Endogenous Cohesion Policy

Abstract

Cohesion Policy (CP) is the European Union’s main instrument to address regional disparities and promote convergence. Yet, over the past two decades, spatial inequalities within the Union have widened, raising concerns about the effectiveness of CP and its ability to confront the structural deficiencies of lagging regions. This paper examines the allocation of CP funding across EU regions, assessing whether it is endogenously determined, prioritizing and addressing the underlying socio-economic and structural gaps or is shaped by other drivers. Using a panel econometric model with NUTS II regional data covering three programming periods (2000–2006, 2007–2013, 2014–2020), we examine the responsiveness of allocations to six dimensions of regional disparities as well as to institutional and political factors. The results reveal a complex and sometimes contradictory pattern: although CP shows partial responsiveness to regional needs, it remains insufficiently targeted to structural deficiencies such as infrastructure and investment gaps in weaker regions, while the concentration of decision-making power at the top ranks of EC administration, as well as political considerations related to the European Parliament representation, affect the allocation of resources.