#CPnet Theoretical reflections on EU Cohesion Policy

Theoretical reflections on EU Cohesion Policy a webinar organised by the Regional Studies Association’s Research Network on EU Cohesion Policy #CPnet

The event report by:

• Ida Musiałkowska, Associate Professor and Head of Department of European Studies at Poznań University of Economics and Business (Poland). RSA Ambassador to Poland, https://www.regionalstudies.org/people/ida-musialkowska/
• Julia Walczyk, Master’s student (2020/2021) of European Public Affairs and Research Assistant at the Faculty of Arts and Social Sciences (FASoS) of Maastricht University. She holds her Bachelor’s degree in European Studies obtained at Maastricht University. https://www.linkedin.com/in/julia-walczyk-637a37198/

Organisers: Ida Musialkowska, Piotr Idczak and Dorota Czyżewska-Misztal (PUEB) as local organisers; Ugo Fratesi (Politecnico di Milano, IT), Sebastien Bourdin (Normandy Business School), Mara Giua (Università degli Studi Roma Tre), Serafin Pazos-Vidal (COSLA), Riccardo Crescenzi (London School of Economics), Ekaterina Domorenok (Università di Padova), Nicola Francesco Dotti (VUB), as academic convenors

The aim of the event was to discuss the theoretical issues related to EU Cohesion Policy defined in the Call for Presentations, namely: the following research questions were addressed in the workshop:

• Why do we have Cohesion Policy?
• What should be its distinctive objectives, different and complementary to others by the EU?
• Which theoretical approaches are missing when analysing and implementing the policy?
• Is convergence still a “key-word” in the policy?
• Is history of economic thoughts useful for analysing Cohesion Policy?
• What are the directions to improve the Cohesion Policy towards the next decades?
• What is the role of Cohesion Policy role in the process of integration/ disintegration of the European Union?
• What are the synergies of Cohesion Policy with other policies, instruments, initiatives and programmes (e.g. Horizon, Common Agriculture Policy, transport and environment policy, trade policy, external relations and aid programmes)?
• Should macro-economic and other conditionalities be kept when looking from a theoretical angle?
• Does Cohesion Policy fuel theories, or it is a reciprocal action between theory and practice?

The event aimed at creating forum for discussion to all interested scholars and practitioners and allowing for scientific exchange as well as promoting RSA to the wider audience. The outreach of the workshop was wider thanks to virtual format of the workshop (Zoom application).

The workshop started with welcome by Daniela Carl from RSA who presented the association and its current activities and benefits to all participants. The next speaker was Ida Musiałkowska from Poznań University of Economics and Business, RSA Ambassador to Poland who officially opened the workshop and presented the key-note speaker prof. Philip McCann form the University of Sheffield and chair of the plenary session prof. Ugo Fratesi from Politecnico di Milano.

Philip McCann, University of Sheffield, The Challenges Facing EU Cohesion Policy in the Context of Covid-19 and Climate Change. Key issues addressed by Phillip McCann are the following:

• Challenges faced by Cohesion Policy are observed  two domains: (1) COVID-19 pandemic: damage made for societies, economies ; (2) Climate changes
• Europe 2020 Agenda: pushing into more social inclusion (societal benefits from economic benefits); introduction of smart specialization agenda in the previous programming period (novelty of 2014-2020)
• The world and society is “hit by tsunami” (i.e. COVID-19 pandemic) as  many aspects of daily life have been affected, such as education, tourism, travelling
• When that tsunami hit, many sectors at the market got closed. Governments, at the same time, got involved in the economy. However, the government’s involvement is not nothing new  – similar challenges during the financial crisis in 2008, but now much bigger scale
• We don’t how the tsunami is going to look like (mutations, vaccinations). Further, there’s no consensus among investors how to shape the market, behavior isolations, very slow recovery
• Governments take different positions on how to deal with the pandemic.
• BIG QUESTIONS to keep in mind: How long is it going to take ? How are financial markets going to look like/ In which direction will they go ? How will technology will change? → A lot disruptions, thus, a lot of questions remaining we don’t know → A lot of concerns
• Such situation like COVID-19 pandemic   hasn’t been seen before (i.e. financial crisis in 2008)
• Governments’ role has adverse effects on the market because many sectors will shut down). A lot of entrepreneurship (smart specialization – very critical) seriously hit ! In addition, digital entrepreneurship seriously affected by the COVID-19 crisis. Most sectors will be, consequently, losing due to the Corona crisis.
• There’s so much uncertainty in the financial market
• As a consequence of the pandemic, there is more divergence than convergence among the regions → That’s why we need Cohesion Policy
• The questions of work community relationship is very important: in some sectors, there’s uncertainty, suffer from the pandemic. Especially, in small cities, people will suffer (prevented from commuting). In other words, weaker cities relying on bigger ones will be hit
• Priority of all governments is get people to work, thus, SDGs push at the back. However, another big question remains: How to deal with the climate change?
• Real thing: HOW WILL ECONOMY RECOVER? What about the European Green Deal?
• Climate challenge is not now the biggest issue as the priority is now given to economic recovery due to the Corona crisis
• In the pre-corona crisis, Green Deal had been a flagship initiative on the European Commission’s agenda. Importance of Cohesion Policy for “Green Growth’. Smart & inclusive & sustainable growth had been on the menu of many stakeholders
• There’s a need to build narratives! (Green Deal). Otherwise,  we will be 5 years behind the Paris Agreement (climate strategies). It’s important to link Cohesion Policy with Green investments. However, the pandemic have re-directed Cohesion Policy financing. As a consequence, weaker regions more vulnerable to successful to Green transitions. Therefore, there’s importance of Cohesion Policy investments
• Societal inclusiveness is a critical part of every Sustainability Agenda. Thus, Cohesion Policy is the important part of the Green Deal.
• The sense of ownership (i.e. working together, having own goals) is crucial of the entrepreneurship recovery – COVID-19 ‘wasn’t born in Brussels’!
• There’s a big risk in terms of inequalities among societies and regions
• Smart investments are essential parts of sustainability and inclusiveness. There’s a need to be treated together (As a whole menu)
• Weak cities have multiply challenges, thus, Cohesion Policy is an important toolkit to address these challenges. Cohesion Policy needs to provide financial incentives for weak areas to make them develop, create new jobs/support businesses
• In places which are more vulnerable to climate change and sustainable investments, Cohesion Policy is important to ensure that the Green Deal will be implemented successfully in those places
• Decentralizing agenda and allowing Cohesion Policy for being a part of Cohesion Policy and taking it across a wide range of places (i.e. towards convergence)

Then the Q&A session started with active engagement of all delegates who joined this session. The plenary session was recorded and is available at the Poznań University of Economics and Business (local organiser) YouTube channel:

In the first session chaired by Serafin Pazos Vidal (COSLA) four papers were presented.

Flavio L. Pinheiro, Universidade Nova de Lisboa, Pierre-Alexandre Balland, Utrecht University, Ron Boschma, Utrecht University, University of Stavanger, Dominik Hartmann, Federal University of Santa Catarina, University of Hohenheim, The Dark Side of the Geography of Innovation: Relatedness, Complexity, and Regional Inequality in Europe. Ron Boschma’s key message was the following: We need to tackle the dark side of innovations not to fall in complexity trap ! Therefore, it’s important to develop and invest (i.e. need to develop education and research capacity) to increase broader investment capacity. Further, research collaboration between regions/cities is important. Third, foreign investments are another option. Lastly, stimulating institutional governance (i.e. having good, strong, institutional structure with the focus and willingness to invest in complex infrastructure). Summing up, there’re different solutions to avoid/address complexity trap.

Ilaria Ottaviano, University “G. D’Annunzio” of Chieti-Pescara, What is the role of Cohesion Policy role in the process of integration/disintegration of the European Union? Ilaria Ottaviano brought three key messages in her presentation:

1. The Rule of Law conditionality for obtaining and using the structural funds, as a tool to reinforce the respect of EU values inside EU.
2. Overcoming the obstacles to cross-border interactions between people and businesses: the proposed European Cross-Border Mechanism.
3. The EGTC: an optional instrument with uniform substantial and conflict-of-law rules and room for party autonomy, as breaking point of the markedly territorial consideration of the public law of Member States.

Benoit Dicharry, BETA, University of Strasbourg, Impact of European Cohesion Policy on regional growth: When time isn’t money. Benoit Dicharry raised some messages on the absorption of Cohesion Policy Funds:

1. Regions with good absorption tracks are considered as virtuous by European authorities. However, fast absorption is associated with a low economic impact of the EU funds in Objective-1 regions. The existing literature has identified a positive association between fast spending and the quality of governments. However, is fast spending always good spending ?
2. This result especially holds for Mediterranean regions.
3. The decommitment rule, or n+2 rule, should be softened.
4. The absorption pace reflects a crucial outcome of how cohesion policy has been implemented as it shows cities’ and regions’ capacity to spend the Funds. Therefore, the absorption pace is important not to have delays and respect the deadlines. However, there’s a huge heterogeneity in the absorption pace across Member States.
5. To sum up, both the European Commission and Member States have incentives to absorb cohesion policy money on time. Regarding the Commission, it seeks to maximise the absorption pace to show the full utility of the ESI Funds. As for Member States, they seek to send a positive signal to the European Commission that the money has been absorbed timely.

Ida Musiałkowska and Piotr Idczak, Poznań University of Economics and Business, Spatial Distribution of JESSICA Funding Across Polish Municipalities. Perspective of Territorial Dimension of EU Cohesion Policy. Ida Musiałkowska and Piotr Idczak presented some perspectives on spatial distribution of JESSCIA funding in the case of Polish municipalities:

1. JESSICA projects were spaced more or less evenly throughout the five Polish regions.
2. Contrary to expectations, smaller cities have also considerably benefited from this instrument.
3. Projects ensure the repayment of JESSICA loan on the basis of their primary business activities in all city classes.
4. Project capacity is the key to receive JESSICA funding. High economic and financial profitability of the regions are the two requirements of eligibility of JESSCIA funding. Further, re-payability is a crucial condition of receiving JESSICA funding.
5. JESSICA funding serves as the important message to boost economic development in urban areas. In this regard, financial instruments should be taken into account while supporting the urban development.

The second session was chaired by Piotr Idczak (Poznań University of Economics and Business) and was composed by another four papers.

Małgorzata Dziembała, University of Economics in Katowice, The sustainable competitiveness of the CEE regions in the post-COVID-pandemic – the case of Polish regions. Małgorzata Dziembała stressed that importance of sustainable competitiveness and resilient regional economies:

1. Factors such as support for institutions, personal security, nutrition, basic care and wellness (social dimension); human resources, institutions and ICT development (economic dimension) influence the regional competitiveness.
2. There’s diversification of Polish regions in terms of sustainable competitiveness against other regions in the CEE countries.
3. Promotion of sustainable competiveness is crucial for creating the resilient regional dimensions across the CEE countries
4. Some factors identified to social and economic dimension are essential for sustainable economic development

Cristina Lincaru, National Scientific Research Institute for Labour and Social Protection, Cohesion in the new sustainability framework. Cristina Lincaru discussed Cohesion Policy evolving in time through changing its objectives:

1. Geography of discontent brought as priority the individual cohesion issue.
2. There’s link between Social Progress and new cohesion policy objectives. This link is a starting for a better analysis of objectives aimed to be evaluated. It’s, therefore, important to make a distinction between subject and action in social progress
3. There is radical cohesion policy transformation under the 2021-2030 period and individual cohesion is challenged in the new sustainability framework (Agenda 2030). Under the new Framework, cohesion policy needs to focus on disposition of collective actors, in both structural and individual terms, to work together. It’s important to keep cohesion policy together and to use endogenous capacities together. It’s important that cohesion policy doesn’t leave anybody behind.

Serafin Pazos Vidal, PhD European Union, Convention of Scottish Local Authorities, The Demise of “place”? Assessing the Cohesion Policy package 2021-2027 in the times of COVID-19 and Structural Reform. Serafin Pazos Vidal left four key messages:

1. Territorial Cohesion is a contingent concept. This concept is subject to great reflection. It was firstly recognised by the Lisbon Treaty, however, without consensus.
2. EU Cohesion Policy is marred by internal silos and external threats.
3. How the partnership principle works in practice remains an open question. In other words: Is it captured in real life ? How does cohesion policy apply in practice ? The partnership principle is a corporatist approach (top-down approach) ? Therefore, it’s important to  take into account how cohesion policy together with the partnership principle work in real life,
4. The Recovery and Resilience Facility is the biggest ever conceptual challenge to cohesion policy because of neither the partnership principle nor the multi-level governance (the RRF is not under the shared management).

Anastassios Chardas, Democritus University of Thrace, Conceptual and policy changes underpinning the European Union Cohesion Policy: from exogenous to endogenous perspectives. Anastassios Chardas underlined endogenous and exogenous perspectives on cohesion policy:

1. Conceptual and policy underpinnings of EU Cohesion Policy have changed substantially.
2. Late 1980s- early 2000s exogenous conceptual underpinnings were complimentary to Single Market and EMU.
3. Mid 2000s onwards were driven by endogenous institutional approaches.
4. In post 2020  non- economic policy issues dominated in CP.

Again each session was followed by dynamic discussion among the speakers and participants.