11.5.77 Official  Journal  of the European  Communities No C 114/35 
1.7. It  would  point  out  that  users  should  be 
completely  free  to choose  whether  to use  carbon 
paper,  direct  reproduction  or a matrix  and  masks 
when  filling  in the  documents.  Also,  it may  happen 
in some  cases  that  export  and  transit  documents  are 
filled  in separately  instead  of being  typed  out  at one 
go because  of the  way  a firm  is organized  or because 
of business  requirements. 
1.8. The  deadlines  for the introduction  of the  new 
forms  should  be quite  long.  Once  they  have  been 
fixed,  the Commission  and  the Member  States  should 
organize  a large-scale  information  campaign  directed 
at users.  Customs  forms  are  used  by the  million  in the Community  and  it must  be ensured  that  (a) all 
users  are supplied  with  the  new  forms  and  (b) stocks 
of the  forms  in current  use,  which  are  in some  cases 
considerable,  are disposed  of. 
1.9. Finally,  the  Committee  would  urge  the 
Commission  and  the  Member  States  to make  a real 
effort  to reduce  the  amount  of information  which 
users  are  asked  to supply.  While  recognizing  the 
usefulness  of statistics,  for  example,  the  Committee 
notes  a tendency  amongst  governments  and  specialists 
to ask  for  more  and  more  detailed  information, 
thereby  placing  a further  burden  on users. 
Done  at Brussels,  30 March  1977. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
Opinion  on how  regional  development  helps  solve  unemployment  and  inflation  by 
making  for  a more  balanced  distribution  of the  working  population 
The Opinion  of the  Committee  is not  based  on any  text. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 137th  plenary  session  held  on 25 and  26 February  1976,  the  Committee,  acting 
on a proposal  from  the Bureau,  decided  to deliver  an opinion  on the  abovementioned 
subject  on its own  initiative. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the  above  matter  at its 
147th  plenary  session,  held  in Brussels  on 30 and  31 March  1977. 
The full  text  of the  opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the  Decision  taken  by its Bureau 
on 24  February  1976,  instructing  the  Section  for 
Regional  Development  to do  the  groundwork  for 
an own-initiative  opinion  (fourth  paragraph  of 
Article  20 of the rules  of procedure)  on:  how  regional 
development  helps  to  solve  unemployment  and 
inflation  by making  for a more  balanced  distribution 
of the working  population, Having  regard  to its previous  opinions  and  studies 
on regional  development  (1), 
Having  regard  to  the  report  submitted  by  the 
rapporteur,  Mr Bornard, 
Having  regard  to the  opinion  issued  by the  Section 
for Regional  Development  at its meeting  on 8 March 
1977, 
(») OJ No C 131,  12. 6. 1976,  and  OJ No C 56, 7. 3. 1977. 
No C 114/36 Official  Journal  of the European  Communities 11.5.  77 
Having  regard  to the discussions  at its 147th  plenary 
session  of 30  and  31  March  1977  (meeting  of 
31 March), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
with  no votes  against  and  7 abstentions: 
1. Overall  layout 
1.1. The  attitude  of the Community  institutions 
1.1.1.  The  Commission,  the  Council  of Ministers 
and the  European  Parliament  have  always  felt  that 
the improvement  of the  employment  balance  was 
one of the  key  objectives  of regional  policy. 
1.1.2.  The  Economic  and  Social  Committee  has 
repeatedly  endorsed  this  approach  and  in this 
connection  has  studied  a number  of development 
policy  experiments. 
1.1.3.  In  the  light  of these  experiments,  the 
Committee  considers  that  the  criteria  for  assessing 
the employment  situation  must  be improved  and  that 
regional  policy  instruments  must  be put to better  use 
in order  to cope  with  the employment  situation.  The 
Committee  also  takes  the  view  that,  leaving  aside 
employment  problems,  a better  regional  balance  can 
alleviate  certain  pressures  and  make  a significant 
contribution  to the fight  against  inflation. 
1.2. For  a better  assessment  of the employment 
situation 
1.2.1.  The  criteria  for  analyzing  the  regional 
employment  situations  include: 
— high,  chronic  unemployment, 
— rapid  fall  in the  percentage  of the  labour  force 
engaged  in farming, 
— a high  percentage  of jobs  in declining  industries, 
— structural  under-employment. 
1.2.2.  These  criteria  should  be amplified  to include: 
— emigration  and  net migration, 
— rate  of population  growth  and  ageing  of the 
population, — average  incomes/wages, 
— the  state  of infrastructures. 
1.2.3.  To  gear  regional  policy  more  closely  to the 
requirements  of the  employment  situation,  in all its 
aspects,  the Committee  calls  for: 
— better  regional  and  local  statistics, 
— definition  of a common  yardstick, 
— greater  attention  to be paid  to all those  factors 
by the  ERDF.  The  Committee  stresses  however 
that the  areas  receiving  aid  from  the  Fund 
coincide  pretty  well  with  the  areas  where 
unemployment  is highest. 
1.3. Greater  efficiency,  in respect  to employment,  of 
regional  policy  instruments 
1.3.1.  It  became  apparent  that  in many  cases 
regional  policy  had  made  a significant  contribution 
towards  solving  employment  difficulties,  without  of 
course  solving  all  the  problems  which  require 
constant  attention. 
1.3.2.  There  is a very  wide  range  of regional  policy 
instruments: 
— national  investment  aid systems,  generally  tailored 
to regional  situations, 
— additional  regional  aids, 
— holdings  by regional  bodies, 
— infrastructure  aids, 
— tax  reliefs, 
— support  from  advisory  agencies, 
— aid  from  Community  bodies. 
1.3.3.  In  the  interests  of higher  efficiency  the 
following  rules  are essential: 
— none  of these  forms  of aid is sufficient  on its own. 
They  must  be part  of an overall  blueprint, 
— aids  which  encourage  the  direct  creation  of jobs 
must  be expanded,  alongside  infrastructure  aids 
which  are necessary  and  complementary, 
11.5.  77 Official  Journal  of the  European  Communities No C 114/37 
— as regards  the jobs  to be created,  steps  must  be 
taken  to prevent  excessive  reliance  on  one 
industry,  independent  establishments  must  be 
developed,  existing  economic  activity  must  be 
expanded.  Vocational  training  facilities  and 
employment  opportunities  in forestry  must  not 
be overlooked, 
— if the jobs  created  are to be viable  and  durable, 
plans  must  be vetted  and  amenities  must  be deve-
loped  so that  handicaps  to regional  development 
can be phased  out, 
— such  measures  to  standardize  development 
conditions  are  the  best  way  of preventing 
competition  distortions, 
— Community  aids  must  be better  coordinated. 
1.3.4.  Attention  must  also  be focused  on a number 
of general  factors  which  are largely  instrumental  in 
determining  the  effectiveness  of specific  measures: 
— the  general  economic  climate  must  be favourable, 
— there  must  be  an  overall  regional  policy 
comprising  both  incentives  and  disincentives, 
— regional  policy  must  be consistent  with  other 
Community  policies, 
— a more  thorough-going  regional  policy  must  be 
adopted.  In addition  to creating  employment  it 
must  seek  to improve  living  conditions  and 
provide  greater  equality  of opportunity  as between 
the regions, 
— it is essential  to establish  local  bodies  to 
undertake  research  and  action, 
— better  information  on facilities  for aid and  action. 
1.4. Contribution  to the fight  against  inflation 
1.4.1.  Far  from  fuelling  inflation,  regional  policy 
makes  a contribution  to the  drive  against  inflation. 
1.4.2.  It  helps  to combat  excessive  congestion 
which  apart  from  creating  social  pressures,  pushes 
up the cost  of collective  investment. 
1.4.3.  It  helps  to align  productivity  conditions  and 
in doing  so reduces  pressures  on the  wages  and 
prices  front  by creating  more  uniform  conditions. 
1.4.4.  By  creating  the  conditions  for  a better 
balance  between  the  regions,  regional  policy  is a positive  counter-inflationary  factor  apart  from  its 
indisputable  — but  difficult  to quantify  — contri-
bution  to the improvement  of living  conditions. 
1.4.5.  The  bulk  of the  experiments  referred  to 
have  had  a positive  effect  on the  employment 
situation  and  appear  to have  a role  to play  in the 
fight  against  inflation.  Regional  policy  instruments 
should  therefore  be further  strengthened  to allow 
them  to tackle  the twin  priority  targets  of unemploy-
ment  and  inflation. 
1.4.6.  The  Committee  therefore  suggests  that,  under 
the auspices  of the  Commission,  local-level  regional 
policy  planners  should  come  together  to exchange 
views  and  get  to know  more  about  the  scope  of, 
and arrangements  for,  the aid  which  the  European 
Communities  can contribute. 
2. Criteria  for assessing  regional  employment  patterns 
In a previous  study,  the  Economic  and  Social 
Committee  laid  down  a whole  series  of criteria  for 
channelling  priority  aid  towards  particular  regions 
according  to their  employment  situation.  These 
criteria  which  are  set out  in summary  form  below 
are extremely  judicious  as the examples  listed  in the 
report  show. 
2.1. High  chronic  unemployment  over  a period  of 
years 
In most  of the  cases  cited,  unemployment  exceeds 
the national  average.  But  it must  be remembered  that 
the unemployment  percentages  given  for  each 
Member  State  are not based  on indentical  criteria. 
2.2. Rapid  fall  in the  percentage  of labour  force 
employed  in farming 
The number  of people  working  in agriculture  is 
declining  with  each  successive  year  and,  although 
the trend  has  slowed  down  slightly,  it is likely  to 
continue.  Areas  which  are predominantly  agricultural 
therefore  face  serious  employment  problems.  Special 
attention  must  be paid  to these  areas,  as a reasonably 
balanced  employment  situation  can  be maintained 
only if new  jobs  are created  to replace  those  lost  in 
agriculture. 
No C 114/38 Official  Journal  of the  European  Communities 11.5.  77 
2.3. A high  percentage  of jobs  are  provided  by 
declining  industries 
The same  applies  to areas  which  rely  mainly  on 
industries  such  as  coal-mining,  shipbuilding  and 
textiles.  The  decline  of these  industries,  or more 
exactly,  the  drop  in the  number  of workers  they 
employ,  means  that  strenuous  efforts  will  have  to 
be made  to  create  alternative  employment  and 
prevent  a real  decline  in areas  such  as the Highlands 
of Scotland,  Wales,  Cumbria  and  Liverpool  in the 
United  Kingdom,  and  Nord  Pas-de-Calais  and  Ales 
in France.  The  situation  in these  areas  must  be 
analyzed  forthwith  so that  the  requisite  steps  can  be 
taken  in time. 
2.4. Structural  under-employment 
The number  of registered  unemployed  is not the sole 
indicator  of employment  difficulties.  A further  sign 
is when  the  active  labour  force  represents  a smaller 
proportion  than  usual  of the total  population.  A high 
number  of women  looking  for  work  is also  typical 
of structural  under-employment. 
There  are also  a number  of other  factors. 
2.5. Emigration  and  net migration 
2.5.1.  Unemployment  may  be relatively  low  in a 
given  region  because  job-seekers  leave  to find  work 
elsewhere.  Net  migration  therefore  gives  an indication 
of the  dynamism  of a region  and  its capacity  to 
achieve  balanced  employment. 
2.5.2.  A  careful  study  must  be  made  of net 
migration  but  this  feature  is, in itself,  only  one  of 
several  factors  to be taken  into  account  when  making 
an assessment  of a given  area.  In point  of fact  an 
apparent  balance  may  conceal  population  movements, 
such  as workers  returning  to their  own  country  either 
to retire  or as a consequence  of temporary  recessions. 
An example  of the  latter  type  of movement  is 
provided  by workers  from  the south  of Italy  who  are 
returning  home  at the present  time  because  of cyclical 
setbacks  in the industrialized  areas. 
2.6. Kate  of population  growth  and  ageing  of the 
population 
In certain  regions  there  is no  net  migration  of 
population.  This  absence  of net  migration  is of 
greatest  significance  in regions  which  have  a high  rate 
of natural  population  growth.  In an area  with  a high 
birthrate  it is obvious  that  more  effort  will  be needed 
in order  to maintain  full  employment.  An  ageing 
population  is another  yardstick  for the situation  in a 
region. 2.7. Average  incomes!wages 
The level  of incomes/wages  also  tells  us something 
about  employment  in a region.  A low  level  usually 
points  to the presence  of marginal  economic  activities 
with  low  productivity  or businesses  suffering  from 
particular  disadvantages. 
2.8. Infrastructure 
2.8.1.  Although  the question  of infrastructure  does 
not come  within  the  scope  of a straight  analysis  of 
the employment  situation,  it is nevertheless  a matter 
of decisive  importance  for the regions. 
2.8.2.  The  case  studies  which  have  been  considered 
show  that  isolated  areas  which  do not  have  satis-
factory  transport  links  with  other  economic  regions 
find themselves  facing  almost  insuperable  problems. 
2.8.3.  In  the  same  way,  regions  are  clearly  not 
attractive  to potential  new  industries  if they  have  no 
established  industrial  areas,  or if their  infrastructure 
is antiquated. 
2.8.4.  Regional  development  can  likewise  be held 
back  by  the  absence  or inadequacy  of schools, 
vocational  training  centres,  housing,  medical  and 
cultural  facilities,  administrative  infrastructure  and 
hotels.  Shortcomings  such  as these  must  be taken 
into consideration  when  assessing  regions,  and  their 
elimination  must  be the  basic  aim  of redevelopment 
plans. 
3. Comments  on the criteria  for assessing  employment 
patterns 
If all  the  above  factors  are  to be  taken  into 
consideration  to a greater  extent  and  if they  are  to 
be assessed  from  more  of a Community  point  of 
view,  measures  will  have  to be taken  in several  fields. 
3.1. Better  regional  and  local  statistics 
3.1.1.  It  was  found  that  statistics  were  lacking  to a 
relatively  large  extent.  Also  they  were  often  just  a 
breakdown  of national  statistics. 
3.1.2.  First  and  foremost,  regional  data  relating  to 
the factors  listed  above  should  be  periodically 
updated. 
3.1.3.  The  authorities  must  encourage  supplemen-
tary studies  on regional  situations  and  prospects,  so 
that the requisite  regional  measures  can  be undertaken 
sufficiently  in advance.  These  studies  should  be 
carried  out  by regional  or local  bodies. 
11.5.77 Official  Journal  of the  European  Communities No C 114/39 
3.2. Search  for a common  yardstick 
3.2.1.  Regional  employment  patterns  should  be 
analyzed  on the basis  of standard  criteria  subsuming 
the factors  given  above. 
3.2.2.  The  information  to be provided  annually 
under  the  Regulation  setting  up  the  Regional 
Development  Fund,  should  shed  some  light  on the 
situation  in individual  regions. 
3.2.3.  In  its outline  development  plan,  the Regional 
Policy  Committee  has  rightly  called  for  economic 
and social  analyses  of regions. 
3.2.4.  The  areas  for which  aid is requested  differ 
very considerably  in size,  and  there  is often  extreme 
variation  within  them. 
In view  of these  facts  the  following  information 
should  be appended  to all applications  for aid from 
the Regional  Development  Fund: 
— Analysis  of the employment  situation  in the area 
— Percentage  of unemployed 
— trend  over  last  ten years, 
— comparison  with  national  average, 
— forecast  based  on projection  of present 
trend. 
— Employment  trends  in dominant  industries  in 
past years  and,  if possible,  also  forecasts.  This 
applies  to industries  such  as: 
— agriculture, 
— mining, 
— shipbuilding, 
— textiles. 
— Labour  force  as  a percentage  of  total 
population 
— comparison  with  national  figure. 
— Net  migration 
— trend  over  recent  years. 
— Rate  of  population  increase  (or  overall 
propulation  trends  over  last  few  years) 
— Average  wage  or average  income 
— compared  with  national  average. 
3.3. How  the  Regional  Development  Fund  should 
take these  factors  into  account 3.3.1.  The  Regional  Development  Fund  should  take 
the fullest  possible  account  of these  factors  when 
deciding  how  to allocate  priority  aid. 
3.3.2.  Whatever  the  shortcomings  of the  analyses 
of regional  situations  and  the  statistics  that  are 
currently  available,  it is interesting  to observe  that 
the areas  receiving  aid from  the Fund  coincide  pretty 
well with  the  areas  of highest  unemployment  and 
out-migration. 
3.3.3.  The  figures  showing  unemployment  rates 
are now  homogeneous.  The  average  unemployment 
rates  in the  various  Member  States  given  in 
Community  documents  relate  to areas  which  differ 
very considerably  in size  (in Germany  for  example 
the figures  are given  for 550  areas,  in France  for 95, 
in Italy  for 94 and  in the UK  for 11). 
3.3.4.  Irrespective  of these  differences,  although 
the employment  situation  ought  to be analyzed  with 
reference  to more  adequate  indicators  than  just 
unemployment  and  net migration,  it is clear  from  the 
figures  given  that  the Regional  Development  Fund's 
aid is indeed  directed  towards  the  regions  with  the 
severest  employment  difficulties.  This  is not  to say, 
however,  that  there  is no room  for improvements. 
4. Regional  policy  instruments  and  stimulation  of 
job creation 
An examination  of the various  examples  of regional 
action  shows  that  the  types  of action  are  complex 
and extremely  varied.  It is difficult  to assess  how 
effective  individual  types  of action  are,  particularly 
since  the situations  to which  they  are applied  seem  to 
call for specific  measures. 
The action  may  be classified  into  several  categories: 
4.1. Financial  investment  aids 
4.1.1.  Most  Member  States  grant  investment  aids. 
The size  of these  aids  varies  in some  cases  in relation 
to the  difficulties  in the  regions  concerned  and 
depends  on how  much  the  national  exchequers  can 
afford  to spend. 
4.1.2.  The  aids  come  in the form  of loans  (some-
times  at preferential  rates)  and  grants  amounting  in 
general  to 10—30  % of the investment. 
4.1.3.  They  may  be granted  either  for the setting-
up of new  activities  or occasionally  for the expansion 
of existing  activities.  But  in the  latter  case,  aid  is 
generally  granted  at a lower  rate. 
No C 114/40 Official  Journal  of the  European  Communities 11. 5. 77 
4.1.4.  Sometimes  too,  investment  aids  may  be 
limited  to a maximum  amount  per  new  job  created. 
The more  serious  the  employment  situation  in the 
area in question,  the higher  the ceiling. 
4.1.5.  Frequently  there  are regional  aids  in addition 
to national  aids.  Sometimes,  regional  and  local 
authorities  provide  supplementary  loans  and  grants. 
Certain  credit  institutions  do likewise. 
4.1.6.  Some  regional  (and  even  national)  bodies 
with  certain  funds  at their  disposal  have  been 
authorized  to take  holdings  in companies.  Sometimes 
these  holdings  are  for  a limited  period  to help 
companies  get started,  and  also  to allow  the funds  to 
circulate  from  one  company  to another. 
4.2. Infrastructure  aids 
4.2.1.  It  is also  very  common  for  aids  to be 
directed  not  only  towards  investment  in companies 
but also  towards  the construction  and  modernization 
of infrastructure  and  equipment. 
4.2.2.  In  the  cases  which  have  been  considered, 
transport  is the  prime  beneficiary  (roads  and 
motorways  which  open  up remote  regions,  railways, 
airports  and  port  installations).  These  are  cases 
where  the building  of a road  or a motorway  has  not 
sufficed  to  generate  development.  Conversely, 
however,  few  isolated  regions  are  developing 
satisfactorily. 
4.2.3.  After  transport  come  industrial  estates  with 
the associated  infrastructure.  Telephone  services  also 
receive  special  attention. 
4.2.4.  Sometimes  even  buildings  are  constructed 
on industrial  estates  for rent  or sale  to firms.  Local 
authorities  have  been  empowered  to take  such  action 
in the  United  Kingdom  and  it is relatively  common 
there. 
4.2.5.  Aids  are sometimes  earmarked  for setting  up 
social  and  cultural  services,  such  as educational  and 
training  centres. 
4.2.6.  Housing-renovation  programmes  and,  more 
generally,  environment-improvement  programmes 
have  also  often  received  encouragement,  particularly 
in old  industrial  areas  where  the  antiquated  state  of 
local  facilities  has  tended  to put  off new  investors. 4.3. Tax  advantages 
4.3.1.  Tax  advantages  also  come  under  the heading 
of aid.  They  are sometimes  given  for a limited  period 
at national  level  and,  sometimes  at local  level  too. 
4.3.2.  The  extreme  instance  of such  aid  is to be 
seen at Shannon,  where  incoming  companies  enjoy 
tax exemption  in a new  area  which  has  been 
transformed  into  what  amounts  to a free  port.  This 
measure  which  has  been  used  in other  parts  of 
Ireland,  has proved  to be successful. 
4.4. Support  from  advisory  agencies 
4.4.1.  It  is necessary  to emphasize  the  crucial 
support  which  has  been  afforded  to  regional 
development  and  job  creation  operations  by agencies 
set up to promote  and  coordinate  projects. 
4.4.2.  Most  often  the  agency  concerned  is a 
special  authority  set up at regional  or local  level  and 
comprising  representatives  of local  communities  or 
local  authorities,  and  economic  and  social  interest 
groups.  Such  bodies'  powers  may  extend  to the right 
to purchase  land  and  they  may  even  set  up new 
activities  themselves.  Their  advice  and  technical  and 
administrative  support  has  proved  to be the decisive 
factor  in many  cases,  particularly  in the  United 
Kingdom. 
4.4.3.  Occasionally,  the  dominant  industry  in a 
region  may  take  on this  role.  This  has  been  the case 
with  the  coal-mining  industry  in France.  In several 
coal-mining  areas  the  industry  has  cooperated  with 
a number  of special  bodies  that  have  been  set up 
especially  with  a view  to introducing  new  industries. 
4.5. Aid  from  Community  bodies 
At the  end  of 1976,  the  Commission  published  a 
brochure  about  Community  aid.  The  purpose  of this 
brochure  is  to  provide  information  on  the 
Community's  financing  facilities  and  the  procedure 
to be followed  by those  who  wish  to use  them.  The 
brochure  deals  in turn  with  the  financial  assistance 
granted  by the European  Coal  and  Steel  Community 
(ECSC),  and  the  loans  granted  by the  European 
Investment  Bank  (EIB),  the  European  Regional 
Development  Fund  (ERDF),  the European  Agricultural 
Guidance  and  Guarantee  Fund  (EAGGF)  and  the 
European  Social  Fund. 
The passages  in this  brochure  which  are of particular 
relevance  to this  opinion  are  in the  report. 
11.5.77 Official  Journal  of the  European  Communities No C 114/41 
5. Comments  on regional  policy  measures 
Many  problems  are caused  by the fact  that  regional 
policy  and  job-creation  measures  are so multifarious. 
A number  of conclusions  may,  however,  be drawn 
from  experience  to date. 
5.1. The  need  for a coherent  set of measures 
5.1.1.  It  very  often  happens  that,  when  a region 
becomes  aware  of its difficulties  and  its employment 
problems  and  starts  to look  for a solution,  the first 
idea that  comes  to mind  is to offer  firms  financial 
assistance  or exemptions  in order  to encourage  them 
to set up in the region  in question. 
5.1.2.  Such  financial  incentives  may  well  be 
important  and  necessary  but  cannot,  in themselves, 
constitute  a genuine  regional  policy. 
5.1.3.  Experience  has  shown  — and  the  cases 
considered  by the Group  have  confirmed  this  — that, 
if regional  policy  action  is to be successful,  a whole 
set of multifarious  measures  must  be taken: 
— financial  aid — this  is, of course,  necessary  in 
order  to offset  the disadvantages  which  discourage 
firms  from  moving  into  regions  needing 
development  or redevelopment, 
— measures  to improve  infrastructure  and  facilities 
are also  needed,  as firms  are  generally  not  -
prepared  to invest  in areas  which  are  isolated, 
which  do not  have  satisfactory  communications 
and where  industrial  estates  and  facilities  are 
either  lacking  or inadequate, 
— finally,  and  perhaps  most  important  of all,  new 
establishments  are  set  up only  if a real  and 
substained  effort  is made  to encourage  them. 
These  efforts  must  be backed  up by a regional 
body  able  to stimulate  and  coordinate  measures 
and establish  permanent  liaison  with  the 
national  and  international  authorities  providing 
the necessary  outside  assistance.  It is essential  to 
seek assistance  from  existing  bodies  or to set up 
ad hoc  bodies. — economic  and  social  analyses  of regions, 
— clear-cut,  coherent  development  goals, 
— development  projects, 
— the  provision  of funds, 
— the  appointment  of persons  to direct  operations. 
5.2. Aid  in respect  of infrastructure,  investments  and 
the direct  creation  of new  jobs 
5.2.1.  The  overall  cost  of these  measures  varies 
considerably  from  case  to case  and  from  country  to 
country.  In 1975,  the cost  to the European  Regional 
Development  Fund  of creating  a new  job  in Italy 
was five  times  the figure  for Ireland.  The  reason  for 
this difference  was  that  RDF  aid  to Italy  was 
concentrated  mainly  on major  infrastructure  schemes. 
It is, however,  always  difficult  to estimate  the overall 
cost of creating  a new  job,  since  a job  is created 
as a result  of a combination  of very  complex 
measures. 
5.2.2.  In  view  of the seriousness  of the employment 
problems,  the  question  nevertheless  arises  as to 
whether  priority  should  not  be given  to direct  job-
creation  aid.  Between  70 and  80°/o  of RDF  aid  is 
spent  on infrastructure.  The  effect  of this  aid on the 
creation  of new  jobs  is therefore  mainly  indirect. 
5.2.3.  The  creation  of new  jobs  must  of course 
remain  an absolute  priority;  the number  of new  jobs 
which  will  be created  by particular  measures  must 
continue  to be the  decisive  factor.  Investment  aid 
schemes  which  specify  the creation  of a given  number 
of new  jobs  (as in the  case  with  RDF  aid)  should 
therefore  be encouraged.  On  the  other  hand,  aid 
should  not  be restricted  to investments  likely  to 
result  in, say,  at least  ten new  jobs.  This  could  rule 
out certain  interesting  measures,  particularly  in rural 
areas.  One  way  of cutting  down  on paper  work  and 
administrative  costs  might  be to give  aid to composite 
job-creation  programmes,  even  if the  individual 
projects  involved  would  create  less  than  ten new  jobs. 
5.1.4.  Success  will  generally  only  be obtained  if 
convergent  measures  are taken  in the abovementioned 
three  fields.  The  development  plan  adopted  by the 
Regional  Policy  Committee  is a very  interesting  idea 
in this  respect  as it advocates: 5.2.4.  It  would,  however,  probably  be risky  to 
provide  only  such  direct  aid.  It has been  demonstrated 
that one  of the major  causes  of regional  backwardness 
is isolation  from  more  economically  active  areas  and 
the lack  of basic  facilities.  If a region  is to 'take  off 
No C 114/42 Official  Journal  of the European  Communities 11.5.77 
economically,  it may  well  be absolutely  essential  to 
end its  isolation,  to set  up  industrial  estates  for 
small  as well  as for large  firms  and  to develop  and 
renew  its infrastructure.  It would  seem,  therefore, 
that measures  designed  to achieve  these  aims  must 
also be strongly  encouraged. 
5.2.5.  Similarly,  special  attention  must  be paid  to 
the problem  of  housing.  The  building  or 
modernization  of dwellings  may  be important  aspects 
of a regional  development  drive. 
5.2.6.  Rather  than  conflicting  with  each  other, 
infrastructure  aids  and  direct  job-creation  aids  are, 
in fact,  complementary  to a high  degree.  Infrastructure 
shows  them  to be necessary,  and  direct  job-creation 
aid must  be expanded  as far as possible. 
5.3. Choice  of jobs  to be created 
5.3.1.  There  can  be no question  of laying  down  in 
advance  what  kind  of jobs  should  be created  in 
given  regions  — even  if natural  conditions  in those 
regions  are  inherently  suitable  or unsuitable  for  a 
particular  type  of economic  activity. 
5.3.2.  There  are many  examples  of the vulnerability 
of areas  which  have  only  one  economic  activity  or 
industry.  Past  experience  thus  argues  in favour  of 
diversification,  whether  this  be  diversification  of 
vocational  skills  or a mix  of production  and  tertiary 
activities. 
5.3.3.  The  decentralization  policy  pursued  in a 
number  of countries  (use  of disincentives  in congested 
areas,  and  of incentives  to attract  industrial  and 
service  activities  —  banks,  insurance  companies, 
administrative  units  — to problem  regions)  has  done 
much  to improve  the  employment  situation.  This 
action  should  therefore  be continued. 
5.3.4.  On  the  other  hand,  in recession  periods 
large  firms  often  tend  to give  their  old-established 
units  priority  over  their  comparatively  less-well-rooted 
establishments  in development  areas. 
5.3.5.  So  it is not  sufficient  to attempt  to induce 
large  firms  to decentralize.  Entire  firms  should  be 
cncouraged  to set up in the  regions. 5.3.6.  Efforts  must  also  be made  to expand  and 
consolidate  existing  industries  and  economic 
activities.  Such  action  may  in some  cases  enable 
jobs to be saved,  or even  new  jobs  to be created, 
with  the  minimum  of trouble.  The  cost  involved  is 
sometimes  relatively  low.  The  jobs  thus  saved  (or 
created)  must,  however,  be useful,  permanent  and 
genuinely  productive,  as  well  as  meeting  the 
requirements  of the  workers  concerned. 
5.3.7.  It  should  be examined  how  forestry  can  be 
expanded  in some  regions.  The  Commission  Directive 
on this  matter  has  not  been  adequately  applied.  The 
forestry  sector  is often  over-neglected,  even  though 
the Community  is short  of forestry  resources  and  is 
forced  to import  large  quantities  of timber.  It would 
seem  that  the  reforestation  of some  areas,  along 
with  the  upkeep  and  harvesting  of forests  and  the 
work  provided  by the  transportation  and  processing 
of timber,  could  make  a long  significant  contribution 
towards  solving  employment  problems  in several 
regions. 
5.3.8.  Special  attention  must  be  paid  to  the 
provision  of facilities  for general  education  and  for 
training  local  labour  in the  skills  needed  for  newly 
created  jobs.  Lack  of a broad  range  of job  skills  in 
a particular  area  is just  as detrimental  as dependence 
on a single  industry. 
5.4. Prerequisites  for  the  creation  of  lasting  new 
employment 
5.4.1.  Experience  has  also  shown  that  great 
attention  has  to be given  to the  durability  of the 
new jobs  created. 
5.4.2.  Not  only  does  the  closing  down  of an 
enterprise  which  was  given  special  incentives  to come 
to a given  region  represent  a deplorable  waste,  it 
also makes  further  projects  more  difficult,  while 
sapping  morale  in the particular  sector  concerned. 
5.4.3.  The  grant  of aid  must  therefore  be made 
subject  to a close  examination  of the  prospects  and 
qualifications  of applicants  and  careful  checks  must 
also subsequently  be carried  out  into  the  way  the 
funds  are used.  The  competent  regional  body  should 
be involved  in these  checks. 
5.4.4.  At  all events,  the  new  economic  activities 
should  be given  the  chance  to compete  on an equal 
footing  with  comparable  activities  in other  areas. 
5.4.5.  In  other  words,  if — to start  with  — grants 
and special  concessions  are  no doubt  necessary  to 
offset  handicaps,  these  handicaps  themselves  must 
11.5.77 Official  Journal  of the European  Communities No C 114/43 
be eliminated  as quickly  as possible,  with  efforts 
being  concentrated  on  the  infrastructure  and 
environment,  so  that  the  area  in question  can 
achieve  self-sustaining  growth.  This  is probably  the 
best way  of ensuring  that  newly  created  jobs  are 
permanent. 
5.4.6.  It  also  confirms  the  importance  of the 
current  efforts  of the  Commission,  which  is urging 
applicants  for  Regional  Fund  aid  to make  their 
applications  within  the  framework  of a regional 
policy  plan. 
5.4.7.  A  genuine  regional  policy  calls  for  well 
thought-out  development  programmes  which  enable 
each  region  to make  up lost  ground  and  to have  the 
same  opportunities  as other  regions. 
5.5. The  danger  of distorting  competition 
5.5.1.  Viewed  from  this  angle,  the  aid  granted  to 
firms  which  agree  to set  up in backward  regions 
ought  not  to give  rise  to any  serious  danger  of 
competition  being  distorted. 
5.5.2.  Apart  from  the  advantage  it may  have  in 
making  for  a better  balance  in the  distribution  of 
activities  throughout  each  Member  State  and  the 
Community  (a point  discussed  later  on),  such  aid 
compensates  for  unquestionable  difficulties  which 
have  hitherto  hampered  development. 
5.5.3.  This  aid  is intended  to produce  a situation 
where  all regions  have  equal  opportunities.  This  does 
not mean  that  all regions  are to develop  on the same 
lines.  It simply  means  that  they  must  be able  to find 
their  own  ways  of developing. 
5.5.4.  It  cannot  be denied,  however,  that  firms  are 
hampered  by decentralization  constraints  and  by ob-
ligations  to make  at least  some  of their  investments 
in particular  areas. 
5.5.5.  These  obligations  are,  however,  generally 
offset  by the  granting  of additional  aid  in cases 
where  investments  are made  in particular  areas.  It is, 
of course,  important  to ensure  a balance  between 
restrictions  and  compensatory  aid,  so that  firms  may 
continue  to expand. 
5.5.6.  The  costs  involved  in  bringing  about 
balanced  regional  development  clearly  vary  from 
Member  State  to Member  State.  In view  of the  way 
in which  it is financed,  the common  regional  policy 
is an ideal  instrument  for  bringing  about  more genuine  solidarity  between  all the  States  and  regions 
of the  Community.  This  is one  of the  reasons  why 
the common  regional  policy  should  be strengthened. 
5.6. The  coordination  of  Community  aid 
5.6.1.  Finally,  it must  be emphasized  that  as yet 
Community  aid  does  not  seem  to have  been  used  to 
maximum  effect. 
5.6.2.  There  are  a good  number  of cases  of aid 
having  been  granted  by the  Regional  Fund,  the  EIB, 
the ECSC,  the EAGGF  or the  Social  Fund.  But  cases 
of aid from  one  of such  sources  being  combined  with 
aid from  other  such  sources  are  rare,  even  though 
joint  aid  could  have  been  granted  under  a fully 
fledged  regional  policy. 
5.6.3.  The  coordination  that  is beginning  to emerge 
between  the  various  Commission  departments  in 
charge  of these  funds  augurs  well  for  the  future. 
Flowever,  an extensive  information  drive  must  be 
undertaken  at regional  level,  so that  the  interested 
parties  themselves  are  better  aware  of the  various 
opportunities  offered  by the Community. 
6. General  prerequisities  for effective  action 
Regardless  of the  form  which  they  take,  the  success 
of job-creation  and  regional  development  measures 
hinges,  to a large  extent,  on a number  of general 
factors. 
6.1. The  general  economic  climate  must  be favourable 
It is always  difficult  to attract  new  industries  to areas 
which  they  would  not  choose  of their  own  accord, 
or which  are suffering  from  de-industrialization.  These 
difficulties  are  compounded  in periods  of economic 
depression,  which  are  obviously  not  favourable  to 
investment  or job  creation.  At any  event  a special 
effort  must  be made  in underdeveloped  areas  and 
regional  policy  must  be integrated  into  a general 
expansion  blueprint.  It is more  difficult  to transfer 
existing  jobs  than  to influence  the  selection  of the 
areas  in which  new  jobs  are to be created. 
6.2. An overall  regional  policy 
6.2.1.  The  abovementioned  measures  will  be all the 
more  effective  if they  form  part  of a comprehensive 
policy. 
No C 114/44 Official  Journal  of the European  Communities 11.5.  77 
6.2.2.  If  work  is to be more  evenly  distributed, 
regional  development  incentives  should  be coupled 
with  disincentives  calculated  to deter  the  establish-
ment  of new  plants  in congested  areas. 
6.3. Regional  policy  must  be  consistent  with  other 
policies 
6.3.1.  Regional  policy  can  assume  its  true 
importance  and  develop  smoothly  only  if it is 
implemented  in a manner  consistent  with  all  the 
other  common  policies,  and  if it is closely  coordinated 
with  the policies  pursued  by the Member  States. 
6.3.2.  Regional  policy  must  take  particular  account 
of the  other  Community  policies.  Otherwise  the 
success  of its  measures  might  be jeopardized  by 
general  economic  developments.  Conversely,  all the 
other  Community  policies  must  ensure  that  they  do 
not impede  the  progress  of the  backward  regions. 
Otherwise  the measures  taken  by regional  policy  may 
be reduced  to the  modest  role  of remedying,  not 
always  adequately,  the  adverse  effects  of the  other 
Community  policies. — all these  questions  are  outside  the  scope  of this 
opinion  but  they  will  certainly  have  to  be 
examined  in more  detail. 
6.5. The  contribution  of  local  bodies 
The Committee  would  point  out  that  regional  policy 
must  help  the  regions  to help  themselves.  It must 
operate  through  local  bodies  which  can  spell  out 
local  needs,  and  play  an active  part  in the  measures 
taken.  The  inhabitants  of the  regions  must  take 
their  fates  into  their  own  hands.  They  must  take  more 
initiative  and  pull  together  more  in every  way,  in a 
direct  attempt  to improve  the  quality  of life  in their 
local  areas  and  strengthen  regional  activities.  This  is 
essential  if regional  measures  are  to be successful 
and have  a lasting  impact.  This  raises  the whole  issue 
of regional  structures,  their  terms  of reference  and 
ways  of keeping  them  in existence. 
6.6. Better  information 
6.4. A common  regional  policy 
We do not  intend  to call  the  responsibilities  of the 
Member  States  into  question.  The  objective  of the 
European  Regional  Fund,  namely  'correction  of the 
main  regional  imbalances',  laid  down  by the  Paris 
Conference  of 1972,  should  not  be considered  with 
undue  haste  to be excessively  narrow.  However,  if 
the purpose  of the  common  regional  policy  is to be 
fully  understood,  it is necessary  to give  further 
consideration  to what  is meant  by the  term  'main 
regional  imbalances'. 
— In any  review  of regional  imbalances,  the problem 
should  not  be considered  solely  from  the employ-
ment  angle, 
— all inequalities  should  be taken  into  account, 
— it is necessary  to revamp  the  regional  policy  — 
integrated  as it is with  the other  common  policies 
— and  gear  it to improving  not  only  the employ-
ment  situation  but  also  living  conditions  in 
general,  the  public  services  that  are  essential 
to the  quality  of everyday  life,  and  the  balance 
between  large  towns  on  the  one  hand  and 
small  towns  and  the  countryside  on the  other, 
— is it not  possible  that  such  a revamped  regional 
policy  may  even  serve  as the  basis  for  an anti-
inflation  drive? 6.6.1.  Much  more  must  be done  to ensure  that  the 
Member  States'  regional  authorities  are fully  informed 
about  Community  aid  facilities.  At the  moment, 
Community  aid  facilities  are a sealed  book  as far as 
most  people  are  concerned.  Improved  publicizing  is 
essential  if these  facilities  are to be better  used. 
6.6.2.  Better  publicizing  is also  essential  if the 
various  approaches  are  to be brought  into  line  by 
gradually  incorporating  regional  measures  in 
Community  development  blueprints  Finally,  better 
publicizing  of Community  aid  facilities  is a way  of 
bringing  home  the  existence  of the  Community. 
6.6.3.  It  is also  very  important  for  much  more 
publicity  to be given  to Community  action. 
6.6.4.  In  this  connection,  the Committee  has  noted 
with  interest  that  the  Commission  has  started  to 
publicize  such  action  in the  Official  Journal  of the 
European  Communities  and  has  prepared  an 
information  brochure  for  industrial  investors. 
Similarly,  hearings  have  been  prepared  to inform  the 
general  public  about  Community  aid  for  road 
building  and  improvement  schemes,  for example.  The 
Commission  is urged  to continue  with  its efforts  in 
this field. 
11.5.77 Official  Journal  of the  European  Communities No C 114/45 
7. Regional  and  counter-inflation  policy 
7.1. Attention  has  already  been  drawn  to the need 
for the regional  policy  to be consistent  with  the other 
common  policies.  The  links  between  regional  policy 
and the  employment  situations  have  already  been 
considered.  An  endeavour  must  now  be made  to 
discern,  more  especially,  the  links  which  may  exist 
between  regional  policy  and  the drive  against  inflation 
which  is, together  with  employment,  one  of the  main 
priorities  at the present  time. 
7.2. The  linkage  between  regional  policy  and 
inflation  is a complex  issue  which  must  be dealt  with 
cautiously.  The  persons  who  replied  to  the 
Committee's  questionnaire  generally  stated  that,  at 
their  level,  it was  impossible  to gauge  the impact  of 
their  action  on inflation.  Whether  it was  because  of 
a lack  of relevant  local  statistics  or because  inflation 
was seen  as being  essentially  a national  (if not 
international)  issue,  everybody  was  inclined  to think 
that there  was  little  or no trade  off between  regional 
policy  and  inflation. 
7.3. From  a general  point  of view,  it is sometimes 
said that  regional  policy  is inflationary  in that  it 
necessitates  immediate  financial  outlay  in a period  of 
budgetary  restrictions.  The  amount  of money  spent 
by the  Community  and  national  governments  on 
regional  policy  projects  is, however,  too  small  to 
warrant  this  allegation. 
7.4. It  is nevertheless  essential  to determine  whether 
inflation  is ultimately  fuelled  by  reductions  in 
regional  imbalances,  and  in particular  by reductions 
in unemployment  — which  are,  after  all,  the  main 
objectives  of regional  policy.  There  is known  to be a 
close  link  between  employment  levels  and  the  control 
of inflation. 
7.5. It  must  be  pointed  out,  first  of all,  that 
congested  areas  tie up a particularly  large  amount  of 
capital  investment.  The  larger  the  congested  area 
the more  capital  is tied  up. Firms  are attracted  by the 
existing  infrastructure  of such  areas,  and  considerable 
expenditure  has  to be made  when  these  firms  grow, 
as they  inevitably  do.  Generally  speaking,  local 
communities  and  taxpayers  foot  a higher  proportion 
of this  expenditure  than  the firms  which  cause  it. The 
extent  of these  additional  costs  is thus  not  so readily 
recognized.  It can  however  be illustrated  by certain 
examples.  It has,  for  instance,  been  shown  that 
transport  costs  in the  Paris  area  are  two  and  a half 
times  higher  than  in other  parts  of France.  Similarly, 
the same  house  can  cost  80 °/o more  to build  in one 
area than  in another. Be that  as it may,  the  existence  of such  facilities  is a 
growing  incentive  to the  creation  of new  jobs  which 
in turn  creates  new  infrastructure  requirements, 
culminating  in a widespread  concentration  process. 
Measures  to  prevent  over-concentration  and  to 
decentralize  therefore  make  for  more  efficient 
utilization  of resources. 
7.6. Wages  are often  higher  in congested  industrial 
and urban  areas.  It is sometimes  argued  that 
productivity  is lower  in less-developed  areas,  and 
that inflation  is therefore  fuelled  by the  tendency  for 
wage  rates  to be evened  out,  or by the aspirations  in 
this direction  which  are  frequently  expressed  at 
national  level  by those  living  in the  under-developed 
areas. 
7.7. It  has  also  been  argued  that  prices  are 
sometimes  geared  to a considerable  extent  to the 
production  costs  of less  viable  firms,  i.e.  they  are 
not always  fixed  on the basis  of the production  costs 
of firms  which  have  the highest  levels  of productivity. 
7.8. Whether  it is wages  or prices  which  are  the 
main  factor,  it is nevertheless  clear  that,  by helping 
to eliminate  excessive  imbalances  and  create  more 
equitable  conditions  for  development  in the  various 
areas,  regional  policy  ipso  facto  reduces  pressures 
and inflation.  Similarly,  by allowing  economic  and 
pay policies  to develop  in parallel,  it prevents 
ruptures  that  would  be prejudicial  to employment. 
The impact  of the  regional  policy  is therefore 
beneficial  rather  than  adverse,  just  as it is in the 
other  cases. 
7.9. Looking  more  to the long  term,  the expansion 
of infrastructures  and  amenities,  and  new  productive 
capacity  in areas  suffering  from  under-employment 
and under-development  is bound  to improve  the 
overall  level  of productivity  in each  Member  State 
and in the  Community  as a whole.  After  all, 
productivity  is determined  not  only  by  factors 
internal  to a firm  but  also  by its environment. 
7.10.  This  improvement  is particularly  marked 
when  — as frequently  occurs  — regional  policy 
measures  are  carried  out  to facilitate  industrial 
re-development  and  to regenerate  local  economies. 
Measures  such  as this  are  frequently  carried  out.  It 
is much  better  both  for  the areas  concerned  and  for 
the community  at large  if employment  is safeguarded 
by setting  up viable  and  dynamic  new  firms,  rather 
than  by propping  up old  industries  whose  existence 
is threatened.  A vigorous  regional  policy  is one  of 
the conditions  for  adapting  economic  structures  in 
socially  acceptable  conditions. 
No C 114/46 Official  Journal  of the  European  Communities 11.5.77 
7.11.  Over  and  above  questions  of strict  economic 
productivity,  no  one  can  deny  the  enormous 
advantage  of establishing  communities  which  are  on 
a more  human  scale.  In  such  communities  the 
problems  of daily  commuting,  housing,  environment 
and pollution  can  be grasped  and  solved  infinitely 
more  easily  than  is possible  in huge  urban  areas. 
Achievement  of a better  socio-economic  balance  is 
probably  one  of the  most  important  aims  of regional 
policy.  The  Community  has  a duty  to tackle  such 
issues. 
8. Conclusions:  a greater  effort  must  be made 
8.1. In  conclusion,  it may  be said  that  regional 
policy  measures  are  essential  if the  employment 
situation  is to be improved. 
8.2. Regional  policy  cannot  solve  the  overall 
problem  of restoring  a satisfactory  level  of full 
employment.  It can,  however,  provide  a decisive 
assistance  in a top-priority  sector,  i.e.  in regions 
which  suffer  from  chronic  unemployment,  and  in 
regional  economies  which  have  been  shaken  by rapid 
change. 
8.3. Regional  policy  is therefore  by  no  means 
inconsistent  with  the  other  current  priority,  namely 
the drive  against  inflation.  Indeed,  by  removing 
excessive  imbalances,  this  policy  helps  to reduce 
pressures  and  bring  about  the more  even  development which  is one  of the  objectives  of the  Community  and 
also one  of the  greatest  aspirations  of its inhabitants. 
8.4. In  view  of its contribution  towards  improving 
the employment  situation  and  reinforcing  the  drive 
against  inflation,  the  regional  policy  is entitled  to 
receive  both  greater  attention  and  increased  funds. 
9. A suggestion:  organization  of  a Community 
conference  on regional  problems 
9.1. The  analysis  of  the  answers  to  the 
Committee's  questionnaire,  clearly  showed  that  those 
who  are  engaged  in  the  very  difficult  task  of 
regenerating  their  regions  are  largely  unaware  of the 
possibilities  of Community  aid  and  the  work  being 
undertaken  by  the  Community  to foster  regional 
measures. 
9.2. Contacts  with  the Commission,  and  comparing 
of notes  would  undoubtedly  give  valuable  encourage-
ment  and  assistance  to the  people  who  are  directly 
involved  in regional  development. 
9.3. The  Committee  thus  proposes  that  the 
Commission  organize  a conference  which  would 
bring  together  representatives  of all  those  engaged 
throughout  the  Community  in the  considerable  task 
of implementing  a genuine  regional  policy.  Such  a 
conference  would  undoubtedly  further  the  common 
regional  policy. 
Done  at Brussels,  31 March  1977. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
The following  passages  in the  opinion  of the  Committee's  Section  for  Regional  Development 
were  amended  or deleted  following  the acceptance  of amendments  proposed  during  the plenary 
session. 
Paragraph  4.1.1. 
'Most  Member  States  grant  investment  aids.  The  size  of these  aids  depends  on the difficulties 
in the regions  concerned'. 
11. 5. 77 Official  Journal  of the  European  Communities No C 114/47 
Voting: 
The vote  in favour  of the new  version  of this  paragraph  was  unanimous. 
Paragraph  5.3.8. 
'Special  attention  must  be paid  to the  provision  of facilities  for training  local  labour  .. 
Voting: 
The vote  in favour  of the new  version  of this  paragraph  was  unanimous. 
Paragraph  6.3.2. 
'Regional  policy  must  take  particular  account  of industrial,  agricultural  and  social  policy. 
Otherwise  the  jobs  created  by regional  policy  measures  may  be jeopardized  by  general 
economic  developments'. 
Voting: 
The vote  in favour  of the new  version  of this  paragraph  was  unanimous.