Communication from the Commission to the European Parliament and the Council - Fifth progress Report on economic and social cohesion - Growing regions, growing Europe {SEC(2008) 2047 final}
Date: 2008-06-19
Institutions: European Commission
Subjects: EU policy, economic and social cohesion, economic convergence, economic growth, governance, regional economy, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 19.6.2008 
COM(2008) 371 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Fifth progress report on economic and social cohesion 
Growing regions, growing Europe 

{SEC(2008) 2047 final} 

(presented by the Commission) 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

Introduction .................................................................................................................. 3 

Cohesion policy: the state of the debate....................................................................... 4 

Objectives and priorities .............................................................................................. 4 

The governance of cohesion policy.............................................................................. 6 

Next steps ..................................................................................................................... 7 

Convergence, growth and economic restructuring among EU regions........................ 7 

3.1. 

Regional distribution of European high growth sectors............................................... 8 

3.1.1.  Convergence regions.................................................................................................... 8 

3.1.2.  Transition regions......................................................................................................... 8 

3.1.3.  Regional competitiveness and employment regions .................................................... 9 

3.2. 

3.3. 

3.4. 

The contribution of high growth sectors to convergence............................................. 9 

Education, skills and knowledge workers.................................................................. 10 

Conclusions ................................................................................................................ 10 

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COMMUNICATION FROM THE COMMISSION 

Fifth progress report on economic and social cohesion  
Growing regions, growing Europe 

1. 

INTRODUCTION 

In  September  2007,  the  Commission  launched  a  public  consultation  on  the  challenges  with 
which cohesion policy will be confronted in the coming years to collect ideas on the priorities, 
organisation and governance of the policy. 

Cohesion policy is anchored in Article 158 of the EC Treaty, which states that the Community 
aims  to  promote  harmonious  development  and  that  with  this  purpose  it  shall  develop  and 
pursue its actions leading to the strengthening of economic and social cohesion. The Lisbon 
Treaty, which is at present in the ratification process, adapts this text in referring to economic, 
social and territorial cohesion. 

The  consultation  has  to  be  seen  in  the  larger  framework  of  the  ongoing  budget  review,  to 
which it contributes. It has been complemented by other important events such as the informal 
meeting of the Ministers responsible for regional development which took place in the Azores 
on 23-24 November 2007; the high level conference organised by the Slovenian presidency in 
Maribor on 7-8 April 2008; and the opinions which the European Parliament1, the Committee 
of  the  Regions2,  and  the  European  Economic  and  Social  Committee3  have  adopted  on  the 
Fourth Cohesion Report. 

A  further  important  milestone  in  2008  will  be  the  adoption  by  the  Commission  of  a  Green 
paper on territorial cohesion, whose main purpose is to launch a wide, public debate on the 
implications of the introduction of the notion of territorial cohesion in the Treaty, particularly 
in the context of cohesion policy. 

In  2008,  the  Commission  will  also  adopt  a  Communication  on  the  renewed  social  agenda. 
Building  on  the  results  of  a  wide  public  consultation  on  Europe's  "social  reality",  it  will 
outline ways in which Europe can respond to changing social realities, in particular how the 
Union's policies can be harnessed to promote opportunities, access and solidarity. 

The  first  part  of  this  report  provides  a  synthesis  of  the  contributions  received  between 
September 2007 and February 2008. This first phase of the debate helps to identify issues for 
discussion  and  direction  for  reflection,  which  the  Commission  will  take  into  serious 
consideration in the context of the budget review. 

The second part of the report provides a more in-depth analysis of major regional trends. The 
theme of this progress report is European growth sectors, whose performance in the regions 
will, to a large degree, determine the level of regional economic development in the years to 
come. 

1 
2 
3 

A6-9999/2008 [REF] adopted on 21 February 2008. 
COTER IV-011 [REF] adopted on 29 November 2007. 
ECO/209 [REF] adopted on 13 December 2007. 

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2. 

COHESION POLICY: THE STATE OF THE DEBATE 

The  Commission  received  more  than  one  hundred  contributions4,  mainly  from  stakeholders 
close  to  the  management  of  the  policy,  representing  more  than  half  the  Member  States 
(accounting for almost 80% of the EU population); a large number of regional authorities; a 
majority  of  regional  and  local  associations;  economic  and  social  partners;  civil  society 
organisations; academic and research institutions; and some citizens. 

Most of the responses, and particularly those of national governments, do not represent final 
positions. This is normal given the early stage in the debate and the wider discussion on the 
EU budget review. 

The public consultation confirms that interest in cohesion policy remains pronounced. Indeed, 
the  first  general  conclusion  which  can  be  drawn  from  the  discussion  is  the  recognition  by 
stakeholders of the important role cohesion policy plays in the construction of the European 
Union and the support for continuation of that policy. Any attempt to re-nationalise the policy 
is almost unanimously rejected.  

investments 

Many  contributions  confirm  that  cohesion  policy  guides  and  fosters  growth  across  Europe; 
that  would  not  have  been  undertaken  otherwise;  supports 
promotes 
competitiveness  in  the  most  vulnerable  regions;  enhances  social  progress  and  solidarity; 
upgrades  physical,  social  and  human  capital  as  drivers  of  growth,  innovation  potential, 
administrative  capacity  and  modernisation  of  the  administration;  encourages  multi-annual 
strategic  and  financial  management;  promotes  transfers  of  know-how  and  best  practices 
between  regions  and  Member  States;  and  fosters  an  evaluation  and  monitoring  culture. 
Similarly,  most  contributions  value  the  partnership  culture  that  the  policy  promotes.  In  line 
with  the  results  of  a  recent  Eurobarometer5  survey,  the  consultation  confirms  the  role  of 
cohesion policy in increasing the visibility of the EU to European citizens. 

2.1. 

Objectives and priorities 

All  contributions  agree  that  the  main  objective  of  cohesion  policy  is  the  reduction  of 
economic  and  social  disparities  between  the  levels  of  development  of  European  regions. 
Lagging regions must thus remain the focus of the policy. Yet, a majority of contributions – 
along with the European Parliament – argues that the policy should cover the whole territory 
of the EU, considering that cohesion policy is not a simple mechanism of solidarity, but also 
aims at fostering the endogenous development potential of European regions. 

The  large  majority  of  stakeholders  recognises  territorial  cooperation  as  an  essential  part  of 
cohesion policy and appreciate that it is now a "fully-fledged" objective. They underline that 
territorial cooperation is one of the best examples of the added value of this policy and, for 
this reason, should be strengthened. 

The Fourth cohesion report identified a series of challenges with which regions and Member 
States are and will increasingly be confronted: globalisation, demographic change and social 
tensions,  climate  change,  and  increased  energy  prices.  While  it  is  widely  admitted  that 
cohesion policy should also address such challenges, most of the contributions point out that 
cohesion policy cannot be the only instrument, not even the principal one. Some consider that 

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See http://ec.europa.eu/regional_policy/conferences/4thcohesionforum/all_contrib_en.cfm?nmenu=6 
http://ec.europa.eu/public_opinion/flash/fl_234_en.pdf 

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these  challenges  are  already  being  addressed  through  the  delivery  of  the  Lisbon  and 
Gothenburg Agendas. Others recall that tackling these challenges should not overshadow the 
main objectives of cohesion policy as enshrined in the Treaty. 

Some  contributions  urge  the  Commission  to  complement  GDP  per  head  in  PPS  with  other 
measures of well-being and standards of living. 

Concerning the content of cohesion policy, a consensus seems to emerge at this stage on the 
following cross cutting themes: 

•  Competitiveness  is  at  the  heart  of  cohesion  policy.  The  requirement  of 
"earmarking" a significant share of the financial resources for the key investments 
linked  to  the  renewed  Agenda  for  growth  and  jobs  is  clearly  supported.  In 
particular,  research,  innovation  and  upgrading  skills  to  promote  the  knowledge 
economy,  development  of  human  capital  through  education  and  training, 
adaptability,  support  for  business  activities  (especially,  small  and  medium 
enterprises),  strengthening  of  institutional  capacity  and  development  of  an 
entrepreneurship culture are deemed as key areas in which investments should be 
concentrated. 

•  Active labour market policies are also at the heart of the actions proposed to boost 
employment,  strengthen  social  cohesion  and  reduce  the  risk  of  poverty.  A 
significant number of participants consider that cohesion policy should contribute 
to  Europe's  social  dimension  by  improving  employment  prospects  of  the  most 
vulnerable  groups  such  as  youth,  elderly,  disabled,  immigrants  and  minorities.

Social and economic partners and civil society organisations stress the important 
role  of  the  social  economy  in  producing  quality  jobs,  enhancing  innovation, 
contributing to the development of rural areas and providing a number of services 
of general interest. They also point out the contribution of capacity building to the 
enforcement  of  principles  of  good  governance  and  partnership.  Finally,  some 
voices representing civil society argue that cohesion policy should support groups 
that have special difficulties entering the labour market.  

•  The  third  cross  cutting  theme  is  sustainable  development.  Many  contributions 
consider  that  cohesion  policy  should  strengthen  its  orientation  towards  the 
delivery of the objective of the Gothenburg Agenda. In particular, the policy could 
contribute  to  reducing  greenhouse  gases  emissions  through  mitigation  policies 
aimed  at  improving  energy  efficiency  and  promoting  the  development  of 
renewable energies.  

In addition to the above themes a number of other issues received considerable attention.  

The  inclusion  of  territorial  cohesion  in  the  Lisbon  Treaty  is  generally  welcomed.  Some 
contributions however urge the Commission to develop a definition of territorial cohesion and 
indicators  for  better  understanding  this  concept.  At  the  same  time,  several  national 
governments  consider  that  territorial  cohesion  is  already  integrated  within  cohesion  policy, 
and that the economic, social and territorial dimensions of cohesion cannot be separated.  

Territorial  cohesion  is  seen,  notably  by  regional  and  local  actors,  as  an  opportunity  to 
strengthen the role of regional and local authorities and other actors in the implementation of 

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the policy. Several contributions stress the role of urban areas and their interdependence with 
rural  areas  as  important  dimensions  of  economic,  social  and  territorial  cohesion.  Cities  are 
often  identified  as  places  characterised  by  significant  social  exclusion,  poverty  and 
unbalanced development. Existing mechanisms in favour of some specific areas such as the 
outermost regions or the northern sparsely populated areas are not questioned. 

Many are also confident that the notion of territorial cohesion will help to better integrate a 
territorial dimension in the design and implementation of European sectoral policies. 

A  consensus  seems  to  emerge  in  favour  of  more  flexibility  under  territorial  cooperation  so 
that regions can cooperate with regions other than neighbour regions or regions belonging to 
the same geographical area. Cooperation with regions and countries neighbouring the EU is 
also considered essential. 

2.2. 

The governance of cohesion policy 

The reform of cohesion policy towards a more strategic approach is supported by the majority 
of the contributions.  

Many  mention  that  programme  implementation  has  just  started  and  a  comprehensive 
assessment cannot be made until the results of evaluations become available. 

Yet,  a  significant  majority  of  stakeholders  calls  for  further  clarification  in  the  allocation  of 
responsibilities between the different institutional levels (Commission, Member State, regions 
and  other  players).  Many  stakeholders,  particularly  at  the  regional  and  local  level,  would 
appreciate further decentralisation of responsibilities. They also underlined, especially for the 
European Social Fund (ESF), the importance of delivery at the local level. Similar statements 
came  from  the  economic  and  social  partners  and  the  civil  society.  These  stakeholders  also 
insist on a more inclusive definition of the partnership principle. 

Simplification  is  another  demand  that  emerges  from  a  majority  of  contributions.  Many 
contributions expressed concern as regards the newly introduced "one programme-one fund" 
principle, which may not facilitate the implementation of the policy.  

There  are  many  complaints  about  "red-tape"  and  auditing  requirements  related  to  the 
implementation  of  the  policy.  These  are  perceived  as  discouraging  many  potential 
beneficiaries  and  hindering  the  implementation  at  local  level  of  important  projects.  The 
Commission is urged to simplify the existing procedures at least for small programmes. 

Another important matter frequently mentioned concerns the coordination between the ERDF, 
the  ESF  and  the  Cohesion  Fund.  Some  contributions  call  for  their  integration  into  a  single 
Fund for the sake of a more coherent strategic development.  

Opinions  seem  to  be  divided  regarding  the  opportunity  to  use  cohesion  policy  as  an 
instrument  to  react  immediately  to  asymmetric  shocks  or  important  crises  triggered  by 
processes  of  restructuring:  while  some  advocate  more  flexibility,  others  point  out  that 
cohesion  policy  is  first  and  foremost  a  structural  policy  characterised  by  strategic  planning 
with a medium and long-term perspective.  

A number of contributions insist on further exploring the use of means of financing other than 
grants such as bank loans, micro-credits, risk capital instruments or public-private partnership 
instruments. 

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A  final,  important  issue  raised  by  the  consultation  concerns  coordination  between  cohesion 
policy,  other  Community  policies,  and  national  policies.  Many  contributions  consider  that 
Community sectoral policies should take better account of regional aspects. In addition, many 
stakeholders  consider  important  to  develop  coherent,  integrated  approaches,  particularly 
between cohesion policy and rural development. 

Coordination  with  national  policies  is  also  considered  critical.  Some  stakeholders,  for 
example, consider that the principle of additionality should be strengthened. Moreover, some 
economic and social partners believe that cohesion policy should be driven by the Integrated 
Guidelines for Growth and Jobs and the National Reform Programmes. 

2.3. 

Next steps 

The debate on the future of cohesion policy has just started and will continue in the coming 
years. Among the many important events which will mark this debate, it is worth mentioning 
the  ongoing  public  consultation  on  the  budget  review,  the  public  consultation  on  the  Green 
Paper  on  territorial  cohesion  which  the  Commission  will  launch  in  autumn  2008,  and  the 
ministerial and high-level events which will be organised under the different Presidencies. 

The Commission will report on the progress of this reflection in the Sixth progress report on 
economic and social cohesion in spring 2009.  

In due course, the Commission will present its report on the 2008/2009 budget review setting 
out its overall vision for the structure and direction of the EU's future spending priorities. 

3. 

CONVERGENCE, GROWTH AND ECONOMIC RESTRUCTURING AMONG EU REGIONS 

Convergence  among  European  regions  has  remained  strong  in  recent  years,  leading  to  a 
marked narrowing of disparities in GDP per head, employment and especially unemployment 
rates. This trend is largely driven by improvements in the least prosperous regions (See Figure 
1).  

For  the  purpose  of  the  analysis  which  follows,  regions  have  been  grouped  into  three 
categories: Convergence, Transition6, and Regional Competitiveness and Employment (RCE) 
regions, each with a distinct socio-economic profile.  

Convergence regions still have a considerably lower GDP per head, at 58% of the EU average 
while Transition regions are getting closer to the EU average. Between 2000 and 2005, both 
groups  of  regions  reduced  the  gap  with  the  EU  average  by  around  5  percentage  points  (see 
Table 1 and fiche on GDP).  

Employment rates are low at 58% in Convergence regions, compared to 68% in RCE regions. 
Since 2000, Convergence regions have not been able to reduce this gap. Transition regions, 
however, did reduce the gap and now have a 63% employment rate, but remain well below 
the RCE regions (see Table 1). Unemployment rates are still four percentage points higher in 
Convergence than in RCE regions, but this gap was almost twice as big in 2000. 

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Phasing  in  and  Phasing  out  regions  were  grouped  together  as  Transition  regions  since  both  receive 
transitional support.  

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3.1. 

Regional distribution of European high growth sectors 

This  section  discusses  the  sectoral  structure  of  regional  economies  focussing  on  the  EU 
growth  sectors  (see  annex).  At  the  regional  level,  three  growth  sectors  are  analysed:  (1) 
Financial and business services, (2) Trade, transport and communication and (3) Construction. 
The growth sector, high and medium-high tech manufacturing, is part of the industry sector 
and thus can not be readily identified at the regional level.  

The  three  types  of  regions  differ  in  terms  of  economic  structure,  growth  trends  and 
productivity. For example, productivity in Convergence regions is half that in RCE regions or 
less (see Table 3) and employment shrank in Convergence regions while it grew in the other 
two types of regions. 

3.1.1.  Convergence regions 

The  three  growth  sectors  are  less  important  in  Convergence  regions,  where  they 
account  for  only  40%  of  employment  compared  to  50%  in  the  other  regions.  The 
share  of  Financial  and  business  services  is  especially  low.  Growth  of  GVA  and 
especially  of  employment  in  this  sector,  however,  is  much  higher  than  in  other 
sectors. Trade, transport and communication also experienced a strong increase in 
both  employment  and  GVA,  while  the  growth  rates  in  Construction  are  similar  to 
the EU averages. 

Industry is more important in Convergence regions than in the others and recorded 
the highest GVA growth rate. Employment in industry declined but less than in the 
other  regions.  Nevertheless,  industrial  productivity  is  still  a  third  of  that  in  RCE 
regions. Employment in high and medium-high tech manufacturing, however, grew 
by 1% between 2000 and 2005. 

Agriculture  remains  an  important  sector  in  Convergence  regions  accounting  for 
more than 15% of employment, five times the share in RCE regions. This happens in 
a  context  of  falling  employment  in  this  sector  accompanied  by  productivity 
increases7.  This  means  that  despite  strong  employment  increases  in  the  growth 
sectors, total employment declined in the Convergence regions. 

3.1.2.  Transition regions 

Transition regions have the same share of employment and GVA in the three growth 
sectors as RCE regions, but their share of Financial and business services is much 
smaller. With annual growth rates of 4% this sector has grown faster than any other, 
but the difference remains large.  

The  two  other  growth  sectors,  Trade,  transport  and  communication  and 
Construction,  also  grew  above  average.  In  Transition  regions,  especially  the  share 
of the Construction sector is much higher than in the other regions. This can be partly 
explained  by  the  strong  economic  growth,  rising  incomes  and  continuing  need  to 
upgrade  some  of  the  physical  infrastructure.  In  some  regions,  the  growth  of 
construction  is  also  partially  due  to  demand  for  second  homes  and  tourist 

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See Commission Communication: Employment in rural areas, SEC(2006)1772. 

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accommodation.  The  highly  cyclical  nature  of  this  sector,  however,  leaves  these 
economies vulnerable. 

The  share  of Industry  is less important in Transition regions than in the other two 
types of regions.  

3.1.3.  Regional competitiveness and employment regions 

In RCE regions, Financial and business services experienced the highest growth in 
employment  and  GVA  showing  a  growing  specialisation.  The  two  other  growth 
sectors  have  a  lower  share  of  GVA  and  employment  than  in  the  other  two  regions 
and experienced growth rates close to the EU average.  

The GVA share of Industry in RCE regions is comparable to that of Convergence 
regions  but  employment  in  this  sector  is  significantly  lower  in  RCE  regions, 
reflecting the results of a successful shift towards higher value added activities in this 
sector. Employment in this sector and in high and medium high-tech manufacturing 
declined. 

R&D  expenditure  as  a  share  of  GDP  is  almost  three  times  higher  in  RCE  regions 
than in Convergence. However, competition in innovation is becoming global which 
means that the EU has to compete globally. RCE regions spend 2.1% of their GDP 
on R&D, but the US spends 2.5%. Also the share of GDP going to R&D in the top 
10% US States is a quarter higher than in the equivalent EU regions.  

in 

RCE  is  the  largest  of  the  three  groups  and  as  a  result  also  more  diverse.  The 
economic  structure  varies  considerably.  Some  are  specialised  in  Financial  and 
business services, such as Luxembourg and Île de France with at least 40% of their 
GVA 
transport  and 
communication such as for example Tirol, Praha and Illes Balears with at least 30% 
of  their  GVA  in  this  sector.  Economic  performance  also  varies.  Between  2000  and 
2005,  17  RCE  regions  experienced  a  decline  in  employment  and  22  had  a  GDP 
growth rate below 0.5%. 

this  sector.  Other  regions  rely  heavily  on  Trade, 

3.2. 

The contribution of high growth sectors to convergence 

The  analysis  above  shows  that  the  growth  sectors  have  made  an  important 
contribution  to  convergence  both  in  Convergence  and  Transition  regions,  but  the 
pattern varies.  

In  Convergence  regions,  the  three  growth  sectors  have  contributed  to  substantial 
employment creation, but not enough to offset the significant employment reductions 
in  agriculture.  GVA  growth  was  also  strong  in  the  growth  sectors  especially  in 
Financial and business services and Trade, transport and communication.  

GVA growth, however, was higher in Industry, leading to a high and growing share 
in this sector. Combined with a high share of employment, this trend may present a 
risk as several industrial sectors have been in decline at the EU level (see figure 2). 
Within  industry,  the  share  of  employment  in  high  and  medium-high  tech 
manufacturing, the sector where the EU has the strongest competitive advantage, is 
only 24% in Convergence regions as compared to almost 40% in RCE. Since 2000, 
Convergence regions have only reduced this gap by 1 percentage point. 

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National data shows that GVA is growing faster in high and medium-high tech than 
other manufacturing sectors in most Member States. Yet some still have a low share 
of  manufacturing  GVA  in  high  and  medium-high  tech,  in  particular  in  Romania, 
Bulgaria, the Baltic  States,  Greece  and Portugal. This and their low productivity in 
the sector may leave them vulnerable to increased global competition. 

Transition  regions  are  catching  up  rapidly  with  RCE  regions  thanks  to  the  strong 
performance  of  the  three  growth  sectors  and  high  and  medium-high  tech 
manufacturing. As a result, the economic structure of Transition regions is becoming 
more and more like that of RCE regions. 

3.3. 

Education, skills and knowledge workers 

Skills  and  qualifications  are  an  important  determinant  of  individual  income  and 
employability and a substantial contributor to labour productivity. They also indicate 
to  what  degree  regional  economies  have  shifted  towards  a  more  intensive  use  of 
knowledge. Yet, the EU invests only 1.2% of GDP in higher education where the US 
invests almost 2.9%. 

The  share  of  highly  educated  people  aged  25-64  is  considerably  lower  in 
Convergence  regions  than  in  RCE  regions,  17%  and  25%  respectively.  Still,  the 
share has increased equally between 2000 and 2006, with a slightly higher increase 
in  Transition  regions,  which  have  now  almost  reached  the  same  share  as  RCE 
regions. 

The share of human resources in Science and Technology (HRST core)8 also lags in 
Convergence  regions  as  compared  to  RCE  regions,  12%  compared  to  17%.  But 
Convergence regions have been able to reduce that gap since 2000 by one percentage 
point.  The  use  of  HRST  core  is  particularly  high  in  knowledge  intensive  services 
such as health and education and high and medium-high tech manufacturing. 

The overall share in the Convergence regions in 2006 was still 10 percentage points 
lower  than  in  the  RCE  regions.  Growth  in  the  share  of  knowledge  workers  is 
nevertheless high. It increased by 3.4 percentage points between 2000 and 2006 and 
the increase was the same in Convergence and RCE regions. 

The  share  of  knowledge  workers9  is  particularly  high  in  capital  regions  and  other 
major metropolitan regions which host major headquarters and specialised services. 
The  share  of  knowledge  workers  tends  to  be  low  in  Portugal,  Spain,  Greece  and 
Bulgaria  even  in  their  capital  region.  The  share  increased  particularly  in  many 
regions in Spain, France, Greece, Austria and Slovenia, indicating that the shift to the 
knowledge economy is not an exclusive affaire of large metropolitan regions.  

3.4. 

Conclusions 

This brief analysis has shown that European growth sectors have largely contributed 
to  convergence.  However,  important  differences  in  the  economic  structure  of  the 
three  groups  of  regions  remain  and  the  pattern  of  catching-up  differs  between 

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See SEC(2008) […] for definition. 
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Convergence  and  Transition  regions.  This  has  several  implications  from  a  policy 
point of view.  

Efforts  to  foster  European  high  growth  sectors,  i.e.  those  with  above  average 
employment or GVA growth, seem justified. Not only are these sectors the ones in 
which  the  European  economy  has  its  clearest  global  growth  perspective,  they  can 
also be powerful motors for the EU convergence process.  

Moreover,  the  analysis  shows  that  Convergence  regions  are  undergoing  a  major 
economic  restructuring.  Substantial  employment  is  being  created  in  the  service 
sector,  while  agriculture  is  shedding  even  more  employment.  GVA  growth  is  high 
especially in industry and services and productivity growth is three times higher than 
in RCE regions. Such restructuring requires a tailored policy response. 

Convergence regions should facilitate the shift of employment to services, especially 
to  sectors  which  do  not  require  high  education  levels,  and  continue  to  modernise 
their  agriculture  sector.  As  industry  is  and  will  remain  an  important  sector  in 
Convergence  regions,  policy  should  facilitate  a  progressive  reorientation  of  the 
industry  towards  high  productivity  and  high  value  added  activities  to  avoid 
specialisation  in  industrial  sectors  particularly  exposed  to  international  competition 
and offering poor growth prospects.  

Convergence  regions  should  also  aim  to  improve  the  education  level  of  the  labour 
force  as  shifting  to  higher  value  added  activities  will  increase  the  demand  for  such 
labour. This will also influence the speed at which they adopt new technologies and 
help to reduce the productivity gap.  

Finally, the high productivity levels in RCE regions give these regions an edge not 
only in Europe but also in the world. In part, this high productivity is due to strong 
investments  in  R&D,  which  are  much  higher  than  in  Convergence  regions.  Yet  to 
maintain  a  global  edge,  these  regions  have  to  be  able  to  compete  with  other  world 
competitors,  which  invest  even  higher  shares  in  R&D  and  higher  education.  This 
clearly underlines the benefit of the increasing orientation of cohesion policy in RCE 
towards more investments in innovation and human capital. 

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   EN