Mind the Gap - Day One - Experts Meet Ahead of EU Cohesion Policy Session

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May 18, 2014
by Alex Jackson
Mind the Gap - Day One - Experts Meet Ahead of EU Cohesion Policy Session

Fellows discuss EU innovation, market growth, and green cities in two-day pre-session program

Pre-session participants discuss contentious EU Cohesion Policy issues in the Max Reinhardt Library.

Following on from the economic downturn, new policies for the EU budget period 2014-2020 aim to put an end to half a decade of austerity and promote smart, sustainable and inclusive growth across the continent. However, in an area that is so culturally, socially and economically diverse, there needs to be a range of complementary measures to revive and sustain such growth. For this, one of the most important questions to consider is “What are the foundations for a competitive Europe?”

At the pre-session brainstorming that launched Salzburg Global Seminar’s session, “Mind the Gap! Innovating for Regional Cohesion and Smart Growth”, a small number of dedicated individuals highlighted areas for improvement in order to restore positive growth trajectories and improve social cohesion. These ranged from appropriate fora for talent development, to tackling youth unemployment, and from advancing more homogeneous carbon pricing and reducing barriers to trade, to leveraging innovation for sustainable cities.

With €350bn being made available between 2014 and 2020, the Cohesion Policy is second only to the Common Agricultural Policy in terms of EU investment. Higher investment in R&D and innovation would go a considerable way to boosting smart specialization and competitiveness in Europe, but reducing the regulatory burden continues to be viewed as a priority.

Participants noted a real desire to pay attention to variations in regional markets. They discussed  the rise of interest in “reshoring” (bringing back industries that have delocalized production outside the EU)  and whether this or greater integration in global value chains should be the key focus. Ways to get multilateral governance actually working in Europe, with initiatives driven from regional and local levels, could also promote more targeted responses to specific regional challenges and bridge the urban-rural divide in imaginative and productive ways.

A key area for improvement is in communication and confidence-building. Participants agreed that one reason for growing levels of opposition to the EU is that younger voters and those in parts of more affluent countries are more sensitive to the idea that EU solidarity mechanisms redistribute funds to less affluent areas without return. The place-based approach lies at the heart of regional development policy, but some question why more money isn’t poured into the likes of Germany and the UK, countries of greater economic output in the Union, which might offer a greater return on investment. The counter-argument is the good news story that cohesion funds are “a university from which you graduate”: socio-economic transformations in Ireland and other Member States show how EU funds have been put to good use.

It was suggested that there needs to be much more active involvement from stakeholders in order to combat this rise in EU apathy or antipathy. As shown by opinion polls for the upcoming European elections starting on 22 May, many people across EU Member States have become louder in voicing their resistance to EU institutions and processes, with approximately one third of voters expressing the intention to vote for far-right or anti-European parties. Reconnecting governments, citizens, countries and identities is a crucial task to revitalize the European project.

Given current estimates that there will be 7 billion city dwellers in the world by 2050 – which would require the resources of around four ‘Earths’ if US production and consumption patterns were replicated - , European frameworks for green innovation will demand scalability and new logistics for both business and government. Both are critical to leverage return on investments and enable competitive industries to kickstart growth in transformative sectors, including smart urban planning and energy grids, e-mobility and logistics, green transport and so on.

To be proactive in these fields, participants suggested that European cities and administrations need to engage business and entrepreneurs much earlier as part of an integrated approach to urban and regional transformation. This trend needs to be accelerated, some Fellows argued, to launch meaningful dialogue and get agreement on realistic, implementable targets.

For such a shift, there is a need to change the European mindset. One speaker reminded the group that the word for “crisis” in China is synonymous with “opportunity”: problems and disruptions also open up a magnitude of potential opportunities to rethink ways of doing business and focus more strategically on the ‘productive region’ and its specific assets and capacity. This nimbler attitude needs to be adopted more systematically within the EU.

The cumulative impacts of austerity and the Euro crisis were seen as hampering progress, access to finance (especially for SMEs) and confidence. As one participant suggested, “If the economy isn’t growing, why would you invest? If you can’t justify your response to that question, you instantly deter investment.”

Against this backdrop, participants also highlighted many arguments to resist the dominant bleak narrative. Panelists explored the game-changing potential of integrated policies for human capital, which will require continuing investment in education and skills, so as to create a dynamic workforce, the need for much higher ICT literacy, and progress towards establishing a migration flow balance to meet workforce needs, especially in aging societies.

In Europe there needs to be a more sophisticated dimension for capital growth and stronger linkages between competitiveness and active labour market policies. For the first time in twenty years of cohesion policy, there is a reversal of economic convergence, partly due to demographic and migration trends and partly due to the economic crisis. The difference between the poorest and richest countries in the EU in terms of GDP per capita is a factor of 8 to 1. Several participants highlighted problems arising from the lack of a fiscal equalization system between Member States, with some expressing concern about salary disparities and the brain drain even within Europe.

One way of increasing efficiencies and reducing these disparities is to consider the interconnectedness of people in cities – social infrastructure was seen as just as critical as ‘hard’ infrastructure. Larger melting pots provide a social milieu in which to exchange ideas and innovation. Yet cities need to function as a socially cohesive unit in order to maximise such benefits, so they are in many ways a microcosm of the continental European issue.

Groupings of urban agglomerations, and streamlined governance of transport and planning, can have very major benefits for productivity. Understanding the correlation between spatial and geographical influences on productivity, both on a local and continental level, can significantly improve cohesive urban planning and support dynamic growth as well as better social and cultural integration.

How to promote and embed sustainable growth and inclusive communities will be the key focus for Fellows as this session develops – a critical issue for revival of confidence in institutions and leaders at both national and European level.  


The main session, 'Mind the Gap! Innovating for Regional Cohesion and Smart Growth', now runs from Sunday 18 until Wednesday 21 May. Please regularly check the website and our social media platforms using #SGSEuro for updates.