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Keynote speech: 'How do regions contribute to competitiveness?”

European Commission - SPEECH/14/373   14/05/2014

Other available languages: none

European Commission

[Check Against Delivery]

Johannes HAHN

Commissioner for Regional Policy

Keynote speech: 'How do regions contribute to competitiveness?”

AER Session – European Business Summit

Brussels, 14 May 2014

It is a great pleasure to be here today to speak about the role of cohesion policy in strengthening regional competitiveness and boosting business development. I am always very glad about opportunities to discuss on how the regions can play a greater role in pursuing this objective.

Improving our competitiveness is one of the greatest challenges Europe faces today. The answer does not depend on lowering our standards or by trying to copy other models. But Europe's competitiveness has to be built on its very own strengths. In this respect, one of Europe's most remarkable features is its great diversity in assets. Each and every one of them has the potential for a successful competitiveness story.

I believe that regions hold the key to our future prosperity. After all, they are the most appropriate level to assess the needs and strengths of an area. With their local knowledge, regions are able to build a proper, tailor-made strategy for growth and competitiveness.

Encouraging regions to come-up with such strategies is at the heart of the new Cohesion policy which aims to provide regions with the tools to address their competitiveness challenges.

Regional competitiveness and attractiveness for businesses touch upon the very raison d'être of Cohesion policy.

Cohesion policy has already shown its significance for regional economic growth, especially during the crisis when investments from national resources declined.

The crisis has indeed had a profound impact on national and regional budgets, limiting availability of funding across all areas of investment.

In the EU as a whole, public investment declined by 20% in real terms between 2008 and 2013. In Greece, Spain and Ireland, the decline was around 60%. In the central and eastern countries, where Cohesion Policy funding is particularly important, public investment fell by a third.

Without EU Cohesion Policy, investments in the Member States most affected by the crisis would have collapsed by an additional 50%. In fact, Cohesion funding now represents more than 60% of their investment budget.

The impact of the new cohesion policy is now set to be even more decisive in the future.

The reform that was adopted for the 2014-2020 programming period enables cohesion policy, more than even before, to become a more efficient and effective investment policy for our regions.

I would like to take this opportunity to explain to you how.

To begin with, cohesion policy has become very much strategic. At policy level it is aligned with the Europe 2020 strategy. At the implementation level the introduction of ex-ante conditions means that projects will follow strategy, and not the other way around.

The conditions have been introduced to ensure that the right environment exists before spending any funds in specific fields. For example in order to finance investments in research and development you need to have in place a smart specialisation strategy. Or for transport you cannot invest any funds unless you have an integrated transport plan. These conditions are there to guarantee the strategic approach but also to make sure that the funds flow in a sound environment where there impact will be optimal.

In this context the Smart Specialisation Strategies are very important. It is an inclusive and bottom-up journey for the regions through which they will identify their strengths and accordingly built on them their growth strategy for the future.

It is an innovation-driven, place-based, entrepreneurial process in which all key players in the economy should participate. They know where the business needs are and how to boost the region's competitive advantages.

Making a proper assessment of every region's assets and weaknesses and designing a consistent growth strategy are critical to the success of cohesion policy investments.

Another new element of the reform is the introduction of the principle of thematic concentration. This means that support provided by cohesion policy is made more efficient by concentrating on key growth-enhancing areas.

The idea is to focus investments on areas linked to Europe 2020 objectives where the impact will be more decisive in the achievement of a better and more competitive growth.

According to the principle of thematic concentration, at least 80 % of all available resources in more developed regions and 50 % in less developed regions will be allocated to areas such as research and innovation, ICT, low carbon economy, as well as SME support.

Of course the reform would not make much sense if we do not have a clear focus on achieving concrete and measurable.

Focussing on results means two things.

The first is that it encourages transparency. Targets and indicators will be set to really allow to assess their achievement and to make it possible to hold accountable the relevant authorities.

The second, is that we have a performance framework assessing and rewarding the programmes which are fulfilling their objectives.

Europe has many challenges ahead, but I believe the new cohesion policy is now better equipped to help European regions become more competitive and prosperous. It can be provide real, meaningful investments to help regions turn challenges into opportunities for growth. In addressing these challenges, Europe shall not give up its values. It should build on its own competitiveness model instead.

Our European values can inspire our future. High social standard, respect of the individual, freedom and entrepreneurial spirit are all strengths to build upon, and not constraints to abide by.

I really believe that every challenge hides an opportunity.

Take for example Europe's dependency on raw materials and energy. These are a critical source of concern these days for political and economic reasons. In 2012, Europe would have had a positive trade balance of 317 billion Euros if it was not for energy and raw material imports. Instead, because of this dependency, our trade balance for 2012 was negative by 105 billion Euros.

Our challenge here is to reduce our dependency and innovation can help us to turn this into an opportunity for growth. In this direction, investment in key enabling technologies could provide us with solutions to reduce this dependency. The same can be said for investments for lower energy consumption and increased energy efficiency.

New material and new technologies in these fields, not only can they help us reduce our dependency from imports but they can even be at the heart of our economic activity and increase our competitiveness for the years to come.

It is by no coincidence that the new Cohesion Policy encourages the low carbon economy and the area of Key Enabling Technologies.

It is my strong belief that the regions can lead the growth of the European economy and become more competitive. We just have to understand that we cannot continue with business as usual and we have to become smarter to be able to be more competitive. Cohesion Policy not only provides the investment in monetary terms but it also provides the right framework for the regions to think strategically and concentrate their efforts in those areas where it really matters. As we are now finalising the Partnership Agreements and the Operational programmes for the new period, I urge you to take this message back to your regions.

Thank you very much for your attention. I look forward to our discussion.


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