Regional policies and European Commission priorities
Data extracted in March 2018.
Planned article update: September 2019.
Regional European policymaking for the 2014-2020 funding period has changed to recognise the important role that may be played by promoting an urban agenda.
The EU’s rural development policy is designed to help rural areas in the EU meet a wide range of economic, social and environmental challenges.
European policymaking is inherently multidimensional: on the one hand, it has to encompass an overall framework providing objectives for the continent as a whole, while on the other it needs to acknowledge the often specific needs of national and subnational territories, as these are the driving forces behind the delivery of results. Recent challenges such as the global financial and economic crisis, the increased flow of migrants into Europe, or security concerns from terror attacks provide examples of the two-sided need to deliver both global and local solutions in a coherent manner.
One of the main policy challenges for the European Union (EU) is to ensure that all developments are scrutinised to ensure that they take account of the considerable geographical diversity within the EU. The territorial dimension of EU policy is increasingly recognised, as growth and job creation depend on making the best use of all assets, while ensuring that common resources are used in a coordinated and sustainable way.
This chapter provides an overview of some of the main EU policy developments that have a territorial impact. It starts with information on how the EU attributes its cohesion policy funding with the goal of reducing socioeconomic disparities between regions, before providing information on a range of policy developments which influence life in Europe’s regions, cities and rural areas.
Cohesion policy — investing to reduce regional disparities in the EU
What is cohesion policy?
The EU’s cohesion policy invests in growth and jobs and promotes territorial cooperation; it is behind thousands of projects that have taken place all over Europe. It aims to reduce the disparities that exist between EU regions, promoting a balanced and sustainable pattern of territorial development, by supporting job creation, business competitiveness, economic growth, sustainable development, and an overall improvement in the quality of life. The bulk of cohesion policy funding is concentrated on less developed European regions in order to help them to catch-up and to reduce the economic, social and territorial disparities that exist across the EU.
The EU’s cohesion policy is established on the basis of seven-year funding periods; the current period covers 2014-2020, for which expenditure of EUR 352 billion has been allocated for measures in the EU Member States, equivalent to almost one third of the total EU budget. At the time of writing, European institutions are in the process of discussing the delivery and implementation of cohesion policy post-2020.
During the period 2014-2020, cohesion policy is based around 11 thematic objectives:
- strengthening research, technological development and innovation;
- enhancing access to, and use and quality of information and communication technologies (ICT);
- enhancing the competitiveness of small and medium-sized enterprises (SMEs);
- supporting the shift towards a low-carbon economy in all sectors;
- promoting climate change adaptation, risk prevention and management;
- preserving and protecting the environment and promoting resource efficiency;
- promoting sustainable transport and removing bottlenecks in key network infrastructures;
- promoting sustainable and quality employment and supporting labour mobility;
- promoting social inclusion, combating poverty and any discrimination;
- investing in education, training and vocational training for skills and lifelong learning;
- enhancing institutional capacity of public authorities and stakeholders and efficient public administration.
Cohesion policy is delivered through three main funds: the European regional development fund (ERDF), the European social fund (ESF) and the cohesion fund. The first of these, the European regional development fund, concentrates its actions on innovation and research, the digital agenda, support for small and medium-sized enterprises (SMEs), and the low-carbon economy. The resources allocated to each of these depends upon the region concerned: for example, in more developed regions, at least 80 % of any funding should focus on at least two of these priorities, whereas in less developed regions this share falls to 50 %. The European social fund aims to improve employment and education opportunities in the EU, as well as the situation of the most vulnerable people, for example, those at risk of poverty, by investing in people. More than EUR 80 billion has been earmarked for human capital investment across the EU Member States during the period 2014-2020. The European social fund focuses on supporting four thematic objectives: promoting employment and supporting labour mobility; promoting social inclusion and combating poverty; investing in education, skills and lifelong learning; enhancing institutional capacity and an efficient public administration. The cohesion fund supports EU Member States whose gross national income (GNI) per inhabitant is less than 90 % of the EU average. During the period 2014-2020 it allocates a total of EUR 63.4 billion to a range of investment projects primarily in relation to trans-European networks (TENs) and the environment, through a focus on the following areas: the shift towards a low-carbon economy; promoting climate change adaptation and risk prevention; preserving and protecting the environment and promoting resource efficiency; promoting sustainable transport and removing key bottlenecks in network infrastructures; enhancing institutional capacity. It is subject to the same rules of programming, management and monitoring as the European regional development fund and European social fund.
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Cohesion policy: how is the budget decided?
The total budget for cohesion policy and the rules associated with its allocation are jointly decided by the Council and the European Parliament. A legislative package for cohesion policy for 2014-2020 was adopted on 17 December 2013. This included a common provisions regulation (CPR) which lays down general provisions and the simplification of European structural and investment funds (ESIF); the CPR was amended in October 2015 to take account of the unique situation of Greece resulting from the global financial and economic crisis and its subsequent sovereign debt crisis.
The NUTS classification — an objective basis for the allocation of cohesion policy funding
As noted above, priority for cohesion policy funding is given to regions whose development is lagging behind the EU average, with more than half (EUR 181 billion) of the total allocation set aside for less developed regions whose GDP per inhabitant is lower than 75 % of the EU average. Statistics on regional accounts are used to classify regions for the allocation of structural and investment funds, with the NUTS classification providing the basis for regional boundaries and geographic eligibility.
Regional eligibility for the European regional development fund and the European social fund during the funding period 2014-2020 was calculated on the basis of regional GDP per inhabitant (in PPS) averaged over the period 2007-2009. NUTS level 2 regions were ranked and split into three groups:
- less developed regions where GDP per inhabitant was less than 75 % of the EU-27 average;
- transition regions where GDP per inhabitant was between 75 % and 90 % of the EU-27 average; and
- more developed regions where GDP per inhabitant was more than 90 % of the EU-27 average.
Map 1 shows the eligibility of NUTS level 2 regions for structural funds over the funding period 2014-2020. The less developed regions (shaded in orange), which receive the highest proportion of funds, are predominantly in the east and south of the EU, and also include the Baltic Member States and several outermost regions.Eligibility for the cohesion fund was initially calculated using a different indicator and for a slightly different period from the two other funds: eligibility is based on GNI per inhabitant (in PPS) averaged over the period 2008-2010. Only EU Member States whose GNI per inhabitant was less than 90 % of the EU-27 average were supported, with funds to cover actions designed to reduce economic and social disparities and promote sustainable development. Bulgaria, the Czech Republic, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovenia and Slovakia were covered during the period 2014–2016, while Cyprus was eligible for a phase-out fund. During 2016, a review of cohesion fund eligibility was conducted, based on information for GNI per inhabitant averaged over the period 2012-2014. As a result, the only change was that Cyprus became fully eligible for cohesion fund support (from 1 January 2017 onwards).
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Cohesion policy: implementation
Structural and investment funds are attributed through a process which involves European, national, regional and local authorities, as well as social partners (for example, organisations representing employers or employees) and organisations from civil society. Each Member State produces a draft partnership agreement and draft operational programme, which provides information on their regional strategy and a list of proposals for various programmes. Having negotiated the contents of these with the European Commission, national/regional managing authorities in each of the EU Member States then select, monitor and evaluate thousands of potential projects. The European Commission commits funds to allow these authorities to start spending funds on their programmes, with each programme monitored by both the European Commission and the Member State in question; payments are made on the basis of certified expenditure and a series of reports.
For the period 2014-2020 the rules for cohesion policy funding have been simplified so that a harmonised set of rules now applies to all of the funds. The policy has been adapted so that it is based upon a results-orientated approach with more transparent controls, less red tape, the introduction of specific preconditions before funds can be released, and the introduction of measurable targets for better accountability.
Cohesion policy: integrated into broader policy goals
Regional policy and funding help deliver many of the EU’s overall policy objectives, for example, contributing directly to the EU’s priorities for 2015-2019. Cohesion policy is closely integrated with the Europe 2020 strategy and the EU’s investment plan for Europe — see below for more information. During the period 2014-2020, cohesion policy programming is, for the first time, embedded within overall economic policy coordination, in particular the European semester, which is a regular cycle of economic policy coordination that is designed to coordinate the individual efforts of EU Member States. These links between cohesion policy and broader economic reforms has been strengthened such that the European Commission may suspend regional funding to any Member State which does not comply with the EU’s economic rules.
Other policy areas that impact on regions
As already noted, regional policy can play an important role in delivering broader EU policy goals — such as the European Commission’s priorities — while cohesion policy investments may also complement a range of policy initiatives in other areas, for example, education, employment, energy, the environment, the single market, research and innovation.
Urban development in the EU
The various dimensions of urban life — economic, social, cultural and environmental — are closely inter-related. Successful urban developments are often based on coordinated/integrated approaches that seek to balance these dimensions through a range of policy measures such as urban renewal, increasing education opportunities, preventing crime, encouraging social inclusion or environmental protection. As such, urban development has the potential to play an important role in promoting the Europe 2020 strategy and delivering smart, sustainable and inclusive growth.
What is urban development policy?
One important change in European policymaking for the 2014-2020 funding period is recognition of the important role that may be played by the urban dimension of regional policy, in particular concerning measures that are designed to assist in the fight against poverty and social exclusion. Indeed, the EU has put the urban dimension at the heart of cohesion policy, with at least half of the resources foreseen under the European regional development fund being invested in urban areas. The European Commission estimates that during this six-year period some EUR 10 billion from the European regional development fund will be allocated to sustainable urban development, covering around 750 different European cities. The EU’s regional policy will target, among others, urban development through:
- focusing investment priorities on issues such as sustainable urban mobility, the regeneration of deprived communities, or improved research and innovation capacity;
- committing at least 5 % of the European regional development fund to integrated sustainable urban development;
- setting-up an urban development network to be responsible for reviewing the deployment of European funds;
- encouraging cities to promote community-led local developments for urban regeneration.
Urban development policy seeks to promote the economic, social and environmental transformations of cities through integrated and sustainable solutions. It can play a valuable role in the implementation of the Europe 2020 strategy, through a range of initiatives, extending the territorial coverage of the strategy to an additional level of governance. Indeed, a number of commentators and stakeholders have argued that cities need to be more involved in the conception and implementation of EU policies, as, despite their economic weight, there is no explicit urban dimension to the Europe 2020 strategy or its targets, although three flagship projects — the digital agenda, the innovation union and youth on the move — each address particular urban challenges.
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What is the EU’s urban agenda?
In February 2014, the European Commission organised a CITIES forum, to discuss how to strengthen the urban dimension of EU policymaking; it was centred on a debate over the need for an EU urban agenda, designed to bring together the increasing number of sectoral policies that impact on the EU’s urban areas, for example, within the domains of energy, the information society, climate action, the environment, transport, education or culture. Many stakeholders saw an opportunity to implement a framework to bring coherence to a diversity of initiatives and policies, and to give clear roles for European, national, regional and local authorities.
The forum was followed, in July 2014, by a European Commission Communication The urban dimension of EU policies — key features of an EU urban agenda (COM(2014) 490). It discussed a range of options for developing an urban agenda, including:
- a role for the EU institutions as a facilitator of urban development;
- further integration of sectoral policies so that these are better adapted to urban realities;
- an instrument to involve cities and their political leaders in EU policymaking and policy implementation;
- a tool to integrate the goals of the Europe 2020 strategy with cities’ own strategies.
At the end of May 2016, a meeting of ministers responsible for urban matters was held in Amsterdam, the Netherlands. It reached an agreement on an urban agenda for the EU, as established by the Amsterdam pact. The agreement foresaw the development of 12 priority themes as partnerships between European institutions, EU Member States, European cities and other stakeholders; each has the goal of ensuring that the urban dimension of policymaking is strengthened. The themes include: the inclusion of migrants and refugees; air quality; urban poverty; housing; the circular economy; jobs and skills in the local economy; climate adaptation; energy transition; sustainable land use; urban mobility; digital transition; public procurement.
The urban agenda is a new method of working designed to maximise the growth potential of cities, while tackling the social challenges associated with urban areas. It seeks to promote cooperation, economic growth, the quality of life and innovation across European cities through the creation of European partnerships, which:
- promote the involvement of cities in EU policymaking (´urban friendly´ legislation);
- ensure better access to and utilisation of European (structural and investment) funds;
- improve the EU’s urban knowledge base, thereby leading to cities increasing their level of cooperation and sharing best practices.
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Rural development in the EU
Having outlined EU policy developments in relation to cities and urban areas, this next section looks at policy developments for rural areas. There are considerable differences between the EU Member States as regards their urban-rural territorial divides. Some Member States — for example, Ireland, Sweden or Finland — are very rural in character. By contrast, the Benelux Member States and Malta have a high degree of urbanisation. Equally, within individual Member States there can be a wide range of different typologies, for example, the densely-populated, urbanised areas of Nordrhein-Westfalen in western Germany may be contrasted with the sparsely-populated, largely rural areas of Brandenburg or Mecklenburg-Vorpommern in north-eastern Germany.
The EU’s rural development policy is designed to help rural areas in the EU meet a wide range of economic, social and environmental challenges; it complements the system of direct payments to farmers and measures to manage agricultural markets. Indeed, rural development policy was introduced as the second pillar of the EU’s common agricultural policy (CAP) during the Agenda 2000 reform.
The European agricultural fund for rural development (EAFRD) provides finance for the EU’s rural development policy, which is used to promote sustainable rural development and to contribute towards the goals of the Europe 2020 strategy for smart, sustainable and inclusive growth. For the period 2014-2020, the EAFRD has been allocated EUR 99.6 billion. If national contributions are included, the funding available for this second pillar of the CAP amounts to EUR 161 billion for the whole of the funding period 2014-2020, with France (EUR 11.4 billion) and Italy (EUR 10.4 billion) the largest beneficiaries.
The EAFRD is intended to help develop farming and rural areas, by providing a competitive and innovative stimulus, at the same time as seeking to protect biodiversity and the natural environment. There are six priority areas, namely, to promote:
- knowledge transfer and innovation in agriculture and forestry;
- the viability and competitiveness of all types of agriculture and support sustainable forest management;
- the organisation of the food production chain, animal welfare and risk management in farming;
- the restoration, preservation and enhancement of agricultural and forest ecosystems;
- the efficient use of natural resources and support the transition to a low-carbon economy;
- social inclusion, poverty reduction and economic development in rural areas.
As with other structural and investment funds, from 2014 onwards, rural development policy is based on the development of multiannual partnership and operational programmes which are designed at a national/regional level by individual EU Member States. Each programme should cover the priorities set by the EU and their contents are the subject of negotiations with the European Commission. Once the general programmes are agreed, national/regional managing authorities in each of the EU Member States are responsible for selecting, evaluating and monitoring individual projects.
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European Committee of the Regions
The European Committee of the Regions (CoR) is the EU’s assembly of regional and local representatives. It was created in 1994 and is composed of 350 members who are regional presidents, mayors or elected representatives of regions and cities in the 28 Member States of the EU; successive European treaties have broadened its role. The Committee of the Regions works closely with the European Commission, the European Parliament and the Council of the EU, as well as various tiers of authority in the EU Member States to promote multi-level governance. It seeks to ensure that European policy developments uphold the principles of subsidiarity and proportionality and promotes economic, social and territorial cohesion in the EU through autonomy for regional and local authorities.
With a view to the important role that may be played by Europe’s regions and cities for achieving the EU’s objectives of ‘smart, sustainable and inclusive growth’, the Committee of the Regions has adopted five political priorities for its current mandate (2015-2020): a fresh start for the European economy (creating jobs and sustainable growth in cities and regions to provide a better quality of life for citizens); the territorial dimension of EU legislation (working in the interest of citizens, no matter where they choose to live and work); a simpler, more connected Europe (reconnecting citizens and businesses at local and regional level); stability and cooperation within and outside the EU (supporting our neighbours on their path towards European values); a Europe of citizens is Europe’s future (enhancing forward-looking partnerships between the EU and its people). With this in mind, the Committee of the Regions has set up the CoR monitoring platform to observe the involvement of local and regional authorities in the European semester, the implementation of structural reforms, and in the EU’s long-term strategy for sustainable growth.
As noted above, approximately one third of the EU’s budget is devoted to cohesion policy, designed to reduce regional disparities, create jobs, open new business opportunities and address major global issues such as climate change and migration.
The #CohesionAlliance is a coalition of those who believe that EU cohesion policy should continue to be a pillar for the EU’s future. The Alliance was created through cooperation between leading European associations of cities and regions and the European Committee of the Regions. It demands that the EU budget after 2020 makes cohesion policy stronger, more effective, visible and available for every region in the EU.
By end of May 2018, more than 400 local and regional authorities, federations of local and regional authorities and civil society organisations and over 5 000 individual supporters had joined the #CohesionAlliance. The local and regional authorities and their national federations from across the EU that have officially signed up to the Alliance represent around 97 % of the EU’s population.
European Week of Regions and Cities
The European Week of Regions and Cities is an annual four-day event which allows regions and cities to showcase their capacity to encourage growth and job creation, implement EU cohesion policy, and provide evidence of the importance of the regional level for good European governance.
Organised by the Committee of the Regions and the European Commission’s Directorate-General for Regional Policy, it has become a networking platform for regional and local development, which is viewed as a key event for policy practitioners. The 16th European Week of Regions and Cities will be held under the title, For a strong EU cohesion policy beyond 2020, with three principal themes:
- territorial development (regional, urban, rural);
- future of cohesion policy, EU budget;
- education, culture and youth.
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Massive open online course (MOOC)
In January and February 2018, the Committee of the Regions, together with several Directorates-General of the European Commission — Regional and Urban Policy; Eurostat; Budget; Employment, Social Affairs and Inclusion; Agriculture and Rural development — the European Investment Bank (EIB), Interreg Europe and URBACT, presented an online training course designed to explain how to make the most of EU resources for regions and cities. The course was targeted at people interested in the EU and its regional and local affairs, in particular, for officials of regional and local administrations involved in EU affairs.
The course covered the following subjects: regions and cities in the EU; the EU budget — revenue, expenditure, management and prospects; EU structural funds and cohesion policy — supporting growth and solidarity; the social dimension of EU funding; stimulating the local and regional economy — financing and advice for investment in regions and cities; the future of Europe — options and debates. The course remains available online until mid-January 2019.
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The Europe 2020 strategy: creating a smart, sustainable and inclusive economy
The Europe 2020 strategy, designed as the successor to the Lisbon strategy, was adopted by the European Council on 17 June 2010. It is the EU’s common agenda for this decade, placing emphasis on promoting a growth pact that can lead to a smart, sustainable and inclusive economy, in order to overcome structural weaknesses, improve Europe’s competitiveness and productivity, and underpin a sustainable social market economy. The Europe 2020 strategy seeks to achieve the following five targets by 2020.
- Employment — increase the employment rate among those aged 20-64 years to at least 75 %.
- Research and development — increase combined public and private investment in R & D to 3.00 % of gross domestic product (GDP).
- Climate change and energy sustainability — reduce greenhouse gas emissions by at least 20 % (or even 30 %, if conditions are right) compared with 1990 levels, increase the share of renewable energy in final energy consumption to 20 %, and achieve a 20 % increase in energy efficiency.
- Education — reduce the rate of early leavers from education and training to less than 10 % and increase the proportion of those aged 30-34 years having completed tertiary education to at least 40 %.
- Fighting poverty and social exclusion — lift at least 20 million people out of the risk of poverty and social exclusion.
Europe 2020: coordination of EU policies
In March 2015, the European Commission proposed a new set of Broad guidelines for the economic policies of the Member States and of the Union (COM(2015) 99 final) which focused on: boosting investment; enhancing growth through the implementation of structural reforms in the EU Member States; removing key barriers to growth and jobs; improving the sustainability and growth-friendliness of public finances. At the same time, the Commission also proposed a set of Guidelines for the employment policies of the Member States (COM(2015) 098 final): boosting demand for labour; enhancing labour supply and skills; enhancing the functioning of labour markets; ensuring fairness, combatting poverty and promoting equal opportunities. At the end of 2017, in the context of the European semester, the European Commission presented its Annual growth survey 2018 (COM(2017) 690 final), which invited Member States to continue building on the ‘virtuous triangle’ of economic policy: boosting investment, pursuing structural reforms and ensuring responsible fiscal policies. Focus was placed on reforms to boost investment, including in human capital, and to improve the functioning of product, service and labour markets, which it is hoped will increase innovation, competitiveness, productivity and long-term growth.
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Europe 2020: a regional perspective
There has been a growing volume of work — for example, by the European Commission’s Directorate-General for Regional and Urban Policy, the Joint Research Centre (JRC), the European Committee of the Regions and the European Parliament — on the relationship between regional development and the Europe 2020 strategy. Although the Europe 2020 strategy does not specifically refer to regional policy, the European Commission has underlined that it may be neither realistic nor desirable that all regions seek to attain the same national targets. Rather, it was considered important for the Member States to take account of their different needs and to draw up national and regional programmes that reflect local specificities so as to promote smart, sustainable and inclusive growth.
Highlighting regional and territorial aspects, there have been a number of calls to align regional funding more closely with the Europe 2020 strategy and to monitor in more detail the performance of EU regions with respect to Europe 2020 targets. The Joint Research Centre and the European Commission’s Directorate-General for Regional and Urban Policy have released three studies based on composite indicators linked to the socioeconomic performance of EU regions, which provide a set of subnational analyses in relation to the Europe 2020 strategy and broader measures of competitiveness. Their work was supported by the findings of the mid-term review of the Europe 2020 strategy, which noted that there was growing evidence of regional divergence in several of the EU Member States. More practically, the Directorate-General for Regional and Urban Policy has increased its efforts to align the various dimensions of regional funding more closely to the Europe 2020 targets.
For more information:
The Europe 2020 index: the progress of EU countries, regions and cities to the 2020 targets, 2015 (Dijkstra L. and Athanasoglou S.)
EU regional competitiveness index, 2013 (Annoni P. and Dijkstra L.)
Sustainable development goalsSustainable development has long been part of the political agenda within the EU. However, this subject area was given fresh impetus with the adoption of the 2030 sustainable development agenda in September 2015 by the United Nations (UN) General Assembly. At the core of the agenda, there is a set of 17 sustainable development goals (SDGs), which provide a global policy framework for stimulating action over the next 12 years in areas of critical importance related to people, the planet, prosperity, peace and partnership.
The 2030 sustainable development agenda came into force on 1 January 2016 and, under the auspices of the UN, work has been finalised on developing a detailed set of targets and a global list of indicators covering three main dimensions: social solidarity, economic efficiency and environmental responsibility.
Under the auspices of the UN Statistical Division, the inter-agency and expert group on SDG indicators (IAEG-SDG) developed a global list of indicators covering the three main dimensions of sustainability: social solidarity, economic efficiency and environmental responsibility.
On 22 November 2016, the European Commission adopted the Communication Next steps for a sustainable European future (COM(2016) 739 final). This Communication identifies the EU policies that contribute to the implementation of the SDGs; it shows the significance of the SDGs, explains how the EU contributes to achieving them and announces a detailed regular monitoring of the SDGs in an EU context. The Communication also announced the creation of a multi-stakeholder platform on SDGs; it is made up of 30 organisations from the public and private spheres including territorial organisations, business and non-profit organisations (NGOs). The platform is designed to support and advise the European Commission and stakeholders on the implementation of SDGs, it is a more inclusive approach to plan and help foster action on SDGs. The platform was launched in March 2018 and has notably produced recommendations for a reflection paper on a sustainable Europe by 2030. The recommendations are centred on the need for an overarching framework for SDGs at EU level (an EU strategy) as well as a territorial perspective with involvement of cities and regions, engagement of stakeholders and EU leadership to step-up implementation on the ground.
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Source data for figures and maps
- Smarter, greener, more inclusive - indicators to support the Europe 2020 strategy (online publication)
- Sustainable development in the European Union (online publication)
- Communication of the European Commission COM (2010) 2020 final of 3 March 2010 on Europe 2020: A strategy for smart, sustainable and inclusive growth