Introduction The European Union was created with the aim of contributing economic growth and development of European countries through establishing a common currency and a single market. According to economics, breaking down existing barriers will cause the escalation of positive economic effects through efficiency and redirection of resources to cost-effective investments. However, equal distribution of profits among the members in freely competing markets is not possible. Newly entering member states having different conditions received different end results from the integration. This uneven distribution within the integration may be hindered by cohesion thus a need for regional policy. The European Union regional policy covers all European regions and consists of three objectives: employment and regional competitiveness, convergence as well as territorial cooperation (Cini, 2003). The regional policy environment has however become very complex and regional policy makers at the national and EU levels are facing the key challenge of globalization. The increasing internalization of economy, the removal of trade barriers within the EU, technological change and the shift towards knowledge-based economy has been actively restructuring the competitive advantage of regions and countries (Boldrin & Canova, 2001). Arguments for EU regional Policy The main argument for the EU regional policy is the presence of large income disparities within the EU. In the Treaty of Rome signed in 1957, the goal of the EU regional policy was aimed at strengthening the economic units of the community as well as ensuring their harmonic development according to Steinen (1991). In any economic unit, there will always be stronger and weaker territorial units in terms of dynamism and economic performance. It has been seen that regions in relative ascendancy and decline can be found in all member states. These disparities are not temporary aberrations but have persisted over long periods. National policies have been under heavy pressure from the effects of globalizations and have mainly focused on increasing competitiveness in areas where different countries can afford and handle. In the EU, uneven economic performance can be limited through a top-down approach in which the EU policy takes responsibility (Krugman & Venables, 1999). Justification of a common EU policy has been provided on the grounds of solidarity. EU regional policy seeks to find spatial balance in economic development so as to ensure that all economies achieve their full potential. The EU regional policy also presses for cohesion within the member states and in the community as a whole. Cities such as London and Paris can be able to deal with any problems of deprivation in their worst affected territories while others such as Portugal and Greece have for a long time been unable to deal with regional disparities. Argument for a common EU policy can thus be made on an institutional capacity as well as in a political capacity. Some member states have been unable to institute internal cohesion policy or to develop proper priorities for such a policy. The EU on the other hand has developed a cohesion policy that relies on two basic measures: unemployment rates which is social cohesion and GDP per head that is economic cohesion (Midelfart-Knarvik & Ov