The report assesses what supports or hinders the competitiveness of these regions and why they have not yet reached the expected levels of growth and income for the EU. More importantly, the report identifies the investment needs of the regions, namely human capital, innovation, quality of institutions, better accessibility, as well as the tools available within the framework of EU Cohesion Policy that could support them in their future.
Regional Policy Commissioner Corina Creţu i said: "For each obstacle to development, there is a Cohesion Policy answer. Tailor-made regional development strategies, combined with preconditions for successful investment, can make these regions attractive places for residents, workers and businesses. This is what we do: we help regions identify their needs and their competitive assets and we provide them with the tools for better-policy making."
47 regions in eight Member States were carefully studied and categorised either as being 'low-growth regions', with a GDP per capita of up to 90% of the EU average but with a persistent lack of growth, or 'low-income regions', where GDP per head is growing, but is still below 50% of the EU average. These regions are home to 83 million inhabitants, i.e. 1 out of 6 EU residents. One group is clustered mostly in southern Europe, and a second group is concentrated in the east.
Low-income regions' economies can be boosted by an effective mix of investments in innovation, human capital and connectivity
Smart specialisation strategies can help improve the innovation capacities of regions which score poorly on the Regional Competitiveness Index and where there is a lack of efficient interaction between academia and the local business sphere.
Investments in human capital and improving the skills of the labour force, via vocational training and lifelong learning, both of which can be supported by Cohesion Policy funds, should be incentivised. By doing this, the depreciation of skills and mismatches between educational supply and labour market demand can be avoided.
Making a region more attractive to young talent and businesses also means linking the regions cities better, as well as its fringes and rural areas. This will generate more spill over from the main economic poles to the benefit of the entire region. Many low-income regions face significant gaps in their infrastructure which is why investments in key transport networks should be prioritised.
Low-growth regions would gain from stronger institutional capacity and structural reforms
The report provides further evidence that development policies can only deliver full results in an investment-friendly environment and only if they are carried out by solid administrations in a transparent, accountable and efficient way.
This is especially relevant for low-growth regions, which have demonstrated limited improvement in their institutional capacity, have not been able to make the most of Cohesion Policy interventions and have consequently grown less and been more exposed to the effects of the economic crisis.
To enhance the impact of EU, national and regional spending, horizontal and sectoral barriers that hinder investments should be broken down. The Cohesion Policy preconditions for successful investments can be powerful incentives to address the main obstacles to investments identified in the report.
Priorities should be to make business environments more flexible, with less red-tape, time and costs involved in setting up start-ups and running SMEs, increasing the efficiency, transparency and accountability of public administrations and services and modernising public procurement with digital procedures.
In June 2015, the Commission launched an initiative to examine the factors that hold back growth and investment in the low-income and low-growth EU regions. In line with this initiative, the report published today analyses the investment needs, growth determinants, macro-economic framework and need for structural reforms of these regions.
The initiative and this report are part of a wider commitment of the Commission to provide tailor-made assistance to regions in order to help them improve the way they manage and invest Cohesion Policy funds (see MEMO 15/4654) and foster more ownership, coordination and prioritisation in regional investment and development strategies.
Competitiveness in low-growth and low-income regions - the lagging regions report
Q&A on the report