European added value of ESI funds in Portugal

The European Structural and Investment (ESI) Funds play a crucial role in Portugal by promoting research, innovation and entrepreneurship and developing the skills to close qualification gaps and boost employment. Portugal 2020, the Portuguese Partnership Agreement, will continue to focus on overcoming structural constraints in the country, in line with the European added value of Cohesion Policy.

Following the introduction of territorial cohesion in the Lisbon Treaty, Cohesion Policy has placed a greater emphasis on sustainability and territorial analysis, in line with the EU’s political agenda. In this context, the role of the ESI Funds is of the utmost importance. The recent economic crisis has posed new challenges concerning governance, the efficient use of resources, and the effectiveness of policies, indicating a return to the European added value of EU policies.

Portugal’s priority investment areas in the 2014-2020 period include boosting competitiveness by stimulating the production of tradable goods and services, promoting employment, particularly among young people, broadening skills and qualifications, reducing poverty, modernising public administration, and promoting energy efficiency and environmental practices.

Within this framework, innovation and qualifications for the working population are vital to overcome restrictions on Portugal’s competitiveness. Thus, as in previous funding periods, they are priority funding intervention areas – in the 2014-2020 period, 57 % of the total cohesion funds are allocated to competitiveness (36 %) and human capital (21 %), compared to 37 % in the EU-28 (27 % and 10 % respectively).

Promoting competiveness and tackling unemployment requires better levels of education and training and matching skills and competences to labour market demands. In this respect, reducing Portugal’s school dropout rate (over 40 % in 2000) has been a priority in the application of ESI Funds.

The use of European funds for vocational training, especially in promoting vocational pathways and dual-certification modalities at school, particularly among children from disadvantaged backgrounds, together with upgrading educational infrastructures, has contributed to a remarkable drop in this rate to 14 % in 2015 (11 % in the EU-28) in line with the Europe 2020 strategy goals.

Another challenge is to stimulate research, innovation and the transfer of knowledge, which are essential for creating jobs and generating economic value. According to the European Innovation Scoreboard 2016, Portugal has a ‘moderate innovator’ profile, performing below the EU average as the result of insufficient coordination between companies and R&D entities, a low level of patenting and poor absorption of skills. However, in the 2008-2015 period, the country’s performance improved, reaching the European average in ‘innovators’, ‘open, excellent and attractive research systems’ and ‘finance and support’. As regards ‘human capital’, Portugal’s performance is higher than the EU average, while expenditure on R&D as a percentage of GDP also rose to 1.3 % in 2014 (2 % in the EU-28).

Structural Funds have proved critical to these achievements. Similarly, Portugal 2020 is reinforcing this focus on tools to promote R&D and the transfer of knowledge to the business sector to increase competitiveness and added value, while strengthening the tradable orientation of the Portuguese economy.

The continuing implementation of Cohesion Policy in innovation and education and training for the working population demonstrates its European added value in promoting growth and job creation in Portugal, thereby helping to strengthen the single market with significant knock-on effects for other economies across EU regions and territories.

The adaptability of Cohesion Policy to the diversity of needs and potential across EU  territories (subsidiarity and place-based), alongside its promotion of a multi-level governance model based on the partnership principle, also makes this EU policy one of the most visible representations of the results of European integration for all territories and their populations.

Duarte Rodrigues – Vice-President of the Board, Cohesion and Development Agency, Portugal

Panorama 58: An Urban Agenda for the EU