Abstract
In order to support economic development across all European Union regions, €351.8 billion –almost a third of the total EU budget– has been set aside for the Cohesion Policy during the 2014–2020 period. The distribution of this budget is made through five main structural and investment funds, after long and difficult negotiations among the EU member states. This paper analyzes the problem of allocating the limited resources of the European Regional Development Fund as a conflicting claims problem. Specifically, we attempt to show how the conflicting claims approach fits this actual problem, and we propose alternative ways of distributing the budget via (i) claims solutions or (ii) the imposition of bounds (guarantees) to each of the regions. By applying this approach we also show that there is a claims solution that performs better than the others by reducing inequality and promoting convergence to a greater degree. It is clear that political bargaining will always be part of the allocation process. However, having an intuitive initial proposal may help politicians to find the best agreement. To that effect, we propose the use of a claims solution as a way to find an initial proposal for future policy changes concerning the allocations of the EU structural funds.
Highlights
The main objective of the European Union (EU) is to strengthen the social and economic cohesion of the EU regions, as well as to reduce the inequalities among them
Where: GDPh is the greatest GDP per capita in the EU regions (Luxembourg); ı is a common amount per inhabitant that all regions receive; and is a coefficient that can be interpreted as a convergence speed fixed by the Member States
We suggest a way to obtain an initial proposal for the distribution of the European Regional Development Fund (ERDF) budget, that is based on defining a conflicting claims problem
Summary
The main objective of the European Union (EU) is to strengthen the social and economic cohesion of the EU regions, as well as to reduce the inequalities among them. Crescenzi et al (2020) argue that “in a context of rising economic nationalism and Euroscepticism, the value added of a supranational Cohesion Policy of the European Union is constantly under scrutiny” and propose to explore new institutional and policy arrangements in order to offer more flexibility and that “EU policies need to buy-in ‘national’ policy agendas in a more timely and systematic manner, sharing responsibility for (and ownership of) key policy reforms.” In this Eurosceptic scenario, the possibility of offering a neutral and fair initial point, as offered by the claims rules, could help to reach more consensual budget distributions.
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