Regional policy : making Europe’s regions and cities more competitive, fostering growth and creating jobs.
Date: 2014-10-29
Institutions: Directorate-General for Communication
Subjects: EU regional policy, European Regional Development Fund, European Union, economic growth, public awareness campaign, regional aid, regional development, regional investment

T H E   E U R O P E A N  
U N I O N  
E X P L A I N E D

Making Europe’s 
regions and 
cities more 
competitive, 
fostering growth 
and creating jobs

Regional policy   

R eg io nal   po li cy  i s  a s tr at eg ic 
in ves tm en t  p o l ic y  targ et in g al l  E U 
r egi o ns   and  c iti es  in   o rder   t o  bo o s t 
t heir   ec o no mi c  growth   and  i m prov e 
p eo p l e’s   qual ity   o f  l ife .  I t  is  al so   an 
ex pr es s io n  o f  so l idar it y,  fo cu sin g 
s up po r t   on   the  l e ss  d evel o ped   re g ions .

CONTENTS

Why does the EU need  
a regional policy?
Europe’s main investment policy  
for growth and jobs .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . 3

THE EUROPEAN UNION 
EXPLAINED

How does regional policy work?
A range of funds for growing regions  
and cities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . 6

This publication is a part of a series that explains  
what the EU does in different policy areas,  
why the EU is involved and what the results are. 

Maximising the impact of  
EU investment
Targeted investment for growth  
and jobs until 2020  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 10

You can find the publications online:
http://europa.eu/pol/index_en.htm
http://europa.eu/!bY34KD

Outlook
EU regional policy 2014–20:  
a new era of strategic spending  .  .  .  .  .  . 15

Find out more  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 16

How the EU works
Europe in 12 lessons 
Europe 2020: Europe’s growth strategy
The founding fathers of the EU

Agriculture
Banking and finance 
Borders and security 
Budget
Climate action
Competition
Consumers
Culture and  audiovisual
Customs
Digital agenda 
Economic and monetary union and the euro
Education, training, youth and sport 
Employment and social affairs
Energy
Enlargement
Enterprise
Environment
Fight against fraud
Food safety
Foreign affairs and security policy
Humanitarian aid and civil protection 
Internal market
International cooperation and development
Justice,  fundamental rights and equality 
Maritime affairs and fisheries 
Migration and asylum
Public health

The European Union explained: 
Regional policy

European Commission
Directorate-General for Communication
Citizens information
1049 Brussels
BELGIUM

Manuscript updated in November 2014

Cover and page 2 picture:  
© iStockphoto.com/Voon Nam Fook

16 pp. — 21 × 29.7 cm
ISBN 978-92-79-41288-2
doi:10.2775/74781

Luxembourg: Publications Office  
of the European Union, 2014

Regional policy

Research and innovation
Taxation
Trade
Transport

© European Union, 2014
Reproduction is authorised. For any use or reproduction 
of individual photos, permission must be sought directly 
from the copyright holders.

3

Why does the EU need a regional policy?

  Europe’s main investment policy for growth and jobs

Investing in the EU’s less developed 
regions

EU regional policy accounts for the single largest chunk 
of the EU budget for 2014–20 (€351.8 billion out of a 
total €1 082 billion) and is therefore the Union’s main 
investment arm.

These resources are used to finance strategic transport 
and communication infrastructures, to favour a 
transition to a more environmentally friendly economy, 
to support small and medium-sized enterprises (SMEs) 
in becoming more innovative and more competitive, to 
create new and lasting job opportunities, to reinforce 
and modernise education systems and to build a more 
inclusive society.

In so doing, regional policy serves as a catalyst for 
further public and private funding, not only because it 
obliges EU countries to co-finance projects from their 
respective national budgets but also because it creates 
investor confidence. Taking into account this national 
contribution, and the leverage effect of financial 
instruments, the overall impact of EU investment for 
2014–20 is likely to be more than €500 billion.

Regional policy is also an expression of solidarity 
between EU countries as it dedicates the bulk of its 
funding to the EU’s less developed regions. It helps 
these regions to fulfil their economic potential, in the 
light of regional disparities both across the EU and 
within member countries. By way of example, figures 
from 2011 (the latest available) show that the gross 
domestic product (GDP) of EU regions ranged from 
29 % of the then EU-27 average in Severozapaden 
(Bulgaria) and Nord-Est (Romania) to 321 % of the 
average in Inner London (United Kingdom). This 
highlights the need for a strategic and targeted 
investment policy which tailors EU investment to 
individual regions.

Thousands of projects across the EU

EU regional policy funding has financed tens of 
thousands of projects over the years, benefiting all 
EU countries individually and the EU as a whole in 
terms of economic growth and jobs. Between 1989 and 
2013, over €800 billion was allocated from the EU 
budget to co-fund projects targeting regional growth.

ALL EU REGIONS BENEFIT

The EU’s 274 regions as covered by regional policy, 2014–20, 
and categories of eligibility for Structural Funds (the European 
Regional Development Fund (ERDF) and the European Social 
Fund (ESF)). 

Canary Islands

Guadeloupe, 
Martinique

French 
Guiana 

Mayotte Réunion

Madeira

Azores

Category

  Less developed regions  
(GDP/head < 75 % of EU-27 average): €182.2 billion

  Transition regions  
(GDP/head between > = 75 % and < 90 % of EU-27 average): 
€35.4 billion

  More developed regions (GDP/head > = 90 % of EU-27 average): 
€54.3 billion

Other sources of funding under regional policy during the same 
period include the Cohesion Fund (€65.3 billion), European territorial 
cooperation (€10.2 billion), the ‘Youth employment initiative’ 
(€3.2 billion) and specific allocations for the outermost and sparsely 
populated regions (€1.6 billion).

REGIONAL POLICY4

Origins and evolution of regional policy

1957 — First mention in the Treaty of Rome.

1958 — Creation of the European Social Fund 
(ESF).

1995 — Special objective added to support the 
sparsely populated regions of Finland and Sweden. 
Overall budget:  
ECU 168 billion.

1975 — Creation of the European Regional 
Development Fund (ERDF).

1986 — Legal basis for regional policy established 
in the Single European Act.

1988 — To adapt to the arrival of Greece (1981) 
and Spain and Portugal (1986), the Structural  
Funds are integrated into an overarching cohesion 
policy. Budget: ECU 64 billion (NB: ECUs later 
became the euro).

1993 — The Maastricht Treaty introduces the 
Cohesion Fund, the Committee of the Regions 
and the principle of subsidiarity (whereby 
decision-making must always be made at the least 
centralised/most local level able to address the 
matter appropriately).

1994–99 — Doubling of the resources for regional 
funds, now equal to a third of the EU budget.

2000–04 — Pre-accession instruments make 
funding and know-how available to countries 
engaged in the process of joining the EU.

2004 — Ten new countries join the EU (increasing 
its population by 20 %, but its GDP by only 5 %). 
Budget: €213 billion for the 15 existing members; 
€22 billion for the new member countries (2004–
06).

2007–13 — Budget: €347 billion (of which 25 % is 
earmarked for research and innovation and 30 % 
for environmental infrastructure and measures to 
combat climate change).

2014–20 — Budget: €351.8 billion, with a 
particular focus on four key investment priorities: 
research and innovation, the digital agenda, support 
for SMEs and the low-carbon economy. Around 
€100 billion will be dedicated to these sectors, of 
which €26.7 billion will support the shift to a 
low-carbon economy (energy efficiency and 
renewable energies). 

These resources have helped to improve the quality of 
life of EU citizens, to create jobs and to promote 
research, development and innovation. For example, 
between 2007 and 2012 alone, EU regional policy:

•  funded 61 000 research projects;

•  provided almost 5 million more EU citizens with 

broadband coverage;

•  created an estimated 594 000 jobs (262 000 in 

•  financed the construction of 1 208 km of roads and 

SMEs);

•  invested directly in 198 000 SMEs;

•  supported 77 800 start-ups;

1 495 km of rail to help establish an efficient 
trans-European transport network (TEN-T);

•  enhanced the quality of life for citizens in urban areas 

through a modernised water supply, benefiting 
3.2 million citizens, and sustainable transport.

THE EUROPEAN UNION EXPLAINED 
EXAMPLES OF THE DIVERSITY OF PROJECTS SUPPORTED BY EU 
REGIONAL POLICY FUNDS

©
E
u
r
o
p
e
a
n
U
n
o
n

i

©
E
u
r
o
p
e
a
n
U
n
o
n

i

©
E
u
r
o
p
e
a
n
U
n
o
n

i

©
E
u
r
o
p
e
a
n
U
n
o
n

i

BEACON, United Kingdom 
— Developing eco-friendly 
products for a low carbon 
economy

Gdynia trolley bus 
network, Poland — 
Improving quality of life 
through sustainable public 
transport

Infection research and 
monitoring centre  
in Lyon, France.

Art on Chairs, Portugal — 
Boosting the region's 
competitiveness through 
innovation in SMEs

5

During the same period, the value of selected projects 
in urban areas amounted to at least €100 billion. 
Almost 20 % of that amount was allocated to 
integrated projects for urban and rural regeneration and 
to education, health, childcare, housing and other social 
infrastructure. In particular, funding for integrated 
projects for urban regeneration accounted for 
€6.8 billion, while investment in social infrastructure 
amounted to €11.4 billion.

In other words, regional policy has a strong impact in 
many fields and on many different levels. It therefore 
greatly complements other policies such as those 
dealing with education, employment, energy, the 
environment, the single market and research and 
innovation.

Estimates show that regional policy investment has 
also contributed to increasing income in the poorest 
regions: their GDP per capita grew from 60.5 % of the 
EU-27 average in 2007 to 62.7 % in 2010. 
Furthermore, GDP in the 13 EU countries that entered 
the Union in or after 2004 (1) is expected to increase by 
around 2.4 % per year between 2007 and 2025.

Economic, social and territorial cohesion

Regional policy is also referred to in broader terms 
as cohesion policy as its overall goal is to 
strengthen what is known as ‘economic, social and 
territorial cohesion’ in regions qualifying for support. 
In practice that means:

 — economic and social cohesion: boosting 

competitiveness and green economic growth in 
regional economies and providing people with 
better services, more job opportunities and a 
better quality of life; 

 — territorial cohesion: connecting regions so that 

they capitalise on their respective strengths and 
work together in new, innovative configurations 
to tackle common challenges (such as climate 
change), thus benefiting and reinforcing the EU 
as a whole. 

(1) Bulgaria, the Czech Republic, Estonia, Croatia, Cyprus, Latvia, Lithuania, 
Hungary, Malta, Poland, Romania, Slovenia and Slovakia. 

REGIONAL POLICY 
 
 
 
 
 
 
 
6

How does regional policy work?

  A range of funds for growing regions and cities

Regional funds: an overview

The European Regional Development Fund (ERDF) and 
the European Social Fund (ESF) are known as the 
Structural Funds as they are designed to invest in 
economic and social restructuring across the EU and 
thereby reduce gaps in development between European 
regions, for example in terms of infrastructure and 
employment. Together with the Cohesion Fund, the 
European Agricultural Fund for Rural Development 
(EAFRD) and the European Maritime and Fisheries Fund 
(EMFF), they make up the European structural and 
investment funds (ESIFs). In addition to common rules 
for the ESIFs (see next chapter), there are also some 
fund-specific rules.

While the Cohesion Fund invests in transport networks 
and environmental projects, the EAFRD supports rural 
areas to make the agricultural sector more resilient, 
innovative and climate-friendly and the EMFF promotes 
sustainable and competitive fisheries and aquaculture 

across the EU. Each fund therefore contributes in its 
own way to delivering on the growth goals of the 
Europe 2020 strategy, the EU’s overarching strategy 
for growth and jobs until 2020 (for further information 
see the ‘EU Explained’ publication on the ‘Europe 
2020 strategy’).

Another important fund managed by the European 
Commission is the EU Solidarity Fund (EUSF), initially 
set up in summer 2002 as a response to severe flooding 
in central Europe. The EUSF is now a stable fund with a 
yearly budget of €500 million. It is an expression of 
solidarity with disaster-stricken regions in Europe. It 
enables the EU to respond in a rapid, efficient and 
flexible manner to assist any EU country (or country 
applying for membership) in the event of a major natural 
disaster with serious repercussions on living conditions, 
the environment or the economy. The EUSF complements 
national public service efforts by contributing, for 
instance, to clean-up operations, restoring infrastructure 
or providing temporary accommodation.

©
N
e
s
a
C
e
r
a

/

S
h
u
t
t
e
r
s
t
o
c
k

The EU Solidarity Fund 
provides financial aid to any 
EU region affected by major 
natural disasters.

THE EUROPEAN UNION EXPLAINED 
Regional funds in detail

The European Regional Development Fund (ERDF) 
invests in growth-enhancing sectors to foster 
competitiveness and create jobs in all EU regions 
and cities. ERDF actions are designed to address 
economic, environmental and social challenges, 
with a special focus on sustainable urban 
development. It is expected that over 50 % of ERDF 
investment between 2014 and 2020 will be in 
urban areas.

The ERDF pays particular attention to specific 
territorial characteristics, for example areas 
naturally disadvantaged from a geographical 
perspective (remote, mountainous or sparsely 
populated regions). The outermost areas of the 
Union (e.g. the Canary Islands, Réunion and 
Guadeloupe) also benefit from specific assistance 
from the ERDF to address possible disadvantages 
due to their remoteness.

The ERDF also promotes and finances cross-border, 
transnational and interregional cooperation (known 
as European territorial cooperation), covering a 
wide range of issues including joint transport 
infrastructure, innovation and communication 
networks, cross-border trade, joint management of 
natural resources and the linking of urban and rural 
areas. These forms of cooperation have clear added 
value, not only for the EU but also for neighbouring 
regions.

The European Social Fund (ESF), set up in 1958, is 
the oldest Structural Fund. It aims to assist 
jobseekers by ensuring they have access to 
appropriate training to enhance their employability, 
whilst helping existing workers to retrain, learn new 
skills and adapt to changing professional situations. 
Each year, around 15 million people take part in the 
thousands of projects  co-financed by the ESF 
across the EU.

7

The ESF also invests in projects which aim to 
combat discrimination in all its forms and to help 
marginalised communities integrate into society. It 
also invests in the efficiency of public 
administrations and public services to ensure that 
relevant institutions deliver on education, 
employment, social and other policies.

The Cohesion Fund, set up in 1994, invests in 
transport networks and the environment in EU 
countries with a GDP lower than 90 % of the EU-28 
average (notably the central and east European 
countries, as well as Greece, Cyprus, Malta and 
Portugal). The fund actively promotes green 
economic growth while reducing economic and 
social disparities by improving regional connectivity 
and accessibility.

In particular, the fund supports the trans-
European transport network (TEN-T), which is 
essential for the proper functioning of the internal 
market and for facilitating the circulation of people 
and goods within and beyond the EU by land, sea 
and air.

The Cohesion Fund invests in climate change 
adaptation and risk prevention, the water and waste 
sectors and the urban environment. It can also 
support projects related to energy efficiency and 
the use of renewable energy in companies and 
public infrastructures.

Part of the Cohesion Fund is set aside to finance 
core transport and other networks under the new 
Connecting Europe Facility, a strategic 
instrument investing in broadband infrastructure 
and online public services as well as infrastructure 
for roads, railways, electricity grids and gas 
pipelines. Better interconnections will enhance 
business opportunities and energy security whilst 
making work and travel easier, therefore benefiting 
businesses and citizens alike right across the EU.

REGIONAL POLICY8

Record solidarity sum paid out for Emilia-Romagna restoration (December 2012)

A record sum of €670 million from the EUSF was paid 
to Italy for recovery operations in the wake of the 
devastating earthquakes which hit Emilia-Romagna 
with forces of up to 5.9 on the Richter scale on 
20 May 2012. The earthquakes were followed by 
hundreds of aftershocks spreading out into the 
neighbouring regions of Veneto and Lombardy. They 
caused 27 deaths, an estimated 350 people were 
injured and over 45 000 people had to be evacuated. 
There was serious and widespread damage to 

buildings, infrastructure, businesses, industrial 
facilities, agriculture and to the important cultural 
heritage sector.

The bulk of the money was dedicated to covering the 
costs of emergency aid and rescue operations, as well 
as temporary accommodation. Some €292 million 
was earmarked for the immediate restoration of 
education and health facilities as well as the 
reparation of electricity and water systems.

©
E
u
r
o
p
e
a
n
U
n
o
n

i

In 2012, Italy received €670 million from the EU Solidarity Fund after earthquakes hit Emilia-Romagna.

THE EUROPEAN UNION EXPLAINED 
 
 
9

The Commission does not select or manage individual 
projects but approves the overall programmes covering 
a range of potential projects. It is also important to note 
that whereas the Commission makes overall funding 
available, it is up to EU countries, via their  
EU-accredited national and regional paying agencies,  
to make direct, individual payments to beneficiaries.

How are the funds invested?

EU regional policy is carried out by national and regional 
bodies in partnership with the European Commission, a 
system known as shared management. Unlike annual 
national budgets, the regional policy budget is set for 
seven years, making it inherently reliable and a 
valuable resource for private investment to draw upon.

There are three main stages in the investment process.

1.  The budget and rules for its use are jointly decided 
by the European Parliament and the EU Council of 
Ministers (which brings together national ministers at 
the European level), on the basis of a Commission 
proposal.

Channelling EU investment

 — The Commission makes funding available at 
the beginning of each year to allow EU 
countries to start investing in individual 
projects. 

2.  The Commission works with the EU countries as they 

draw up partnership agreements outlining their 
investment priorities and development needs. They 
also present draft operational programmes (OPs) 
breaking down the objectives into concrete areas for 
action. These can cover entire countries and/or 
regions and can include cooperation programmes 
involving more than one country. The Commission 
negotiates with the national authorities on the final 
content of these investment plans. All levels of 
governance, including civil society, should be 
consulted and involved in the programming and 
management of the OPs.

3.  The programmes are then carried out by the 

countries and their regions. That means selecting, 
monitoring and evaluating hundreds of thousands of 
projects. The work is organised by managing 
authorities in each country and/or region.

Management and delivery of the programmes is 
therefore largely devolved to administrations at 
national and subnational (regional and local) levels. 
EU countries must assure the Commission that the 
funds are being spent effectively and in accordance 
with EU law. They must provide reliable accounting, 
monitoring and financial reporting systems and identify 
the responsible bodies and procedures to ensure an 
adequate audit trail.

An audit authority must be designated for each OP. This 
authority provides the Commission with an audit 
strategy and an annual audit opinion and annual control 
report, taking into account issues identified during 
audits carried out during the previous 12 months.

 — Payments, certified by national authorities, are 

made by the Commission. 

 — National programmes are constantly monitored, 
with on-the-spot audits and checks by the 
Commission and the EU country in question.  

 — Both the Commission and the national 

authorities submit reports throughout the 
seven-year budgetary period.

The EU has invested €400 million from the ERDF in the 
regional metro system (RMS) in Naples, Italy. Apart from 
providing better and more frequent services and faster 
journey times, carbon dioxide (CO2) emissions have been cut 
by 250 000 tonnes per year — and oil consumption by 
110 000 tonnes per year — across the network.

©
E
u
r
o
p
e
a
n
U
n
o
n

i

REGIONAL POLICY 
 
10

Maximising the impact of EU investment

  Targeted investment for growth and jobs until 2020

A limited number of key investment 
priorities

Although Europe is on the path to economic recovery it 
is still essential, in a context of limited financial 
resources, for the EU to be able to do more with less 
and to ensure the added value of every euro committed 
at European level. By adopting a new legislative 
package on regional policy at the end of 2013,  
the EU overhauled the funding approach for 2014–20 
to maximise the potential impact of the EU funding 
available.

Between 2014 and 2020, a total of over €351.8 billion 
will be invested in EU regions. The level of support and 
the national contribution (‘co-financing rate‘) is adapted 
to each region’s level of economic development:

LESS DEVELOPED REGIONS (GDP < 75 %  
OF THE EU-27 AVERAGE) (*)

TRANSITION REGIONS (GDP 75–90 %  
OF THE EU-27 AVERAGE)

MORE DEVELOPED REGIONS (GDP > 90 %  
OF THE EU-27 AVERAGE)

(*) NB: Figures predate the accession of Croatia to the EU in July 2013 . 

All projects receiving funding will contribute to 
delivering on the agreed Europe 2020 growth goals. 
Indeed, EU regional policy is the EU’s main investment 
tool for meeting Europe’s targets: creating growth and 
jobs through innovation and support for small 
businesses, tackling climate change and energy 
dependence, and reducing poverty and social exclusion.

Regional policy funds focus on a limited number of key 
investment priorities, with a strong emphasis on results. 
EU countries and regions are required to outline their 
objectives and what they intend to achieve with the 
available resources in their partnership agreements and 
they must identify precisely how they will measure 
progress towards those goals. This allows for regular 
monitoring and debate on how funding is used and for 
well-performing programmes to be rewarded (through a 
‘performance reserve’) towards the end of the period.
In order to better coordinate the funds and to avoid 
overlaps, the EU has designed a common set of rules 
for the five European structural and investment funds 
(ESIFs): this also provides for stronger links with other 
EU instruments like Horizon 2020 (the EU’s new 
programme for research and innovation) and the 
Connecting Europe Facility (see previous chapter).

New common rules for the five European structural and 
investment funds (ESIFs) will create better links between the 
funds and between EU policies, simplify procedures and 
ensure that money is invested faster in regions across the EU.

COMMON RULES

European Agricultural Fund 
for Rural Development

European Social Fund

European Regional
Development Fund

European Maritime
and Fisheries Fund

Cohesion
Fund

THE EUROPEAN UNION EXPLAINED11

Preconditions for effective investment

Before funding can be channelled to regions and cities, 
potential beneficiaries need to fulfil certain 
preconditions to ensure that all EU investment is 
targeted and effective. These include, for example:

•  the development of smart specialisation strategies: 

regions should specialise in the sectors providing 
them with the highest potential for growth and 
competitiveness and should promote partnerships 
between universities, research institutes, businesses 
and public administrations to develop innovative 
products and services;

•  strategies to reduce youth unemployment and 

promote non-discrimination;

•  compliance with environmental laws;

•  business-friendly reforms; 

•  measures to improve public procurement systems.

Strategies must also be consistent with the national 
reform programmes agreed upon under the European 
semester, the EU’s system of collective economic 
management. The European semester is an annual 
health-check of EU economies, bringing together all 
EU countries and institutions, where countries are given 
specific recommendations for economic reform on an 
individual basis.

If the European Commission considers that a country’s 
investment plan is not consistent with national reform 
programmes or insufficient to address the relevant 
reforms identified in the European semester, it can ask 
it to modify its programme so as to support key 
structural reforms. As a last resort, it can suspend 
funds if economic recommendations are repeatedly and 
seriously breached (for example, if a an EU country has 
excessive economic imbalances or budget deficits). This 
is to guarantee that the impact of EU investment on 
growth and jobs is not undermined by unsound 
economic policies or by weak administrative capacity. 

Project example: Launch of Romanian seat for top research consortium — ELI–NP

ELI–NP’s objective is to create a European centre 
for high-level research on ultra-high laser and 
laser-matter interaction. The ELI-NP research site 
will attract researchers, students and the private 
and business sectors from across the world to study 
extreme light applications for the benefit of society. 
The site should also put Europe on the map of 
nuclear physics research using high-tech laser 
technology. Primarily based in Bucharest, the ELI-NP 
project includes two other facilities: one in Hungary 
and one in the Czech Republic. It is part of a 
research consortium that brings together 40 
partners from 13 EU countries. By 2018, ELI-NP will 
employ 262 researchers, including 36 support staff, 
and will make an important contribution to reducing 
‘brain drain’ in the region. The research site is 
scheduled to be operational by 2015. The project 

represents a remarkable example of how the 
instruments of the EU’s regional policy can be used 
to serve both the objective of economic cohesion 
and the development of the European research area 
(ERA). Total budget: €356 million 

©
E
L
I
-
N
P

R
o
m
a
n
a

i

European Agricultural Fund 

for Rural Development

European Social Fund

European Regional

Development Fund

European Maritime

and Fisheries Fund

Cohesion

Fund

The EU has invested almost €150 million in a top European 
research consortium bringing together 13 EU countries.

Total ERDF funding: €149 .3 million

REGIONAL POLICY 
 
12

RegioStars — Rewarding innovation

The Commission first organised the RegioStars 
awards in 2008, inviting all EU regions to submit 
projects. Entries have come mostly from Belgium, 
Estonia, Latvia, Lithuania, Portugal and the United 
Kingdom. All submitted projects highlight innovative 
approaches to regional development at the 
grassroots level.

The goal is to identify good practices in regional 
and urban development by rewarding original and 
innovative projects of inspirational value to other 

regions. In 2013, the sixth annual edition of the 
awards attracted a record 149 applications 
competing in five different categories, with 27 
highly commended finalists.

By way of example, the winner of the ‘smart 
growth’ category was the UPTEC Science and 
Technology Park, University of Porto, Portugal. The 
park develops clusters, linking universities, 
research institutes and local businesses, in sectors 
of innovation potential in the local economy. With 
a contribution of €15.4 million from the ERDF, 
companies based at UPTEC created 1 199 highly-
qualified jobs (90 % of them for graduates) 
contributing to robust economic growth in the 
region. It was recognised as one of the four best 
incubators/accelerators in Europe by the London 
Web Summit – People's Choice Award.

Targeting EU investment on smart, 
green growth for all

ERDF investment goes hand in hand with various 
EU policies to deliver growth and jobs across the EU. In 
order to ensure that every euro is invested wisely, 
ERDF actions are concentrated on four key priority areas 
(see below):
•  innovation and research;
•  information and communication technologies;
•  enhancing the competitiveness of SMEs; 
•  the shift towards the low-carbon economy.

The resources allocated to these priorities depend on 
the category of region:
•  at least 80 % of ERDF spending in more developed 

regions must focus on at least two of these priorities;

•  this focus amounts to 60 % of ERDF spending in 

transition regions and 50 % in less developed regions.

Furthermore, some ERDF resources must be channelled 
specifically towards low-carbon economy projects as 
follows:
•  more developed regions: 20 % of their allocation;
•  transition regions: 15 %; 
•  less developed regions: 12 %.

i

n
o
n
U
n
a
e
p
o
r
u
E
©

Campus of the RDM 
Innovation Dock, a project 
supported by EU regional 
policy funds. This former 
shipyard in Rotterdam, the 
Netherlands, was turned into 
a campus for educational 
institutions, innovative 
business and research 
institutes in 2011.

THE EUROPEAN UNION EXPLAINED 
 
Research and innovation

Enhancing the competitiveness of SMEs

13

Europe needs to invest more in research and 
innovation as it is a key driver of economic growth 
and jobs. Europe is trailing behind its global 
competitors in terms of investment, spending 
considerably less than the United States, Japan and 
South Korea, while China is rapidly catching up. One 
of the Europe 2020 objectives is to ensure that EU 
countries invest 3 % of the EU’s overall GDP in 
research. ERDF funds invest in both basic and 
applied research, encouraging all actors in the 
innovation chain (research institutes, universities, 
technological centres, entrepreneurs, large and 
small companies, financial institutions, etc.) to work 
together to generate the innovative products and 
services which EU countries need to remain 
competitive internationally.

Information and communication 
technologies (ICT)

Effective use of ICT by companies is a prerequisite 
for productivity, competitiveness, higher revenue 
growth and job creation. The ERDF therefore invests 
in ICT infrastructure for access to high-speed 
connections in all regions, especially in remote, rural 
and less developed areas. It will continue to 
facilitate the shift towards innovative uses of ICT 
services by firms (for example, e-learning and 
e-business), citizens (digital literacy and e-skills) 
and public administrations (e-health and 
e-government) to improve productivity and quality 
of life.

SMEs are the backbone of Europe’s economy: 
numbering around 20 million, they account for 99 % 
of EU businesses and are a key stimulus for growth 
and jobs. To ensure they remain competitive and can 
attract the talented people they need, the ERDF 
promotes and invests in entrepreneurship to boost 
business creation and makes it easier for them to 
access a variety of new financing instruments 
— loans, microfinance and venture capital. The idea 
is to boost the leverage effect of EU investment at a 
time of limited budgetary resources, thus spurring 
supplementary investment from the private sector.

Shift towards a low-carbon economy

The ERDF is investing almost €27 billion in 
decarbonising or ‘greening’ the economy in 2014–
20. That means increasing the use of renewable 
energy in both the public and private sectors and 
boosting energy efficiency, for example in housing 
and public buildings or by investing in smart grids 
for distributing electricity. ERDF investment also 
helps to reduce emissions from transport by 
investing in research into clean low-carbon 
technologies and by promoting sustainable public 
transport.

Putting EU cities at the heart of 
policymaking

Over two thirds of European citizens currently live in 
cities: by 2020, this proportion is set to rise to 80 %. It 
is becoming increasingly clear that economic growth in 
the EU will come primarily from Europe’s towns and 
cities and that neither EU countries nor the EU itself can 
achieve their economic and social policy objectives 
without engaging with cities. The figures speak for 
themselves: metropolitan regions host 59 % of the 
EU population and 62 % of all jobs, generating 67 % of 
the Union’s GDP.

REGIONAL POLICY 
14

Since cities are places where challenges occur and 
where solutions can be most effectively delivered, they 
are in the driving seat for implementing many EU or 
national policies at the local level. For example, if the 
EU is to meet its climate targets, it needs cities to 
better address resource and energy efficiency, notably 
in transport, housing and overall urban design. A 
multi-pronged approach is also essential for cities to 
solve problems such as concentrations of poverty, 
spatial segregation and ageing populations.

More than half of all ERDF investment between 2014 
and 2020 will explicitly target urban areas, for instance 
promoting low-carbon strategies, improving the urban 
environment, including the regeneration of brownfield 
sites and the reduction of air pollution, and promoting 
sustainable urban transport systems. These investment 
projects will be more focused than ever before in order 
to help cities address their challenges and help the EU 
harness the power of cities in the fields of smart, 
sustainable and inclusive growth.

Macro-regional strategies

The ERDF, among other funding sources, also 
contributes to macro-regional strategies which 
address common challenges faced by a group of 

countries in a defined geographical area. Two such EU 
strategies are already in place, for the Baltic Sea and 
the Danube regions, while new strategies are being 
drawn up for the Adriatic–Ionian and the Alpine areas.

Regional policy and the economic crisis

From 2008, regional policy responded quickly and 
effectively to the economic crisis with a high degree of 
flexibility, for instance through ‘thematic 
reprogramming’ — redirecting funding to where it was 
most needed and investing in key sectors for growth 
and jobs. More than €39.2 billion — or 11 % of the 
total funds — was redirected to ensure maximum 
impact by the end of May 2013, to support the most 
pressing regional economic and development needs and 
to ensure the effectiveness of EU investment despite 
the crisis.

Moreover, targeted reductions in the national  
co-financing requirements and the frontloading of 
financial allocations to EU countries in crisis provided 
much needed liquidity at a time of significant national 
budgetary constraints. Increased co-financing was 
approved in 2011–12 for Spain, Greece, Ireland, Italy, 
Lithuania and Portugal in particular and, to a lesser 
extent, for Belgium, France and the United Kingdom.

The PEACE programme: building peace and developing Northern Ireland’s economy

powerful new symbol for the city, physically and 
metaphorically, linking communities on both sides 
for whom the river had become a significant 
religious and sectarian divide.

The launch of the PEACE programme in 1995 was 
the direct result of the EU’s desire to respond 
positively to new opportunities arising from the 
Northern Ireland peace process during the 
paramilitary ceasefire announcements. The EU has 
provided a total of €1.3 billion in financial 
assistance. One of the most iconic projects was the 
‘PEACE bridge’ in Derry/Londonderry, officially 
opened by the EU commissioner for regional policy 
in June 2011. The bridge cost €14.6 million to build, 
over €11 million of which came from EU funding. 
The PEACE bridge has now physically united both 
sides of the riverbank and its design represents a 
symbolic handshake across the River Foyle. It is a 

Total ERDF funding: €1 .3 billion

THE EUROPEAN UNION EXPLAINED15

Outlook

  EU regional policy 2014–20:  

a new era of strategic spending

Regional policy, accounting for just over one third of the 
Union budget, is the EU’s main investment policy for 
regional and urban development and growth. It has 
co-financed a multitude of projects over the years in 
every EU country, benefiting citizens and businesses alike.

budgets for all. As we enter the 2014–20 financing 
period, the fifth of its kind since 1989, the EU,  
together with its members, is establishing investment 
strategies to ensure that the whole of Europe gets the 
maximum leverage and impact from every euro spent.

Projects supported by regional policy have created 
millions of new jobs, developed thousands of kilometres 
of strategic transport, energy and broadband links, 
invested in research and innovation, small businesses 
and entrepreneurs, supported projects developing new 
solutions in the fields of renewable energy and energy 
efficiency, protected cultural heritage and areas of 
natural beauty, spurred growth in sparsely populated 
areas and the outermost regions of the EU and much, 
much more.

At the time of writing, there are positive signs that 
Europe is on the road to recovery, after one of the worst 
economic and financial crises since the 1920s. However 
it is still a time of fiscal constraints and reduced 

New, simpler rules will increase coherence between the 
various funds and will also promote complementarities 
between policy fields (research and innovation, the 
common agricultural policy, education and employment, 
to name but a few). New preconditions before 
EU funding is granted and careful monitoring once 
funding is channelled, alongside a focus on a limited 
number of strategic investment priorities, will ensure 
that the money gets to where it is most needed.

Through clear and measurable targets for regional 
policy investment, EU countries and regions can 
demonstrate their contribution to achieving the 
Europe 2020 objectives for sustainable economic 
growth and job creation.

REGIONAL POLICY16

Find out more

N
A
-
0
4
-
1
4
-
8
5
7
-
E
N
-
C

Who can apply for regional funding?

Organisations that can benefit include public bodies, some private sector organisations  
(especially small businesses), universities, associations, NGOs and voluntary organisations.

How can I apply for funding?

Applications for funding should be submitted to the national or regional authority  
managing the relevant programme and covering a particular project.

Whom can I contact in my country to obtain further information?

 X Managing authorities in EU countries:  

http://ec.europa.eu/regional_policy/manage/authority/authority_en.cfm

 X Europe Direct: EU service which answers all your questions about the European Union.  

Call 00 800 6 7 8 9 10 11 or visit http://europedirect.europa.eu

 X Representations of the European Commission in EU countries: http://ec.europa.eu/represent_en.htm 
 X Discover how the EU is investing in your region through our projects database: http://ec.europa.eu/regional_

policy/projects/stories/index_en.cfm

Follow us:

  http://ec.europa.eu/regional_policy/index_en.cfm (general information website)

  http://www.twitter.com/@EU_Regional (breaking news)

  https://www.yammer.com/regionetwork (EU social network)

  http://www.flickr.com/euregional (database of photos)

 X Sign up for Regioflash, the Commission’s newsletter on regional policy: http://www.inforegiodoc.eu

ISBN 978-92-79-41288-2 
doi:10.2775/74781

THE EUROPEAN UNION EXPLAINED