Regional support of the EU helped lower the unemployment rate and create jobs, but it did not raise disposable income or the level of education of the population, finds a study conducted in Finland by Ville Vehkasalo. The results indicate that the EU’s regional policy is efficient to some extent, but other instruments are also needed in order to achieve all long-term strategy goals.
Vehkasalo studied the effects of ERDF regional support in Finnish Ostrobothnia, where several municipalities were transferred from a region of lower support to one with much higher support in 2007. The unemployment rate declined and the number of jobs grew especially in the regions where the increase of support was the most pronounced. On the other hand, disposable income or the number of people with tertiary education did not increase in these regions after the transfer. This suggests that other instruments besides a regional policy are also needed to achieve all of the EU’s long-term growth strategy goals.
”The transfer of the municipalities was due to changes in EU legislation. As a result, areas picked practically at random received considerable extra support in 2007–2013, whereas regional support is normally only allocated to poorer regions. This gave us information about the effects of the EU regional policy, which would, otherwise, have been difficult to get. The evidence of the effects of regional support is conflicting.” Vehkasalo states.
In the study, Vehkasalo compared the unemployment rate, the number of jobs, disposable income and the number of people with tertiary education of the transferred municipalities to other municipalities in Central and Western Finland that remained in the region of lower regional support during the EU programming period 2007–2013. The lower rate of the regional support at that time was 17 euros per capita and the higher rate was 70 euros per capita.
In 2007–2013, the EU annually allocated approximately 50 billion euros – a third of its annual budget – to regional policy, implemented through structural funds. However, little is known about the effects of these measures.
Ville Vehkasalo is a Principal Performance Auditor in the National Audit office of Finland. The study was published in the journal Region on July 2, 2018. It is based on a performance audit Effectiveness of structural fund programmes (21/2016) published by the National Audit office of Finland.