Beyond Brexit: Reshaping policies for regional development in Europe

TL;DR: In the context of emerging policy challenges and recent contributions to the regional policy literature, the authors highlights innovation, human capital and effective institutions as three crucial dimensions of future policy and argues that a shift in regional policy priorities, governance and territorial focus is underway at EU level under Cohesion Policy as well as under national regional policies in the EU27 and the UK.

Abstract: Regional development is one of the main EU spending priorities through its Cohesion Policy. Brexit is one of several influences on the future of the policy, whose evolution is part of a wider reshaping of the principles and practice of regional policy in Europe. In the context of emerging policy challenges and recent contributions to the regional policy literature, the article highlights innovation, human capital and effective institutions as three crucial dimensions of future policy. It argues that a shift in regional policy priorities, governance and territorial focus is underway – partly influenced by place-based policy thinking - at EU level under Cohesion Policy as well as under national regional policies in the EU27 and the UK.

Summary

1. INTRODUCTION

• The United Kingdom's decision to leave the European Union (EU) is one of a number of strategic challenges confronting the EU, along with the still simmering sovereign debt crisis, varying levels of growth and job creation across Member States, the need for a comprehensive approach to migration, and adaptation to climate change.
• EU Structural Funds have influenced economic development in the UK for over 40 years, but the UK Government and Devolved Administrations (DAs) now have to work out what sort of domestic spatial policies they want to adopt (Bachtler 2017, Bachtler and Begg 2017 ).
• Of particular interest are the questions of whether and how the conceptual basis for regional policy in Europe is evolving, the rationale for policy intervention and the evidence for how this is being translated into practice.
• The paper begins with a review of the latest data and research on regional disparities and development challenges in Europe, as well as academic and policy research on appropriate policy responses.
• The final section draws together the main conclusions to emerge.

2.1 Patterns and trends

• After several years of recession or stagnation, economic growth in Europe is edging upwards.
• Unemployment has either stabilised or declined but is still higher than its pre-crisis levels.
• In the worst affected regions, GDP per head declined sharply, falling by some 25% in Greece, while social exclusion and poverty levels grew by more than 15% in Ireland, Greece and Spain (Cuadrado Roura et al 2016) .
• The latest EU data show that regional disparities in employment and GDP per head began to narrow in 2014-15, and the European Commission asserts "there are signs that the long-run process of regional convergence, which was interrupted by the economic crisis, has resumed" (Ibid: 4).
• Also, regional disparities in unemployment are substantial, especially for young people in many southern European regions.

2.2 Explaining regional differences

• Productivity growth has declined in many European countries and is becoming a worrying problem in several Member States, not least in the UK where it has stagnated for the last decade.
• As Bachtler et al (2017) note: "At regional level, there is an increasing productivity gap between leading 'frontier' regions and lagging regions, a gap that has grown by 56 percent between 1995 and 2014….
• According to Eurostat data, almost every UK region (apart from Inner London West, North East Scotland and Cumbria) had a lower regional GDP head (PPS) as a percentage of the EU28 average in 2015 than in 2004.
• In Figure 1 , the UK has the third largest regional difference in the proportion of working age population with tertiary education (after Spain and Romania).

Figure 1: Proportion of working age population with tertiary qualifications (difference between highest and lowest region -capital city region in red)

• There are clearly limitations in using this indicator in making comparisons between countries, given the differences in national education and apprenticeship systems, also known as Note.
• Tertiary education levels are not always synonymous with high human capital.
• In the aftermath of the crises of the last few years, many regions are faced with significant destruction of existing capacity and of the capabilities on which they previously relied, calling for diversification into new areas of activity.
• Apart from the renewed divergence of economic performance, the crisis has led to an intensification of immediate social challenges in localities worst affected.
• But it has also disrupted socio-economic models affecting the potential of regional economies, because of how the supply-side of regional economies has had to adjust.

3. INFLUENCES ON ECONOMIC DEVELOPMENT

• Behind the observed trends in regional development, new influences have been identified in a growing body of literature.
• They include innovation, governance, institutional culture and the reconciliation of equity and efficiency.
• These determinants transcend more conventional analyses of the roles of basic infrastructure or enhancing the attractiveness of regions to inward investors, but also call for a different appreciation of certain influences.
• Thus, the policy tension between sectoral and regional policymakers that has characterised debates on regional innovation is now being discredited.
• As Iammarino et al (2017: 26) note emphatically: "the notion that any attempt to widely distribute innovation capacities is somehow going to destroy the benefits of agglomeration is sustained neither by theory nor by any robust evidence".

3.1 Innovation

• Innovation has long been regarded as a vital ingredient in economic development, but it has a decidedly uneven geographical incidence (OECD 2015) .
• Many EU regions barely register on indices of innovation, while a few leading regions stand out.
• In contrast to previous decades, core metropolitan regions have significant advantages which Iammarino et al (2017) argue have two principal causes.
• A balancing-act is likely to be needed between realism about a region's innovation attributes and avoiding locking it into an inherited innovation model with limited growth potential.
• Inclusive innovation is, in large part, about targeting policies towards lower-income and excluded groups and can be linked to the concern about those left behind by globalisation.

3.2 Regional resilience and human capital

• Boschma et al (2017) argue that understanding of diversification is deficient and propose a new theoretical framework combining insights from evolutionary and transition theories.
• Regions hosting innovative manufacturing have a strong skills base, pay well and score highly on indicators of innovation, such as patents.
• Labour mobility is an obvious adjustment mechanism but has also had an uneven incidence.
• In several regions, particularly in the South of Italy, low demand for skills results in a vicious cycle in which skilled workers leave, deterring employers from offering jobs that demand higher skills.
• This sort of low-skill equilibrium 3 becomes a trap constraining economic development.

3.3 Governance and institutions

• A third important explanatory factor, in addition to innovation and human capital, is the crucial influence of effective governance on regional development.
• Other significant influences include strategic orientations for EU policy, such as Europe 2020, and the conduct of macroeconomic policy.
• Deficiencies in governance can have a debilitating effect on the results of regional policies for two distinct reasons.
• Second, they may mean that the coherence and quality of the programmes and projects undertaken may be sub-optimal, and thus that they contribute too little to regional development.
• Both the 6 th and 7 th EU Cohesion Reports stress that poor quality administration does not necessarily mean a corrupt one or that there is illegality, though they may coincide (European Commission 2014, 2017g) .

4. POLICY RESPONSES: NEW THINKING ON REGIONAL DEVELOPMENT

• The starting point for policy responses is the state and priorities of public finances.
• Fiscal sustainability, as explained in the 2017 Convergence Report by the Commission (2017d), is not just about conjunctural indicators of deficits and debts, but also the longer term influences on the public finances, notably provision for population ageing.
• Of the six 4 countries most at risk over the medium-term (up to 2031 and thus covering much of the likely duration of the next two rounds of EU Cohesion Policy), three are in southern Europe (Italy -with the highest adverse score on the composite indicator used -Portugal and Spain), along with Belgium, France and the UK.
• Given the long-run nature of these national differences in fiscal capacity, there is a case for shifting more of the responsibility for policy interventions to the supranational level in the EU.
• How large policy interventions should be is, however, open to question because of the evident risk of diminishing returns if more marginal projects are funded.

4.1 Broad policy directions

• Given the pivotal role of large cities in leading economic development, a new imperative for economic development policy is to improve the coherence of urban and regional policies.
• Only a minority of OECD members has a national urban policy, as opposed to piecemeal plans for individual urban areas (OECD, 2017a), but even those which do are mainly at an early stage.
• Networks are not just about direct connections between economic agents, but also the diversity and openness of the connections (Bergé et al 2017) , suggesting a need to look at broader conceptions of being involved in a network in relation to innovation-led growth.
• This line of argument goes beyond some of the traditional emphases on basic infrastructure or bolstering the quality of skills and other factors of production.
• Instead, there are persuasive arguments for seeking to enhance the development potential of all regions by fostering different forms of what Camagni and Capello (2015) call "territorial capital".

4.2 Changing policy agendas

• Over the past decade, policies for regional economic development in Europe have been influenced by the causes and consequences of the financial and economic crises.
• National support measures were often channelled to specific regions suffering from economic downturn, especially factory closures, as in Finland, France, Spain (Bachtler and Davies 2010) .
• There is, however, less consensus on how to respond.
• Across Europe, national regional policies have historically struck a balance between promoting economic efficiency goals (national growth and competitiveness in all regions) and equity or social justice goals (supporting development and restructuring in lagging regions).
• The subsequent 'reflection paper' on the reform of EU finances noted that (European Commission 2017b): "reducing economic and social divergences between and within Member States is crucial for a Union that aims for a highly competitive social market economy aiming at full employment and social progress".

4.3 Policy objectives

• One of the striking features of EU-level regional policies in recent years is their reorientation towards meeting broader and longer term strategic objectives and priorities that are sometimes more sectoral than regional.
• Under EU Cohesion Policy, the so-called 'earmarking' of programme expenditure in line with the Lisbon Strategy was applied in the 2007-13 period, with mixed success (Bachtler and Ferry 2013) .
• Building on previous generations of regional innovation support, the S3 approach is intended to promote a more differentiated strategic approach with regional or national priorities identified through an inclusive entrepreneurial discovery process, drawing on evidence of the development challenges and competitive potential, but also taking account of institutional settings and the regional resources available (McCann and Argilés 2013, 2015) .
• This has not been straightforward: variation in institutional arrangements and deficits in administrative capacity has limited the scope for sophisticated S3 strategies (Kroll 2015) .

Figure 2: Thematic concentration in EU Cohesion Policy

• European Commission Among national regional policies, the agenda for regional policy has also been broadening to incorporate new policy themes, in particular climate change and alternative energy, environmental sustainability, energy security, and demographic change (including migration and demographic ageing), also known as Source.
• Within this overall context, the main recent trends are threefold.
• The Nordic countries are some of the leaders in this regard: the 2014 Swedish National Strategy for Sustainable Regional Growth & Attractiveness identified the environment and climate change as horizontal principles in measures promoting regional growth work (Regeringen, Näringsdepartmentet 2016 ) .
• In Italy, for example, the 2016 Masterplan for the Mezzogiorno and the subsequent 15 Pacts for the South include objectives to improve social cohesion, including the social integration of migrants, and social integration in the 'internal peripheries' of the country.

4.4 Policy integration

• The past two decades have seen increasing efforts to achieve greater coordination in implementing regional development interventions reflecting the expansion of the regional policy agenda to incorporate a broader range of sectors, issues and objectives, especially with respect to regional innovation (Keating 2003 , Uyarra 2010 , McCann and Ortega-Argiles 2013) .
• A challenge for regional policymakers has been to move beyond multi-level governance mechanisms for improved policy coordination (between different tiers of public authority and horizontal coordination of different actors and sectors) to policy integration involving the adoption of common objectives across different policy domains with a view to achieving synergies.
• At a European level, there are significant overlaps between ESIF and funding streams such as Horizon 2020, the Competitiveness of Enterprises and Small and Medium-sized Enterprises programme , the Connecting Europe Facility (CEF) and the European Fund for Strategic Investments (EFSI).
• Exploiting synergies is constrained by differences in legal frameworks (especially compliance with State aids and public procurement), institutional priorities of different Commission services, and difficulties in combining the sharedmanagement and central management systems used for different EU policies (Ferry et al 2016, Bachtler and Polverari 2017) .
• The long-standing French State-Regional Planning Contracts are well-known, and their application has progressively been emulated in other countries.

4.5 Local knowledge, capacity and bottom-up strategies

• The challenge is how to elicit the knowledge and preference of local actors and "create the appropriate balance between encouraging local actors' commitment and discouraging rent-seeking" (Barca 2009) .
• Reliance on local development and bottom-up strategies is also evident in the regional policies of some national governments.
• In Portugal, it also includes training, knowledge exchange and other capacity-building support for sub-regional or local organisations to undertake small projects or increase the number or competence of staff (Bulgaria, Croatia, Latvia, Switzerland).
• In the UK, the shift from regionalism to localism as a basis for subnational economic development policy support is most evident in the creation of Local Enterprise Partnerships (LEPs) in England, which have been tasked with developing local strategies to manage an increasing range of central government funding.

4.6 Territorial specificity

• For much of the period since the reform of Structural Funds in 1988, EU Cohesion policy has been implemented through national and regional programmes.
• This has been fostered by the methodology for allocating Cohesion policy funding, using NUTS 2 regions for determining eligibility, aid intensity and the conditions on spending.
• A similar diversification in the spatial scale of intervention has been occurring in the domestic regional policies of several European countries.
• Policy concepts emphasise the role of cities/towns as 'growth poles', particularly in catching-up countries.

5. CONCLUSIONS

• Such thinking is grounded in the necessity of engaging the local level and building on its knowledge, but it also requires more sophisticated economic development strategies with adequate institutional capacity and sufficient time and space to succeed.
• With accumulating evidence that the Eurozone crisis has (at last) been overcome, a more strategic outlook will again be needed, and its core is expected to be innovation, climate change and migration, as well as a stronger link with EU economic governance.
• Institutional capacity and good governance also need to move from plausible rhetoric to deliverable and convincing actions.
• Especially since the countries of Central and Eastern Europe acceded to the Union, Cohesion Policy has had a powerful influence over the years in shaping spatial policy in the UK (Bachtler and Begg 2017) .

Figures

Figure 1: Proportion of working age population with tertiary qualifications (difference between highest and lowest region – capital city region in red)

Figure 2: Thematic concentration in EU Cohesion Policy

Full text

John Bachtler and Iain Begg
Beyond Brexit: reshaping policies for
regional development in Europe
Article (Accepted version)
(Refereed)
Original citation:
Bachtler, John and Begg, Iain (2018) Beyond Brexit: reshaping policies for regional development
in Europe. Papers in Regional Science, 97 (1). pp. 151-170. ISSN 1056-8190
DOI: 10.1111/pirs.12351
© 2018 The Authors
This version available at: http://eprints.lse.ac.uk/86438/
Available in LSE Research Online: January 2018
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1
BEYOND BREXIT: RESHAPING POLICIES FOR REGIONAL DEVELOPMENT IN
EUROPE
AUTHORS
John Bachtler
European Policies Research Centre
University of Strathclyde
40 George Street
Glasgow G1 1QE
Tel: 0141 548 3339
Email: john.bachtler@strath.ac.uk
Iain Begg
European Institute
London School of Economics and Political Science
Tel: 0207 955 6813
Email: iain.begg@lse.ac.uk
John Bachtler is Professor of European Studies and a Director of the European Policies Research
Centre, University of Strathclyde in Glasgow, and of EPRC Delft based at Delft University of
Technology.
Iain Begg is a Professorial Research Fellow at the European Institute of the London School of
Economics and Political Science.
Abstract
Regional development is one of the main EU spending priorities through its Cohesion Policy. Brexit is
one of several influences on the future of the policy, whose evolution is part of a wider reshaping of
the principles and practice of regional policy in Europe. In the context of emerging policy challenges
and recent contributions to the regional policy literature, the article highlights innovation, human
capital and effective institutions as three crucial dimensions of future policy. It argues that a shift in
regional policy priorities, governance and territorial focus is underway – partly influenced by place-
based policy thinking - at EU level under Cohesion Policy as well as under national regional policies in
the EU27 and the UK.
JEL Codes
F15; H77; L52; R11; R58

2
1. INTRODUCTION
The United Kingdom’s decision to leave the European Union (EU) is one of a number of strategic
challenges confronting the EU, along with the still simmering sovereign debt crisis, varying levels of
growth and job creation across Member States, the need for a comprehensive approach to
migration, and adaptation to climate change. With relatively low levels of confidence and trust in EU
institutions, these challenges are driving a debate on the future policy priorities of the Union.
Launched by European Commission President Juncker with a White Paper (European Commission
2017a), the Commission has produced a series of ‘reflections papers’ exploring different options for
policy change that will be formalised in mid-2018 with proposals for budget and policy reform
(European Commission 2017b-f).
As the reflection papers acknowledge, there is a strong territorial dimension to the major EU
challenges. The EU’s growth objectives depend on narrowing the differences in innovation and
productivity between frontier and lagging regions (European Commission 2017c). Adapting to the
effects of climate change and managing the transition to clean energy will affect some regions more
than others (European Commission 2017f). The impact of migration, and the need to integrate
migrants, also varies between regions and cities, part of the wider regional and urban policy
challenge of social inclusion in marginalised communities (European Commission 2017b).
For decades, the EU has been one of the most enthusiastic proponents of regional policy through its
Cohesion Policy, one of the most substantial expenditure programmes in the EU budget. In fact, the
adoption of regional policy in 1975, with the establishment of the European Fund for Regional
Development (ERDF), was a direct consequence of UK accession to the then European Economic
Community. The objectives of the policy have evolved over the years, but its underlying aims include
spreading the gains from economic integration, boosting the productive potential of the EU, and
fostering a distinctive model of social, economic and territorial development. It complements the
single market, ironically in view of the current discourse around Brexit, a dimension of European
integration long regarded as most congenial to the United Kingdom. All Member States, and all
regions within countries, obtain some support from a policy with resources of €352 billion over the
2014-20 period, much of which are concentrated on less-developed regions in central, eastern and
southern Europe.
However, the future scale and scope of Cohesion Policy is now in question (Bachtler et al 2017, Begg
2017). The UK contributes in excess of 12 percent of the EU’s gross revenue and, unless net
contributor countries are willing to pay more, there will be significant cuts in the next EU
Multiannual Financial Framework (MFF) from 2021 onwards. Notwithstanding the importance of the
above regional development challenges, resources may be switched to increase funding for other
internal EU policies (such as research, SME development, environment, transport, border security)
as well as more support for ‘external actions’ financing development aid to reduce the flow of
migrants from outside the EU.
Policy responses to these challenges in the EU are not restricted to Cohesion Policy. While European
Structural and Investment Funds (ESIF) account for most regional policy intervention in the poorer
EU Member States, many of the more developed European countries have their own domestic
regional policies which are also subject to reflection and debate about their post-crisis role in
addressing regional imbalance (Davies et al 2015, 2016).
For the UK, Brexit presents the challenge of redesigning policy frameworks outside the scope of EU
regulation, in a country where deep-seated regional differences in productivity and living standards

3
may be compounded by the differential regional impacts of Brexit (McCann 2017). EU Structural
Funds have influenced economic development in the UK for over 40 years, but the UK Government
and Devolved Administrations (DAs) now have to work out what sort of domestic spatial policies
they want to adopt (Bachtler 2017, Bachtler and Begg 2017). An Industrial Strategy published in
November 2017 focusing on productivity has provided orientations for a UK-level sectoral policy
approach, at least in England, while recognising the importance of place and the role of regional and
local institutions (HMSO 2017), and a new UK-wide ‘Shared Prosperity Fund’ is currently being
developed as a direct successor to Structural Funds.
This paper examines the debates underway at EU and UK levels on the future of regional policy. Of
particular interest are the questions of whether and how the conceptual basis for regional policy in
Europe is evolving, the rationale for policy intervention and the evidence for how this is being
translated into practice. The paper begins with a review of the latest data and research on regional
disparities and development challenges in Europe, as well as academic and policy research on
appropriate policy responses. Drawing on comparative studies of EU and national regional policies,
1
the paper then assesses recent trends in the design and implementation of regional policy at
different levels. It argues that there is an important reshaping of policy objectives and practice
underway - influenced by place-based policy thinking (Barca 2007, Farole et al 2009, Iammarino et al
2017) – which has significant implications for government responses to territorial inequality.
The paper begins by reviewing regional disparities and development challenges in Europe and
discusses the main influences on economic development: innovation; the integration of regional and
sectoral policies; and the role of governance and institutions. It then considers the new thinking on
regional development and examines how policy is responding in practice at EU level, among the
EU27 Member States and in the United Kingdom. The final section draws together the main
conclusions to emerge.
2. REGIONAL DISPARITIES AND DEVELOPMENT CHALLENGES IN EUROPE
2.1 Patterns and trends
After several years of recession or stagnation, economic growth in Europe is edging upwards.
Unemployment has either stabilised or declined but is still higher than its pre-crisis levels. The years
of crisis have left a legacy of accentuated disparities in macroeconomic performance and, perhaps
more alarmingly, underlying growth potential. Ireland and Spain have seen a return to robust GDP
growth, despite the intensity of their economic downturns, but Italy has languished, with is economy
no larger today than it was in 1999 – a trajectory unparalleled in post-war Europe.
Analysis of the regional effects of the crisis by Crescenzi et al (2016) reveal a complex core-periphery
pattern; relatively low regional impacts in the core of the EU (Germany, most of Poland, Slovakia,
Czech Republic) compared to much more severe effects on the peripheries (Ireland, Spain, southern
Italy, Greece, Cyprus, Lithuania, Latvia and Estonia). In the worst affected regions, GDP per head
declined sharply, falling by some 25% in Greece, while social exclusion and poverty levels grew by
more than 15% in Ireland, Greece and Spain (Cuadrado Roura et al 2016).
1
The policy research draws on a comparative and longitudinal dataset of regional policies in 30 European
countries constructed under the European Regional Policy Research Consortium (EoRPA) research and
knowledge exchange programme managed by the European Policies Research Centre, University of
Strathclyde, Glasgow. For details, see: http://www.eprc-strath.eu/eorpa

4
Recovery has been slow and patchy among Europe’s regions (European Commission 2017). The
latest EU data show that regional disparities in employment and GDP per head began to narrow in
2014-15, and the European Commission asserts “there are signs that the long-run process of
regional convergence, which was interrupted by the economic crisis, has resumed” (Ibid: 4).
However, the long-term economic convergence of almost all regions in Central and Eastern Europe
contrasts with the major divergence of regions in southern Europe, notably Spain and Portugal. Also,
regional disparities in unemployment are substantial, especially for young people in many southern
European regions.
2.2 Explaining regional differences
Productivity growth has declined in many European countries and is becoming a worrying problem in
several Member States, not least in the UK where it has stagnated for the last decade. Data on
productivity change and employment reveal marked cleavages at both national and regional levels.
OECD research argues that this productivity slowdown is due less to a lack of innovation by the most
advanced firms, sectors or regions, than to a problem of the diffusion of innovation (OECD 2015).
Only a minority of regions in many countries have productivity levels and trends that can be
considered favourable (OECD 2015). EU innovation is concentrated in a relatively small number of
regions, mainly in northern and western Europe (European Commission 2017). As Bachtler et al
(2017) note: “At regional level, there is an increasing productivity gap between leading ‘frontier’
regions and lagging regions, a gap that has grown by 56 percent between 1995 and 2014…. while EU
market and economic integration has been a successful convergence machine for countries, these
gains have not been distributed equally inside each country”.
An implication is that policy has to focus more sharply on diffusion, and not exclusively on the
leading-edge regions. The problems are exacerbated where the country, too, has a weak
productivity performance – as is the case notably in the UK. Indicators of regional competitiveness
highlight the growing regional gaps in potential for innovation-based growth. Although some of the
data are less up to date than would be desirable, they tend to evolve only slowly. Some of these
indicators are reasonable proxies for the potential to prosper in knowledge-intensive activities. An
example is the proportion of the working age population with tertiary education. In nearly all
countries there is a large gap between the highest and the lowest (see Figure 1) and in nearly all
cases the highest region is the national capital. What is also striking is the extent of the differences
between Member States, with Italy and Croatia recording rates barely 40% of those countries with
the best qualified workforces. The gap between the highest and lowest region is three to one in
Romania, but relatively narrow in both Finland and Germany.
In the UK, although unemployment is low relative to the EU average, GDP growth has slowed
markedly after a brief period of resilience following the Brexit decision. Along with France, the UK is
characterised by the biggest differences in regional economic performance over the 2008-15 period.
According to Eurostat data, almost every UK region (apart from Inner London West, North East
Scotland and Cumbria) had a lower regional GDP head (PPS) as a percentage of the EU28 average in
2015 than in 2004. In Figure 1, the UK has the third largest regional difference in the proportion of
working age population with tertiary education (after Spain and Romania). The regional effects of
Brexit in the UK are still unclear, depending significantly on the future UK-EU relationship. However,
research to date projects differential impacts on regions and cities – at least during the short term -
with respect to foreign investment and trade, depending on sectoral specialisation and the
importance of trade barriers (Dhingra et al 2017, Los et al 2017).

Frequently asked questions

Q1. What are the contributions in "Beyond brexit: reshaping policies for regional development in europe" ?

In the context of emerging policy challenges and recent contributions to the regional policy literature, the article highlights innovation, human capital and effective institutions as three crucial dimensions of future policy. 

Q2. What are the future works mentioned in the paper "Beyond brexit: reshaping policies for regional development in europe" ?

Brexit is stimulating a reappraisal of the EU model of integration, including how the EU responds to territorial inequality, but it is only one of several influences on the future of regional policy in Europe. As the Commission White Paper on the Future and subsequent reflections papers stress - as well as a recent speeches and policy announcements by national leaders - Europe has to deal with challenges as diverse as migration, climate change, terrorism and the transition to a digital economy, as well as the need to boost growth, jobs and investment. The EU as a whole may be similarly minded. For UK regions facing disruption from Brexit, but also for other EU regions potentially affected by its economic effects, there will be tension between assuring continuity and the search for a ‘ nextgeneration ’ approach. 

Q3. What is the core challenge of the study?

A core challenge is understanding the key determinants of regional development in a context of rapid globalisation and technological change. 

Q4. What are the main pathways to economic strength?

Three main pathways to economic strength are identified: regions with innovation-intensive manufacturing; those with high value services; and those with attributes conducive to tourism and cultural activities. 

Q5. What is the first indication of a new policy framework?

The Industrial Strategy published in November 2017 is the first indication of a new policy framework; it continues the long-standing UK Government priority of raising productivity levels, but with a more interventionist policy mix of sectoral deals, and investment in infrastructure and the business environment. 

Q6. What is the likely outcome of the Brexit reforms?

At EU level, the most probable outcome will be incremental steps to reform Cohesion Policy, some of which have been signalled in the 2017 Cohesion Report (European Commission, 2017), but reluctance to consider more sweeping reforms. 

Q7. What is the main argument for the promotion of bottom-up strategies?

The encouragement of bottom-up strategies is promoted primarily through smart specialisation strategies (discussed above) and support for integrated territorial development. 

Q8. What is the main argument for a false dichotomy?

The enduring debates on ‘efficiency versus equity’, often translated into people-based versus place-based (Barca 2007, World Bank 2007), can be regarded as a false dichotomy. 

Q9. What is the role of the European Commission in the integration of regional and national development?

In several Member States, national-regional contracts or target-driven co-financing arrangements are being used to ensure that national and regional level funding and priorities are coherent, including provisions to negotiate the integration of sectoral and regional development funding. 

Q10. What is the main argument for the link between economic governance and cohesion policy?

This begins with the links between Cohesion Policy and economic governance, notably the use of ‘macro-economic conditionalities’ to ensure Member State compliance with EU economic governance rules. 

Q11. What are the main factors that have come to the fore?

In parallel, new thinking on the determinants of sustainable growth – widely defined to include social and fiscal dimensions, as well as the environmental – has come to the fore. 

Q12. What was the success of the allocation of programme expenditure?

Under EU Cohesion Policy, the so-called ‘earmarking’ of programme expenditure in line with the Lisbon Strategy was applied in the 2007-13 period, with mixed success (Bachtler and Ferry 2013). 

Q13. What is the purpose of the European Commission’s reflection papers?

Launched by European Commission President Juncker with a White Paper (European Commission 2017a), the Commission has produced a series of ‘reflections papers’ exploring different options for policy change that will be formalised in mid-2018 with proposals for budget and policy reform (European Commission 2017b-f).