What Objectives Have Driven the Development of the EU's Regional Policy until Today - Coursework Example

Swarna1 Word count: 2527 P.Swarnalatha ID # 5448 Order # 170166 d 13th May 2007. "What objectives have driven the development of the EUs regionalpolicy until today? To what extent is the policy sustainable in the wake of the 2004 enlargement of the European Union?" What is European Union? The European Union (EU) can be considered as a supranational and intergovernmental union of twenty-seven countries of Europe (John McCormick, 2002). Though it was formed in 1992 by the Treaty on European Union famously known as the Maastricht Treaty, it was actually originated in 1957 as European Economic Community with six member countries (Elizabeth Bomberg and Alexander Stubb, 2003). In 1995 its member strenght was 15 which increased to 25 in 2004 with addition of ten member countries. Subsequently in 2007, the strength has increased to 27 with addition of Bulgaria and Romania. Main objectives that have driven regional policy of EU: Gradual enhancement in member strength of European union clearly reflects its regional policy with an objective of regional enlargement. The integration of economies of more number of european countries has been its main objective since its formation (Brent F Nelsen and Alexander Stubb, 2003). It mainly due to the fact the globalization and liberalization demands fast changes and higher flexibility. It also demands the reorientation of strategies to face global competition. The regional integration will certainly aid the European Union to compete well in world trade. The enlargement of european union also helped in consolidating security positions (Erik Holm, 2001). Keeping this in view, the EU allowed to continue the open-ended process of European integration. As a result of these initiatives, the EU is one of the largest economic and political entities in the world, with approximately 500 million people and a combined nominal gross domestic product (GDP) of €11.6 (US$14.5) trillion in 20061. Further it has evolved as a single market with a common trade policy2, a Common Agricultural/Fisheries Policy, and a Regional policy to assist underdeveloped regions3. It has also introduced a single currency, the euro, adopted by 13 member states. The euro introduction has resulted in faster economic developemnt of european countries and euro stood strongly against American dollar. Moreover, the EU also initiated a limited Common Foreign and Security Policy, and a limited Police and Judicial Co-operation in Criminal Matters. Need for regional integration of EU: If one analyzes the history of european union and its strategies, it identified that integration of as many european Countries as possible has to done at a faster rate. At the same time, it also identified that there have been lot of differences among these countries in terms of economic growth, gross domestic product and human development index. Hence simple enlargement will not help european union to achieve success at global level. Hence it has strengthened its regonal policy with an objective of elevating the economic status of its memebr countries. Accordingly it has given separate packages for its member countries based on their background and needs. Around one third of the EUs budget is devoted to this policy. The main objectives of this regional policy are as follows: 1. To remove the disparities in wealth across the EU : There has been significant difference in economic status of member countries which should be narrowed down. 2. To restructure declining industrial areas : The industrial areas with negative growth rate must be restructured so that they would recover to earn profits and provide higher employment. 3. To diversify rural areas which have declining agriculture : The rural areas with negative growth rate in agriculture was recorded for consecutive years must be earmarked and they should be diversified to other crop enterprises. Most of the recently merged states are poorer than the existing members and it has reduced the EUs average GDP per capita which lead to some structural changes. For example, some regions in the earlier EU-15 no longer qualifying for extra financial help due to the reduction in average GDP of european union. At the same time, most regions in the new member states qualify for the objective one. Three objective policy: To facilitate the uniform development of all the member countres, the european union has started three objective policy. Regions which need support with the regional policy are given either objective one or objective two status. However to ensure the gradual and overall growth, objective three regions cover all regions of the EU which do not have objective one status. Objective one mainly aims at improving the economic status of poor regions of european union and hence they are require the regional policy significantly. The Objective one also covers the most remote regions (the French overseas departements, the Azores, Madeira and the Canary Islands). Significantly, two thirds of the Structural Fund operations come under Objective 1 and almost 20% of the Unions total population should benefit from the measures taken under this Objective. To qualify for objective one status the GDP per capita for the region must be below 75% of the EU average. At the same time, areas with very low populations such as much of Sweden and Finland also qualify for objective one status. Maximum fund of european union goes towards this objective one under structural funds support from the European Community as part of its regional policy. As it involves the common fund, the achievement of objective one status attracts political debate. The time frame also will be declared along with the status and its status will be reviewed after the deadline. Most of the newly joined member countres qualify for the objectve one status which ensure uniform growth of all countries of european union. Some of the regions in the well advanced european countries may also qualify for the objective one. For example, in the United Kingdom, Cornwall, South Yorkshire and much of Wales qualify under objective one. The objective of the regional policy also allows flexibility as far as the uniform growth is concerned. For example, in case of North Ireland, the actual definition will not make it eligible for objective one status as it has a GDP per capita above the qualification threshold, but it has been considered for objective one status because of the peace process. Objective 2 contributes to the economic and social conversion of regions in structural difficulties other than those eligible for the new Objective 1. This Objective will cover areas undergoing economic change, declining rural areas, depressed areas dependent on fisheries and urban areas in difficulty. No more than 18% of the Unions population will be covered by this Objective. Objective two regions are at a smaller level than those with objective one status and attract less percentage of funds of the european union. Objective two status is given to regions which are considered to be less in need of help than those with objective one status. It is mainly meant for the industrial areas which have unemployment higher than the EU average. Similarly the rural areas also qualify for objective two status if the area has a low population density or if the agricultural employment rate is double that of the EU-average. At the same time, areas dependent on the fishing industry will also qualify if it is in decline in that area. Areas with objective two status includes much of Northern England, most of the remainder of Spain not covered under objective one, much of central France and central Italy, parts of Austria, southern Finland and most of Cyprus. A prominent policy goal of the regional policy of European Union is the development and maintenance of an effective single market which is facilitated by the implementation of above mentioned objectives. Accordingly the objective has been creating harmonised standards claimed by their proponents to bring economic benefits through creating larger, more efficient markets. It has facilitated free trade of goods and services among member states. Its uniformity was also implemented in free movement of capital between member states, common system of indirect taxation, the VAT, as well as common customs duties and excises on various products. Success driven objectives: Similarly, the enlargement has been successful due to the implementation of three objectives. (1) To access the countries from Central and Eastern Europe and continued geographic expansion; (2) long-term integration strategy towards the Western Balkans; and (3) gradual development of a European Neighborhood Policy contributing to the democratization, openness, and political stabilization of countries in the periphery of the "Wider Europe." (Boyka Stefanova, 2005.) In addition to the above mentioned objectives, the regional policy also has been driven by indirect objectives or targets which are as follows: To stimulate cross-border, trans-national and inter-regional cooperation. To promote rural development through the initiatives of local action groups. To provide for the development of new ways of combating all forms of discrimination and inequality as regards access to the labour market. To encourage the economic and social regeneration of towns, cities and suburbs in crisis. To safeguard the common values, fundamental interests, independence and integrity of the Union in conformity with the principles of the United Nations Charter. To strengthen the security of the Union in all ways. To preserve peace and strengthen international security, in accordance with the principles of he United Nations Charter, as well as the principles of the Helsinki Final Act and the objectives of the Paris Charter, including those on external borders. To develop and consolidate democracy and the rule of law, and respect for human rights and fundamental freedoms. One should not forget the fact that there have some obstacles which have made the integration and enlargement of european union tougher (Wlson Thomas,2000). However, due to successful implementation of strong objectves as mentioned above, the regional policy of EU was made victorous. To what extent is the policy sustainable in the wake of the 2004 enlargement of the European Union? As discussed earlier, the European Union has been enlarged tremendously with the addition of ten countries and hence one has to analyze the element of sustainability as part of regional policy after the enlargement of the European Union. No doubt, the enlargement in 2004 brought several radical changes to the structural policy of European Union. The main impact is the reduction in the average gross domestic product of EU which has made some of the earlier member countries ineligible to get aid from EU under objective one. At the same time, almost all the new countries due to their weak economic conditions became eligible for getting financial aid under objective one which attracted severe political debate among member countries. However, the benefits coming out of real integration will certainly compensate the temporary losses incurred by some member countries. Hence this regional policy of EU can be considered as sustainable in long term. The sustainable nature of regional policy gets more support with enlargement in 2004 due to higher competitive edge at global trade. The larger group of countries will certainly have more bargaining power and can extend friendly export and import policies and will reduce the double taxations. At the same time, the security position of all the member countries of EU become stronger with higher enlargement making it highly sustainable. However, the regional policy of EU becomes more sustainable if it allows higher flexibility in environmental issues. Mere concentration on increasing investment and trade would not really help in sustainable policy unless it is accompanied by eco-friendly initiatives. Hence the new regulations for the structural fund and cohesion fund for regional policy of EU for the period 2007-2013 must include the sustainability strategy. The following objectives should be incorporated in regional policy of European union to make it highly sustainable. a) Integrating environment and sustainability into all areas of EU regional policy1; 1:http://mail.foeeurope.org/press/2004/joint_10_may_cohesion_forum.htm. b) Adding value to natural resources management, c) Promoting partnership with Civil Society; One more important thing to be kept in mind is that European Union suffers from an inadequate capacity to transform scientific and technological knowledge into business opportunities and hence its regional policy should support a strong collective effort that is needed in the area of innovation. At the same time, to make any real impact on the unemployment problem and the future of forthcoming generations, macroeconomic policies must be backed up by an equally far-sighted range of microeconomic measures which should be reflected in the regional policy. This calls for the training of functionaries in all the fields under human resource development program and enhancement of investments in research and development and information and technology. It was always proved in the history that higher investment in research would convert in to faster economic development. At the same time, it becomes more meaningful if implemented with regional integration. The weakly developed member countries must be encouraged to implement the new and advanced production systems like quality and environmental friendly processes, incorporation of technological methods and innovative management techniques so that they would display faster economic growth with out damaging the environment. These countries should be recognized as the areas of high potential which would certainly help the European union to gain competitive edge at global level on sustainable basis. Lastly, the regional policy must allow a carefully managed enlargement in the interest of the EU. The regional policy in support of integration has politically helped EU to respond to major changes such as the collapse of communism. It has also consolidated democracy, human rights and stability across the continent. At the same time, the regional policy by favoring enlargement has increased economic prosperity and competitiveness, enabling the enlarged Union to respond better to the challenges of globalization. Moreover, the flexible regional policy has made the European Union a stronger international player. Conclusion: The European Union has undergone tremendous changes in its regional policy since its inception according to the change in macro and micro economic environments. However, regional enlargement has been its stable objective that resulted in enhancement of membership from 6 to 27. The other objectives like political and economic integration, technological and scientific advancement, employment and agricultural development and security protection have driven the regional policy of European Union over a period of time. However with the enlargement of EU in 2004, there has been considerable change in structural policy which reduced the average gross domestic product. This also necessitates the flexibility in regional policy of EU to compete well at global level with out affecting the sustainability. References: Boyka Stefanova. 2005. The European Union as a security actor: security provision through enlargement. World Affairs. Fall 2005. FindArticles.com. 13 May. 2007. Brent F. Nelsen and Alexander Stubb. 2003. The European union: Readings on the theories and practice of european integration. Lynne Rienner Publisher. P:379. ISBN-10: 1588262316. Elizabeth Bomberg and Alexander Stubb. 2003. The European Union: How does it work? Oxford University Press. P:280. ISBN-10: 0199247668. Erik Holm. 2001. The European Anarchy: Europes Hard Road into High Politics, Copenhagen Business School Press. P: 268. John McCormick. 2002. Understanding the European Union : A concise introduction. Palgrave Macmillan publication. P:288. ISBN-10: 033394867X. Wilson, Thomas, M. 2000. Obstacles to European Union regional policy in the Northern Ireland borderlands, The. Human Organization. Spring. FindArticles.com. 13 May. 2007. Read More