Inequality and convergence in Europe's regions: reconsidering European regional policies

In this paper, a critical look at current European regional policies is taken. First, the motivation for such policies is taken is examined, that is, the large income disparities across the regions of the EU15. Second, the various instruments adopted are illustrated and their underpinnings in established economic theories are discussed. Next available data is examined, searching for 3 kinds of evidence: 1. if disparities are either growing or decreasing, 2. which are the major factors explaining such disparities and, in particular, if they are the factors predicted by the economic models adopted by the Commission to justify current policies, and 3. If there are clear signs that EU policies, as opposed to other social and economic factors, are actually reducing such disparities. The conclusion is that regional and structural policies serve mostly a redistributional purpose, motivated by the nature of the political equilibria upon which the EU is built. They have little relationship with fostering economic growth.