Regional economic divergence has become a threat to economic progress in the EU (Iammarino et. al., 2017) at a time when globalisation poses new challenges to economic cohesion. While the evidence suggests that the EU economy as a whole has benefited and continues to benefit from globalisation, these benefits are not automatically and evenly transmitted to all European regions (European Union, 2017a).
Cohesion Policy has invested heavily in reducing economic disparities across EU regions. It has co-financed investment in innovation, education and digital and transport networks, so helping to create a single market that boosts growth, productivity and specialisation in areas of comparative advantage in all regions. As such, it strengthens the position of EU enterprises in global markets where they have to compete with both firms from low-cost locations and highly innovative ones.
The crisis has been highly disruptive in many parts of the EU. It has reversed the long-term trend towards a narrowing of regional disparities. It has led to reductions in economic activity and employment in many Member States. However, the first signs of the convergence process resuming can be detected. Nevertheless, many regions still have a GDP per head and employment rate below their pre-crisis level.
Cohesion Policy has made a substantial contribution to economic cohesion. In the years between 2007 and 2014, around 400,000 SMEs received support under cohesion policy and more than 1 million new jobs were directly created. Nevertheless economic disparities still remain, requiring substantial amounts of investment beyond the present programming period if they are to be reduced.