Cohesion Policy needs to boost high-quality governance
April 2024
Effective and efficient institutions and governance arrangements, enhancing the participation of people at local and regional levels are essential. They strengthen democracy, trust in public institutions, economic growth and the returns of Cohesion Policy investments. Furthermore, high quality governance helps translate regional investments and regional support into regional growth.
The report of the group of high-level specialist on the future of Cohesion Policy (Opens in a new window) argues that Cohesion Policy should aim not only to promote inclusive and sustainable regional development and reduce disparities but also to enhance governance, the quality of government, and the efficiency of public policy.
Better institutions can contribute to the development of strategies with a well-balanced mix of initiatives targeting regional infrastructure gaps, advancing human resource capabilities and job structures, and refining the institutional framework.
Since 2014, Cohesion Policy has increasingly strengthened its support for institutional development and capacity building in the regions and member states. However, substantially more needs to be done and efforts need to be become more place-sensitive and tailored to places’ initial conditions and stage of development.
Good institutions and participation matter
An important asset of a democratic state (governed by the rule of law) is the public administration's capacity to orchestrate and mobilise collective action. This is even more important in light of emerging global challenges, which demand novel ideas, skills, capabilities and experimentation. In this context, multidisciplinary and multilevel Cohesion Policy is important for empowering people and institutions to face the new challenges. It is indispensable for development, and for democracy, i.e. people’s trust and participation in societal decision making processes.
A place’s institutional capacity and quality governance affect economic growth, the returns of Cohesion Policy investments and regional competitiveness. Seen from the other side, corrupt or inefficient governments undermine regional potential for innovation and entrepreneurship and weaken the attractiveness of regions to investments and migrants. Furthermore, institutional capacity and quality governance play a vital role for the well-being of society, are a prerequisite for long-term, sustainable increases in living standards, and strongly influences people’s health, their access to basic services, social trust and political legitimacy. Also, a place’s environmental performance and decisions on the type of public good investment are affected, as well as the inclusiveness and participation.
Better institutions and improved trust are essential. Good governance, community engagement, empowerment and addressing the geography of discontent require better institutions and improved trust. Currently, there are significant differences in institutional capacities and trust both within and across regions EU. This is e.g. illustrated by measurements of regional quality of government (Opens in a new window) and by the EU Barometer, which in very rough terms show that rural areas often have less trust in the EU than urban areas, and trust is usually higher in local and regional governments than in national ones. Due to a lack of trust in public institutions, more and more places and people see themselves being left behind. This increases the risk of discontent, leading to growing anti-democratic and anti-EU sentiments. Cohesion Policy – especially if targeting long-term economic decline and/or development traps – can prop up democratic processes and practices. For this see also the previous blogpost on the need for more dynamic typology of regions (Opens in a new window).
Administrative capacities of managing authorities and beneficiaries are key. The need to improve institutional capacities and the effectiveness and quality of governance, notably at regional and local level, including of cross-border areas, goes together with a reinforcement of the administrative capacity of managing authorities, programme partnerships and beneficiaries.
Cohesion Policy needs to allow for more experimentation. There is no blueprint for successful development of places and people. This is especially true in times of uncertainty, transitions and external shocks. There is a need to stimulate experimentation, including by increasing involvement of stakeholders beyond public administrations (e.g. civil society and private stakeholders), in policy design and implementation. It requires capacity building and knowledge sharing. Cohesion Policy can play a fundamental role in this. It also requires implementing transformative innovation policies, which need coordination and coherence between different EU policies, but also monitoring the territorial impacts of EU missions and ensuring the coordination between national and regional policies. Cohesion Policy should also embrace elements to ensure a systemic change, putting emphasis on sustainable transitions. Such an approach requires a capacity to anticipate change and to build regional resilience.
Increase institutional capacities and the quality of governance
Institutional capacities and the quality of governance not only reflects regional development in Europe but may also be an obstacle to development in regions with persistently low growth rates. This means to improve government quality needs to be integral to any efforts supporting regional development in Europe.
Preconditions for growth. In times of increasing financial constraints, there is no money to be spent on investments which do not deliver due to poor governance process and insufficient institutional capacity. In places with weak institutions and low quality of governance, investing in infrastructure, skulls and innovation often delivers limited returns in terms of economic growth. Therefore, where needed, increasing their quality should be a first priority of Cohesion Policy support to ensure that subsequent investments in drivers of economic growth are well spent.
Cohesion Policy methodology. The methodology of Cohesion Policy – including its policy design and implementation approach – is an integral part of the EU's DNA. Principles such as the partnership principle, multi-level governance, subsidiarity, and accountability will continue to be important in a changing future. These principles can serve as preconditions for enhancing government quality, effectiveness, transparency, and accountability for efficient public policies and improving well-being. This should also imply strengthening the role of the code of conduct on partnership (Opens in a new window).
Strengthen capacity building. The quality of institutions and governance are the starting point for a successful Cohesion Policy, as well as effective green, digital and demographic transitions. This also involves the capacity to translate individual learning into institutional learning and administrative capacity building. Cohesion Policy already supports capacity building. However, new or alternative ways to strengthen the quality of institutions should be considered. Regional and local institution building should become integral to Cohesion Policy. Furthermore, effective decentralisation is important as it allows local and regional authorities to have their say and develop place-based approaches.
Enable participation. Involving economic and social stakeholders – prioritising traditionally marginalised groups – stimulates agency. It helps to encourage ownership, engagement, and empowerment for citizens to shape their own future and ensures that diverse perspectives come together in the design and management of a policy. Going beyond the current partnership principle, Cohesion Policy should foster an environment that supports greater participation, driving development. This implies also adjusting the communication on Cohesion Policy so that it appeals to laypeople – including telling the impact of Cohesion Policy via human interest stories.
The full report of the group of high-level specialists on the future of Cohesion Policy, and a range of background materials are available at the group’s website (Opens in a new window).
by Kai Böhme
