National economic planning was extensively accepted in postwar Europe with the French indicative planning fostering a much accepted model of the government and the private sector joining hands in the modernizing the economy. Several European economists considered that the public policy and public money could be combined to shape a greater rational and a more reasonable economic system. (Springer, 1994, p. 72)
The significance of the European public policy for the EU member states has gone up in the last fifteen years. Especially, the association between the national and sub-national government has undergone change a great deal. The coming of the "Europe of the Regions" is no more a buzzword, but rather a vital reality in the EU. Of course, the European Commission found in the regional governments a crucial supporter in fostering the Single European Market -- SEM and in doing so; it lessened the resistance of a lot of national governments to implement the SEM and Economic and Monetary union -- EMU. And this partnership has been the strong point of European regional policy. The keystone in the process of regionalization across the EU is a rising conviction that thriving economic development in an area is functionally linked to its institutions, as regards the network of associations purportedly in support of business innovation. The primary institutions of governance regardless of the European Commission itself, member-states, or the regions inside them act as if business development is in general associated functionally to the mesh of regional institutions. The reason for this is connected with the social scientific research. In case of any event, the impact of the EU on every aspect of regional policy has been distinctly visible for some years and particularly more recently in the European Spatial Development Perspective -- ESDP on which there was a general consensus by the Council of Ministers. (Magone, 2003, p. 114)
At this juncture, it is important to analyze whether trade as also monetary forms of integration in Europe involves the threat of gaping inequalities within the areas. In order to understand by investments committed with regard to policies pertaining to regional in Europe which now represents a third of the budget of the community and constitute the second biggest issue following the common forms of agricultural policy, the answers provided by the governments as well as the EC is a resounding 'yes'. The fast proliferation with regard to the spending concerning regional policy has been underway from the time of the accession of Portugal as well as Spain. This, after including Greece resulted a broadening of income disparities among the affluent and the poor nations of what was known as the EC. The negotiation as regards the inclusion of the two Iberian nations led to a rise in the resources meant for the regional policies from the level of ECU 3.7 billion in the year 1985 to that of ECU 18.3 billion in the year 1992. The actual investments committed with regard to regional policies in case of these nations were considered to be really greater since the EU needs that its transfer need to correspond national forms of spending. The national policies pertaining to the region have also been vital in some countries like Italy, France and Germany. The widening of the EU to the Central & eastern European nations, in which the per capita GDP levels are considered to be really lower compared to the four cohesion nations would spell important revamping of European regional policies. (Martin, 1999, pp: 1-2)
The Regional policy of the EU is founded on the financial solidarity between the member states whose contributions to the Union budget is given to the less affluent regions and social groups. For the period between 2000-2006, these transfers will contribute to a third of the EU budget which translated to absolute terms comes to 213 billion Euros. 195 billion Euros will be expended by the four Structural Funds and 18 billion Euros by the Cohesion fund. The important contribution of the Structural Funds is that they finance multi-annual programs that constitute strategies programmed in a partnership with the regions, the Member States and the EC. The primary objective of the program is to (i) develop infrastructure, like transport and energy (ii) extension of telecom services (iii) provision of assistance to firms and provision of training to workers (iv) Disseminate the tools and knowledge of the information society. (EU Regional Policy after enlargement, 2003)
The primary instrument of EU Regional Policy, the Structural Funds is expressed around three objectives. Among this the first one lies in extending the progress as well as structural adjustment with regard to the areas wherein growth has not been considered to be of satisfactory level. The second objective is supporting the economic and social conversion of areas encountering structural problems. The third objective lies in assisting the adaptation and modernization of policies and systems of education, training and employment. The NUTS 2 regions that is eligible for objective 1 are among those with a GDP per capita lower than 75% of the EU average. The Cohesion Fund is needed make provision of additional 18,000 euros over the period from 2000-2006, in this situation for nations such as Greece, Ireland, Portugal and Spain. Regardless of the expression of the European regional funds under various purposes, it is not always distinct what the objectives comprise. The initial and fundamental issue for a good design of regional policies is to define the objectives in a distinct manner. The decision to be arrived is whether there is a need for homogenization across space of some total measures like per capital income, unemployment or rates of employment, or health and education indicators. (Puga, 2001, p. 50)
Besides, the issue also remains as to whether the first objective of personal fairness, similar people possessing similar opportunities in different regions. It is therefore important that making clear as regards the regional policies constitutes the fist step. Subsequently, there is a need to search for optimal policies to attain those objectives. Prior to taking into account the possible tools, this needs decision on the direction of interference. The issue remains whether the amount of regional heterogeneity provided in the absence of regional policies very high or very low. The overall assumption lies in that the policy must look forward to lower regional disparities by concentrating on the poverty stricken nations. Nevertheless, the degree to which this must happen is not evident. (Puga, 2001, p. 50)
Regardless of what is happening, inconsistencies exist between the European regional policy and national state-aid policies. Debating within a regional competition perspectives, it can be differentiated between the macro and the micro-level. On the macro-level, inclusion for instance infrastructure and education, the European outer fringes lies at a distinct disadvantage as against the main member states. On the micro-level concentrating on direct support to the productive sector, European state-aid regulation establishes a hierarchy. As per Article 92 of the EC treaty, the countries that are not favored and regions facing decline in industrial segment are permitted to use region-specific state aid so as to draw mobile factors of production. (Steinen, 1991, p. 30) broadly held view holds that regional planning in Europe has developed within very distinctive legal and administrative frameworks i.e. British, Napoleonic, Germanic, Scandinavian and East European. In most of the Continental Europe especially within the Federal states there is a view that local and regional authorities possesses a general power over the affairs of their communities, in the United Kingdom notwithstanding the requirement to provide public services on a local degree as agents of central governments. The responsibility to do such is dependent on the concept of basic structure in case of local authority is powers conferred upon it by the centre. (Balchin; Sykora; Bull, 1991, p. 91)
For effective functioning of the regional policy, the need of the hour is a Director General who will be appointed and will have the following (i) good understanding of the cohesion policy (ii) overall good experience of financial, budgetary and administrative management (iii) experience in projects and/or program preparation and management would be useful (iv) superb communication and negotiation proficiencies (v) established capacity in managing, coordinating and motivating a team (vi) good working knowledge of both English and French would be an asset. (DG Regional Policy, 2004, p. 31)
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