyde, UK The 2007-13 planning period saw a new and significant emphasis on the use of so-called ‘financial instruments’ as measures to implement Cohesion policy. This was justified on the basis that such instruments are sustainable (because funds are recycled to be spent again in the same region), that they generate better quality projects (because funds have to be repaid and commercial expertise can enhance project selection) and that they are a more efficient use of public funds (because private sector monies are leveraged in to supplement public spending). In 2014-20, the emphasis on financial instruments is reinforced: they can be used for any thematic objective and there are incentives for programmes to dedicate an entire priority axis to financial instruments. At the same time, there are important changes to the regulatory framework affecting how financial instruments can be implemented in practice. Against the background of these changes, it is important to ask how much is known about the experience with financial instruments in 2007-13. What lessons have been learned? How far have these been incorporated into the new context? What are the key changes implied by the new rules and to what extent do these constrain or enable the effective use of financial instruments in the new period? 64 SEEING IS BELIEVING? METHODOLOGICAL IMPLICATIONS FROM THE EVALUATION STUDY ON GOOD PRACTICES IN COMMUNICATING THE COHESION POLICY Karolina Wrona, Coffey International, UK In 2013 the Directorate-General for Regional and Urban Policy commissioned a company specialising in evaluation Coffey International - to conduct a study on good practices in EU Regional Policy communication. The main purpose of the study was to develop a fuller understanding of what different stakeholders, in particular Managing Authorities (MAs) of the European Regional Development Fund (ERDF) Operational Programmes, do to communicate about EU regional and cohesion policy, and how effective these activities are. Bearing in mind that Cohesion Policy aims to help to develop cities and regions across the EU, it is of great importance to communicate its achievements to citizens, not least to increase the policy’s legitimacy and accountability. With responsibilities for communication shared between DG REGIO and the Member States, all actors must build on their strengths to fully exploit opportunities for effective communication. Although there is research supporting the notion that Structural Funds’ investment is well perceived by the general public (for a short overview see e.g. Dąbrowski, 2014), at the same time the most recent large scale Eurobarometer study (n= 28,065) suggests that only 34% of EU citizens have heard about EU co-financed projects to improve their local area (Eurobarometer, 2013). This proportion has barely changed since the previous Eurobarometer survey in 2010. This paper addresses two challenges. Firstly, the communication process is more complicated than a simple ‘A sends message to B’ pathway. Communication involves a sender, a message, a recipient and an effect. Messages need to be sent in the right way, at the right time and in the right place in order to be received by the intended target group. Communication theory tells us that communication processes work best when the sender and recipient have similar levels of experience. Where this is not the case, the basic communication process is much more complicated (see e.g. Kotler & Keller, 2011:478). Secondly, although systematic evaluation of programmes and policies at the EU level was introduced much earlier than in many Member States (and as the abundance of evaluation reports on EU programmes and policies testifies that evaluations are being carried out in great quantity), there is limited academic analysis of the evaluation at Commission level as a process, i.e. meta-evaluations of evaluations. As noted by Hoerner & Stephenson (2012), where evaluation is analysed, there is little theorising in terms of the factors that influence how evaluation is carried out, and the patterns that can be observed. Existing literature on the methodological implications of evaluating a particular element within the framework of a specific policy is even scarcer. In addressing these two challenges and research gaps, this paper will present the methodological implications for evaluating communications on EU’s Cohesion Policy. Specifically, those stemming from one of the key tasks of the evaluation: the identification of good practices in the communication approaches, activities and tools of MAs and other key communicators in selected Member States. MUTUAL RELATIONSHIPS BETWEEN THE EU COHESION POLICY AND ECONOMIC GOVERNANCE Aleksandra Zakrzewska, Ministry of Infrastructure and Development, POLAND With the 2014-2020, reform a new way of thinking on cohesion policy is gaining ground. In the current debate the EU cohesion policy is perceived as an important component of the entire system of economic and institutional interrelations determining the potential of the EU to boost growth and employment. The cohesion policy is thought to constitute a substantial source of public growth-oriented investment not only for mitigating the effects of crisis but also to ensure the necessary impetus for long term development. However, in order to be a prosperous and competitive territory the EU needs to manage in parallel three elements – structural 65 reforms, fiscal stability and investments. The main characteristics of the 2014-2020 reform i.e. focus on the EU 2020 Strategy, result orientation, macroeconomic and ex-ante conditionality introduce a firm set of mutual linkages between the EU economic governance and cohesion policy, having potential implications for both of them. The cohesion policy being historically focused on the least developed regions has evolved into an investment policy for all EU Member States accounting for one third of the EU budget. Its substance is however highly conditioned and restricted – the policy shall function in a sound macroeconomic environment and an appropriate strategic and institutional framework as well as focus on the relevant priorities rooted in the European Semester process and reflect the Country Specific Recommendations. This means that the EU cohesion policy has been tied up to serving higher rank priorities and values than only reducing disparities. It is both a chance and a risk for the policy, as it is subjected to bargains each time the multiannual financial framework is being negotiated. We periodically experience the attempts to diminish the role of the cohesion policy by reducing its scope to assist the poorest. For sure this will also be the case for the post 2020 debate and the reformed policy would be equipped with stronger arguments not to be defeated in this battle. There is also a risk ahead of the cohesion policy. With its traditional features limited the policy may be hijacked by the overarching objective to boost the EU economy. Constituting one third of the EU budget the cohesion policy is still only a part of 1 % of the EU GDP and cannot radically change the growth perspectives. Assigning too much responsibility to cohesion policy might turn to be counterproductive. Because the relationship between the cohesion policy and economic governance is twofold the expectations shall lie on both sides. One of possible solutions would be to envisage changing the status of expenditure of cohesion policy national co-financing into “development contributive expenditure” and as such not to include it in public deficit statistics. The reference might be made here to the way the national contributions to the European Stability Mechanism are treated – being an international instrument it does not increase the level of public deficit of particular Member States. Along these lines the proposals have also been made to launch a new European investment instrument to mobilise the demand and thus enable the EU to emerge from recession. The cohesion policy as a crucial EU investment policy shall thus be an important player in the discussions on how to ensure the relevant conditions for long term and sustainable growth in the EU. THE BLIND LEADING THE BLIND? - COHESION POLICY AND MACROECONOMIC MODELLING Janusz Zaleski, Institute of Meteorology and Water Management & Wroclaw Regional Development Agency, POLAND Zbigniew Mogiła, Wroclaw Regional Development Agency, POLAND Different macroeconomic models produce different and sometimes contradictory results for Cohesion policy (CP) impacts and this ambiguity poses two main problems for policy makers and analysts. It creates doubt as to the robustness of model-based impact analysis in a situation where there are effectively no other tools available to create policy counter-factual scenarios. And it suggests that we are still searching for better and more robust models. With respect to modelling tools, two main modelling approaches have emerged. The first, “universalist” modelling, tries to incorporate all extant theoretical knowledge (strict general equilibrium properties, endogenous growth theory, etc.) and avoids regional specifics. The other, “region centric” modelling, uses less imposed theory, pays more attention to how regions actual function, and seeks out more extensive data. In our paper we present results that derive from both of these modelling approaches and point out some of the underlying conflicts that arise in their interpretation. RHOMOLO-based results were included in the Sixth Cohesion Report and is in the “universalist” school. The Polish regional HERMIN system is in the “region centric” school. Both systems have been used to study CP impacts on the 16 Polish NUTS-2 regions and have produced remarkably different conclusions. RHOMOLO asserts that long-term impacts of 2014-2020 Cohesion policy programmes on GDP in the most affluent and capital-abundant Polish (e.g. Dolnosląskie, Wielkopolskie, Śląskie, Małopolskie, Łodzkie) are greater than in the poorer regions of Poland. Analysis using the Polish regional HERMIN system asserts the opposite. This is worrying since theories of regional development suggest that higher investment in 66 infrastructure, human capital and R+D should generate greater supply-side effects in regions with lower capital endowments, other things being equal. Our research objective is to compare and contrast these two approaches to modelling. We show that even a theoretically comprehensive and methodologically consistent modelling framework needs to be backed by deep knowledge of regional specifics. Theory is no substitute for local knowledge. Rather, it is a useful complement. A theoretically beautiful model system can still produce questionable results. We identify some crucial modelling assumptions and illustrate them using the example of Polish and Slovak regions. RHOMOLO, the main model of DG REGIO, represents a universalist, one-size-fits-all approach which neglects many important regional specifics. It sends questionable signals to national and regional policy makers. Our preference is for the “region-centric” approach which combines adequate theoretical underpinnings with deep understanding of local characteristics. We draw general conclusions for the implication of our research for the design and impact analysis of EU Cohesion Policy and propose how the credibility and robustness of model-based analysis might be improved. SOCIAL INCLUSION FUNDED BY EUROPE? THE IMPACT OF THE EUROPEAN SOCIAL FUND ON LOCAL SOCIAL AND EMPLOYMENT POLICIES Katharina Zimmermann, University of Oldenburg, GERMANY During the last decades, scholars in Europeanisation research have intensively studied ‚softer‘ forms of Europeanisation in less regulated fields such as social and employment policies (Lopez-Santana 2009, Heidenreich/Zeitlin 2009). However, recent studies dealing with these forms of governance show that the EU impact on member states‘ national social and employment policies is surprisingly low (Graziano 2012). Nevertheless, since an increasing EU focus on subnational levels can truly be stated, the question arises whether the multi-level aspect and the relationship between the EU-and the subnational level have been underestimated within Europeanisation research. Furthermore, EU social- and employment policies have been closely embedded into a broader governance framework especially in the context of the Lisbon strategy and Europe2020. We will show in our paper that in this context, a formerly simple and mostly irrelevant distributional tool has turned to become a conditional and highly relevant financing instrument of EU social and employment policies: the European Social Fund (ESF). Due to its well-established position in domestic delivery-landscapes, its role for the implementation of EU social- and employment policies should not be underestimated. However, there is still a lack of research on the role of EU funding tools and how they shape domestic structures. In order to shed light on this question, we will conduct a fuzzy-set analysis of impact, usage, problems and incentives of EU social- and employment policies, transported via the European Social Fund. We do not only aim to identify the empirically existing types of EU-appearance via the ESF against the backdrop of theoretically derived ideal types, but also to detect a number of characteristics behind these types. Our analysis is based on the empirical findings in 18 local cases in six different welfare states: France, Poland, UK, Sweden, Germany and Italy. Our findings show that both the usage of the ESF and its impact on local social- and employment policies follow a number of key characteristics which are mainly related to the socio-economic situation of the local entity and its administrative capacity. Furthermore, we are able to show that the creation of supporting structures to deal with the procedural requirements of the fund (application, administration), ESF and the building of a “project logic” (i.e. monitoring, project planning etc.) are the main elements which are transported with ESF-funding towards local social and employment policies; while programmatic or substantial impact is often limited. By comparing 18 local entities in six different EU Member States, the paper contributes strongly to the academic Europeanization literature, where both research on the local level and on EU structural funding is heavily underrepresented. Furthermore, the paper also holds a number of interesting policy-related findings for EU policy makers, since it reveals some of the mechanisms how EU policies and procedures are transported to the local level via the ESF funding scheme, and identifies potential barriers and enablers of efficient implementation of EU policy objectives. 67 PERSPECTIVES ON INTEGRATED TERRITORIAL DEVELOPMENT IN 2014-2020 Piotr Zuber, Ministry of Infrastructure and Development, POLAND The promotion of the integrated territorial development was regarded some years ago by academic circles (Barca and others), the European Commission and some MS as a tool for increasing the effectiveness and efficiency of the delivery of public policies and cohesion policy in particular. The reformed cohesion policy regulations (European Structural and Investment Funds regulations) adopted in December 2013 and experiences from programming of Partnership Agreements and OPs for 2014-2020 period show however, that implementation of the integrated territorial approach encounter a lot of strategic and practical problems. The interesting question is therefore what is influencing this situation: • conceptual weaknesses of the whole approach, • regulatory framework or • other factors like administration culture, coordination systems, etc. On the basis of findings in rgard to above areas of research, recommendations wil be made regarding conditionsand facilitation of implementation of integrated territorial approach under cohesion policy as foreseen some years ago. 68 INDEX Lopez, 35 MacKenzie, 32 Maniokas, 32 Marlow, 51 McSorley, 33 Medda, 5 Medeiros, 34 Medve-Balint, 34 Mella-Marquez, 35 Mihalic, 36 Mihaylova-Goleminova, 37 Miles, 41 Mogiła, 66 Molle, 37 Monfort, 1 Muravska, 2 Natali, 9 Novotny, 38 Nyikos, 38 Olteanu, 39 O'Reilly, 60 Paczoski, 40 Pain, 40 Panova, 41 Pascariu, 12 Patrizia, 15 Perretti, 42 Perucca, 11 Petzold, 43 Pienkowski, 44 Polverari, 1 Pontarollo, 45 Porsche, 13 Provenzano, 46 Pugh, 32 Pulmanis, 47 Raugze, 18, 48 Reinhart, 49 Repeckaite, 50 Richardson, 51 Rivza, 21 Roman-Kamphaus, 51 Rosik, 52 Rubianes, 53 Salazar, 35 Sanderson, 63 Simeon, 54 Speckesser, 60 Spiridonovs, 54 Starineca, 55 Annoni, 1 Bachtler, 1 Baltina, 2, 62 Begg, 1 Belicka, 3 Berkowitz, 3, 44 Brandsma, 3 Bristow, 18 Burakiene, 4 Campbell, 33 Carbonaro, 5 Charles, 1 Clar, 6 Crescenzi, 14 Dahs, 7 Damen, 8 Demidov, 8 Di Anselmo, 9 Dijkstra, 9 Dobrzycka, 10 Fazekas, 20 Fejes, 10 Fratesi, 11 Frunza, 12 Ganau, 13 Giua, 14 Gori, 15 Gorzelak, 16 Graute, 16 Gullo, 24 Haarich, 17 Hawrysz, 17 Healy, 18 Ilgavižs, 18, 48 Infelise, 3 Jazwinski, 20 Jensen, 60 Jermolajeva, 21 Jones-Evans, 32 Jouen, 22 Judrupa, 62 Kalman, 22 Karvounis, 24 Kesar, 24 Komornicki, 25, 52 Krasnopjorovs, 26 Kravale, 27 Kroll, 28 Langley, 28 Lasmane, 31 69 Verhelst, 61 Vitola, 62 Wauters, 62 Weidenfeld, 63 Wells, 63 Wilson, 63 Wishlade, 64 Wrona, 65 Zakrzewska, 65 Zaleski, 66 Zaucha, 25 Zimmermann, 67 Zuber, 68 Stathoulia, 56 Stępniak, 52 Surubaru, 57 Sweetenham, 57 Szabo, 58 Telle, 58 Tiganasu, 12 Tiits, 22 Tosics, 59 Tosun, 60 Tóth, 20 van der Zwet, 61 Van Hamme, 40 70 71 KN-04-15-035-EN-C doi (print) : 10.2776/81077 doi (pdf ) : 10.2776/536574
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