The European Structural and Investment Funds (ESI Funds, ESIFs) are financial tools governed by a common rulebook, set up to implement the regional policy of the European Union, as well as the structural policy pillars of the Common Agricultural Policy and the Common Fisheries Policy. They aim to reduce regional disparities in income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes. The current framework is set for a period of seven years, from 2021 to 2027.
Overview Five ESIFs currently exist: under the Cohesion Policy: the European Regional Development Fund (ERDF) the Cohesion Fund (CF) the European Social Fund Plus (ESF+) the Just Transition Fund (JTF) under the Common Agricultural Policy (CAP): the European Agricultural Fund for Rural Development (EAFRD) the European Agricultural Guarantee Fund (EAGF); under the Common Fisheries Policy (CFP): the European Maritime, Fisheries and Aquaculture Fund (EMFAF)
ESIFs constitute the majority of total EU spending; nearly half of all ESIF allocations are realised as expenditure in the "real economy" through third party purchases,European Commission, New guidelines for a better use of EU money: Commission helping Member States with public procurement issues, IP/15/5913, published 29 October 2015, accessed 16 September 2023 and are among the largest items of the budget of the European Union. Apart from them, there are also other EU funds that contribute to regional development, in particular the European Agricultural Guarantee Fund (EAGF), the Just Transition Fund, the Connecting Europe Facility, the LIFE programme, the InvestEU Programme, Horizon Europe and Erasmus+.
It is up to the European Parliament and the Council of the European Union to define the tasks, priorities and organisation of the Structural Funds (the Regional Policy framework), through the ordinary legislative procedure and consulting the Economic and Social Committee and the Committee of the Regions (leading to the publication of Regulations).
The key indicator for the division of regions into objectives is the Gross National Product per capita (GNP p.c.). This criterion is criticised on the ground that it does not reflect the socio-economic reality of regions. Some groups (e.g. Beyond GDP) propose the creation of a set of different indicators.Beyond-GDP.eu
Fund management The way the ESIFs are spent is based on a system of shared responsibility between the European Commission and the member state authorities:
The Commission negotiates and approves each member states's National Strategic Reference Framework (NSRF) and operational programmes (OPs), and uses these as a basis for allocating resources. The member states and their regions manage the programmes. This includes implementing the OPs by selecting individual projects, controlling and assessing them. The commission is involved in overall programme monitoring, pays out approved expenditure and verifies the national control systems.
Prior to 1989, funding decisions were taken by the European Commission. This was followed by a period where EU member states tried to maximize control, with little systematic project appraisal and a focus on a small number of large projects. Since 1994 more systematic, co-ordinated and complex methods of allocating resources have been introduced. For example, most funds within the 2004–06 Integrated Regional Operational Programme (IROP), and its 2007–13 successor (ROP), are allocated through largely need-based project-selection mechanisms.Taylor, S., Bachtler, J. and Rooney, M. S. (2000), Implementing the New Generation of Programmes: Project Development, Appraisal and Selection. IQ Net Thematic Paper, European Policies Research Centre, Glasgow: University of Strathclyde.Ferry, M., Gross, F., Bachtler, J. and McMaster, I. (2007), Turning Strategies into Projects: The Implementation of 2007–13 Structural Funds Programmes, IQ-Net Thematic Paper No. 20(2). Magdeburg: European Policy Research Centre. Regions with low GDP receive more funds. However, within these regions, more funds go to relatively rich local areas with the best institutions. It has been argued that part of this can be explained by the frequent need to co-fund projects, and the needed capacity to prepare applications.
The ESI Funds The European Regional Development Fund (ERDF) The ERDF supports programmes addressing regional development, economic change, enhanced competitiveness and territorial co-operation throughout the EU. Funding priorities include modernising economic structures, creating sustainable jobs and economic growth, research and innovation, environmental protection and risk prevention. Investment in infrastructure also retains an important role, especially in the least-developed regions.
The European Social Fund Plus (ESF+) The ESF+ focuses on four key areas: increasing the adaptability of workers and enterprises, enhancing access to employment and participation in the labour market, reinforcing social inclusion by combating discrimination and facilitating access to the labour market for disadvantaged people, and promoting partnership for reform in the fields of employment and inclusion.
The Cohesion Fund The Cohesion Fund contributes to interventions in the field of the environment and trans-European transport networks. For the 2021–2027 programming period, it provides support to member states whose gross national income per capita falls below 90% of the EU-27 average. The fifteen member states receiving support under this criterion are Bulgaria, Czechia, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovakia and Slovenia.
The European Agricultural Fund for Rural Development (EAFRD) The EAFRD constitutes the second pillar of the Common Agricultural Policy (CAP), financing the EU's contribution to sustainable development of rural areas. For the 2021–2027 multiannual financial framework, the fund received a total allocation of €95.5 billion, an amount that includes €8.1 billion drawn from the NextGenerationEU recovery instrument to address challenges arising from the COVID-19 pandemic. The fund operates through three enduring goals: strengthening agricultural and forestry competitiveness, ensuring the sustainable stewardship of natural resources while addressing climate change, and promoting even territorial growth across rural economies and the communities within them. From 2023 onwards, EAFRD spending is delivered through national CAP Strategic Plans drawn up by each member state in line with nine specific objectives established under Regulation (EU) 2021/2115.
The European Maritime, Fisheries and Aquaculture Fund (EMFAF) The EMFAF covers the period 2021 to 2027 and finances the implementation of the Common Fisheries Policy, the EU's maritime policy, and the Union's engagement in international ocean governance. The fund backs innovative projects aimed at the sustainable use and management of aquatic and maritime resources, and supports such priorities as the transition to low-carbon fishing, the protection of marine biodiversity, the economic and social vitality of coastal communities, and maritime security. The fund's total allocation for 2021–2027 is €6.108 billion. Management is divided between two modes: €5.311 billion is administered through national programmes co-financed by the EU and member states, while €797 million is managed directly by the Commission.
Objectives for 2007–2013 Sections below present information about objectives that have been defined for the programming period, which runs from 1 January 2007 to 31 December 2013. The overall budget for this period is €347bn: €201bn for the European Regional Development Fund, €76bn for the European Social Fund, and €70bn for the Cohesion Fund. The objectives setup shapes the main focus of interventions (eligible activities and costs) and the overall allocations of funds from the EU budget.
Convergence objective (formerly Objective 1) This objective covers regions whose GDP per capita is below 75% of the EU average and aims at accelerating their economic development. It is financed by the ERDF, the ESF and the Cohesion Fund. The priorities under this objective are human and physical capital, innovation, knowledge society, environment and administrative efficiency. The budget allocated to this objective is €283.3bn in current prices.
Regional Competitiveness and Employment objective (formerly Objective 2) This objective covers all regions of the EU territory, except those already covered by the Convergence objective. It aims at reinforcing competitiveness, employment and attractiveness of these regions. Innovation, the promotion of entrepreneurship and environment protection are the main themes of this objective. The funding – €55bn in current prices – comes from the ERDF and the ESF.
European Territorial Cooperation objective (formerly Objective 3)
European Territorial Cooperation is an objective of the European Union's Cohesion PolicyAlso called Regional Policy. After the European Single Act, with the strengthening of the cohesion feature, Regional Policy is also called Cohesion Policy. The different terminologies refer to the same Policy. for the period 2007–2013, serving its ultimate goal to strengthen the economic and social cohesion of the Union. Regions and cities from different Member States are encouraged to work together, learning from each other and developing joint projects and networks. With the Convergence Objective and the Regional Competitiveness and Employment Objective it aims at contributing to reduce regional disparities across Union's territory.
The EUR 8.7 billion allocated to the European Territorial Cooperation objective represents 2.5% of the total budget for Cohesion Policy in 2007–2013 and is financed by the European Regional Development Fund (ERDF). It supports cross-border, transnational and interregional cooperation programmes, helping Member States to participate in European Union (EU) external border cooperation programmes supported by other instruments (Instrument for Pre-Accession and European Neighbourhood Policy Instrument).
History The European Territorial Cooperation Objective replaced the previous INTERREG Community Initiative (in the period 2000–2006) and thus many European Territorial Cooperation programmes bear the name INTERREG.
The "objectives" were introduced with the Single European Act as a criterion to make the Structural Funds spending more effective as Regional Policy started to be rationalised in a perspective of economic and social cohesion. The Single European Act, that entered into force in 1987, institutionalised the goal of completing the internal market with a total borders opening, by 31 December 1992. Regional competition would be tighter and a Cohesion Policy was needed to mitigate the negative side effects of market unification.
The "objectives" were then created to discipline the capture of funds in terms of economic and social cohesion across the Union's territory. In the first multiannual financial framework, 1988–1999, there were seven objectives, which have been progressively reduced.
Even though European Territorial Cooperation Objective is the smallest of the three Cohesion Policy objectives (in terms of budget), it gained a critical importance to address the key challenges of the European Union, particularly with some redefinitions of the Treaty of Lisbon (entered into force on 1 December 2009), and for contributing to achieve the goals of Europe 2020, the EU's growth strategy.
Institutional and legal framework