A transformative and future-wise Cohesion Policy
April 2024
In the face of rapid global changes, emerging societal challenges and green, digital and demographic transitions, Cohesion Policy stands at a pivotal juncture. Originally designed to reduce disparities between EU regions and promote harmonious development, its relevance is increasingly being tested by new waves of technological advancements, societal transitions, and unforeseen global events. A reimagined, more transformative and future-wise Cohesion Policy would be essential for securing a prosperous, inclusive, and cohesive EU for generations to come.
The report of the group of high-level specialists on the future of Cohesion Policy (Si apre in una nuova finestra), argues for a place-based and transformative policy, with future-oriented investments sensitive to the unique strengths, challenges and needs of regions. Cohesion Policy should not be reactive but transformative.
The imperative for transformation
Cohesion Policy is at a crossroad, tasked with addressing the dual challenges of market failures and regional disparities that undermine the collective prosperity and stability of the EU. To master these challenges, policymaking needs to be anticipatory and support transformative shifts which endow places and people with the capabilities needed to master the transitions ahead. This may include shifts from low-tech sector, low-skilled labour economies to more dynamic, innovation-driven ones, as well as shifts to a green and digital economy. To also needs to smooth transitions and enhance social investment.
The EU's major economic and societal transitions, notably the green and digital shifts, risk exacerbating inequalities. Regions with high capabilities can exploit these transitions better than those with lower capabilities, leading to further fragmentation between thriving and left-behind places. Thus, Cohesion Policy must support these transitions while mitigating non-cohesion effects, ensuring that no region is left behind.
These challenges are exacerbated by mega trends – including artificial intelligence, climate change, demographic change, changing global and EU value chains, and geopolitical tensions. They are expected to widen disparities between places and societal groups, highlighting the urgency for policy interventions that not only address current issues but are also robust enough to handle future challenges. See also our earlier blog posts on technological, societal, economic, environmental and political trends shaping territorial development and cohesion (Si apre in una nuova finestra).
Furthermore, the potential for EU enlargement to include countries from the Western Balkans and Ukraine, Moldova and Georgia introduces new dimensions of economic, social, and territorial disparities that the policy must address.
The convergence of these factors calls for a transformative approach to Cohesion Policy, one that is proactive, inclusive, and adaptive to the fluid geopolitical and economic landscape of the EU. Such transformative changes require systemic interventions, institutional capacities, long-term commitments, citizen involvement, and cooperation, among other factors. Yet, interventions must go beyond the piecemeal. Only systemic changes with increased cooperation, a long-term perspective, citizen involvement, and a recognition of global development contexts can lift regions out of low-level traps.
Future-proofing Cohesion Policy
Cohesion Policy – as policy making in general – aims to shape the future. The future however is uncertain and unpredictable. Therefore, it requires the capacity to imagine the general shape of the future in a way that allows for future-wise policy design. Although some long-term developments can be anticipated, new trends, poor policy implementation, unexpected responses by citizens, enterprises or neighbouring countries, and sudden incidents and disruptions might change the game rapidly. At the same time, policy makers have limited resources and capacities to imagine, assess and consider the full range of possible future pathways. Even more and better data and information cannot solve this.
To make Cohesion Policy 'future-proof', it requires flexibility to respond to changing circumstances and emergencies. This flexibility has been demonstrated in the past, but clear rules need to be established to ensure that regional and national entities can use the policy flexibly, contributing to EU objectives and smoothing transitions. Furthermore, focusing on transformative changes is crucial. These require systemic interventions, institutional capacities, long-term commitments, and cooperation. There is potential to focus targeted policy support on places with the highest turnaround potential or to provide support based on place-based thematic orientations.
In a world of rapid technological advancements and constantly evolving societies, making wise decisions becomes ever more complex. The risk is that decisions are either driven by fears and reactions to implicit threats, or that they focus merely on the here and now. To avoid dystopian thinking and the tragedy of time horizons (Si apre in una nuova finestra), we need to nourish our future literacy skills. As we have discussed in an earlier blog post, future literacy (Si apre in una nuova finestra) about the ability to rigorously imagine possible futures, while avoiding the traps of presentism and dystopian or wishful thinking. Improving future literacy is a journey that requires dedication, open-mindedness, curiosity and willingness to embrace uncertainty. It is about developing essential skills and mindsets needed to navigate the complexities of the future.
Leveraging potential across the EU
A transformative Cohesion Policy must mobilise the economic potential of all places in the EU. By empowering regions to benefit from the Single Market's freedoms, the policy should facilitate capital flows into areas it typically wouldn't reach, enabling people to live where they desire and places to thrive.
To do so, policymakers need to dive into supporting regional and local authorities, boosting social investments, leveraging the Single Market, and aligning with the EU's social and economic agendas:
Supporting regional and local capacities. For Cohesion Policy to truly transform, it must reinforce the capacities of regional and local authorities. These bodies are on the front lines, directly tackling the challenges and opportunities unique to their territories. By providing them with the tools and opportunities to address these challenges effectively, the policy can ensure a smoother transition towards sustainable, inclusive growth. This approach emphasises the creation of enabling conditions, such as embedding visions for carbon neutrality and fostering cross-regional collaborations for a carbon-neutral transition.
Boosting social investments. Cohesion Policy stands as a key instrument at the EU level for advancing recommendations related to the future of social protection and the welfare state within the EU. Investing in physical, human, and social capital is crucial in our economies. There is a compelling case for better aligning Cohesion Policy with social investments, enhancing its impact on society's well-being while contributing to economic performance. This strategic alignment underlines the policy's role in addressing systemic social challenges and leveraging the EU's collective resources for greater solidarity and cohesion.
Focusing on performance-based approaches. Shifting the focus towards performance-based approaches can catalyse the transformation of Cohesion Policy. Traditional methods, heavily reliant on resources and inputs, have sometimes led to inefficiencies and a lack of tangible results. By setting clear, tangible results as milestones and targets, the policy can encourage faster delivery of benefits, improve coordination across policies, streamline public expenditure, and enhance the credibility of public institutions. This shift not only promises better outcomes but also aligns with a broader EU objective of making policies more results-oriented and effective.
Empowering regions through the Single Market. One of the most potent tools of the EU is the Single European Market. Empowering all places to harness the four freedoms – movement of people, goods, services, and capital – can unlock untapped potential across the EU. Facilitating the flow of capital to areas it traditionally might not reach, and allowing individuals to live and work where they desire, are foundational steps towards creating a more cohesive and dynamic EU. This approach can help ensure that all places, irrespective of their starting point, have the opportunity to thrive in the Single Market.
Territorialising performance and the EU reform agenda. To further enhance the effectiveness of Cohesion Policy, there is a clear need to adopt a territorial perspective in performance-based approaches and the broader EU reform agenda. This means giving more room for decentralisation and multi-level governance, allowing local stakeholders to identify specific needs and actions. Such territorialised approaches can foster ownership, build capacities at the local level, and ensure that reforms and investments are closely aligned with the unique characteristics and aspirations of each region.
Beyond piecemeal changes
As the EU stands on the brink of potential future enlargements and grapples with rapid technological, social, and economic transformations and geopolitical tensions, the imperative for a future-wise Cohesion Policy has never been clearer. The call for a future-wise and transformative Cohesion Policy is timely.
Piecemeal changes are marginal interventions and do not suffice to address the root of the problem. The transformative journey of Cohesion Policy is not merely an option; it is a necessity for ensuring a resilient, inclusive, and prosperous future for all EU regions. The path forward is complex, requiring concerted effort, innovation, and a deep commitment to the principles of cohesion and solidarity.
By focusing on future needs, embracing flexibility, and fostering transformative changes, Cohesion Policy can rise to meet the challenges of today and tomorrow. By embracing place-based interventions, ensuring the policy is future-proof, and adopting a strategic, performance-based approach, the EU can enhance economic, social, and territorial cohesion across its member states. By focusing on transformative changes, empowering regions, boosting social investments, and adopting performance-based approaches, the EU can ensure its Cohesion Policy is robust, resilient, and ready to meet the challenges of tomorrow.
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 (Si apre in una nuova finestra).
by Kai Böhme
