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Review of Regional Research
Erschienen in: Review of Regional Research 1/2013

01.02.2013 | Original Paper

The EU structural funds as a means to hamper migration

verfasst von: Peter Schmidt

Erschienen in: Review of Regional Research | Ausgabe 1/2013

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Abstract

Comparing the current economic situation of the internal markets of the US and the EU, two things are noticeable. On the one hand, the EU is conducting massive regional policy programmes (notably with their Structural Funds) to foster economic cohesion among the 27 nations belonging to the single European market while in the US with its 50 federal states such policies play a rather subordinate role. At first glance, this seems to be consistent with the fact that a low (high) inequality in the economic geography in the US (EU) is observable. Only 2.5 % of the total population in the US lives in regions with less than 75 % of the US average GDP per capita while in the EU approximately 34 % of the total population lives in such regions eligible for structural funds support. But by taking a closer look, on the other hand, it is revealed that the internal mobility of US citizens is significantly higher than that of EU citizens. According to economic theory migration, besides the free flow of goods, services and capital, plays an important role in assuring convergence in a common market. Following this strand of theory no regional policy is needed to achieve economic cohesion among the regions or nations of a common market. Thus, comparing the two internal markets, the question comes up if the lower degree of economic cohesion in the EU has something to do with the lower mobility of EU citizens and a higher degree of structural interventions? To answer this question, the paper consists of three parts. First, the theoretical background concerning migration and the potential need for regional policy is presented to find out if one of them is a better instrument to achieve a balanced economic development within an internal market. In the second part, I discuss the actual situation of EU internal migration and the structural funds of the EU. In the last part, I examine why migration rates are comparatively low and analyse the interrelation between the regional policy and (internal) migration in the EU. Besides other things like language, culture or institutions this paper is going to argue that structural funds are inhibiting internal migration, which is one of the key measures in achieving convergence among the nations in the single European market. It becomes clear, that the European regional policy aiming at economic cohesion among the 27 member states is inconsistent if the structural funds hamper instead of promoting migration.
Vorheriger Artikel Regionale Bildungsrenditen und weitere Disparitäten in Deutschland
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Fußnoten
1
Before December 2009 this was the “Treaty establishing the European Economic Community” (EEC Treaty) of 1957 which was renamed in TFEU in Article 2 of the Lisbon Treaty.
 
2
Formally, only the ERDF and the ESF belong to the structural funds (Schöndorf-Haubold 2003, p. 8 and p. 74). Nevertheless, the ECF is very often included in discussions about the structural funds in the literature since it has been integrated into the programming of structural assistance in the period 2007–2013 (European Council 2006, p. 25).
 
3
The figures are own calculations based on Marcu (2011) and the European Commission (2012c) for the EU and the data for the US is taken from the Bureau of Economic Analysis (2012) and the Census Bureau (2012).
 
4
There is no clear-cut definition in the literature of what “harmonic” development means. In this paper, I follow Krieger-Boden (2002, p. 3ff.) who states that besides income (economic cohesion) and employment (social cohesion), convergence encloses further questions of political interest.
 
5
Although such a simple comparison between the internal markets of the US and the EU is not unproblematic due to different historical, political, cultural, social, etc. societal conditions, it should be taken as a thought-provoking impulse to deal with the question raised here.
 
6
For an empirical analysis of this question two identical worlds with a common European market would be necessary. One with regional policy without migration and one without regional policy but with migration. Only then, a reliable conclusion about the advantageousness of migration or regional policy in achieving a harmonic economic development would be possible.
 
7
In practise, the EU has implemented the free movement of goods, services, capital and labour, also known as the so-called “Four Freedoms of the EU”. This kind of passive and regulative policy stems from the beginning of European regional policy in 1957 (Treaty of Rome), while since the 1986 Single European Act the EU regional policy became more and more active and interventionist by using the structural funds and other policy measures (Holtzmann 1997, p. 86ff.).
 
8
An example is the “2+3+2-rule” which allowed the countries belonging to the EU-15 to wall off their labour markets for a maximum of seven years against the competition of workers from the central and eastern European (CEE) countries that joined the EU in 2004 and 2007 (Angenendt 2008, p. 20).
 
9
The NEG models usually predict a core-periphery pattern à la Krugman (1991a, 1991b) when labour (or capital) is interregionally mobile, when labour is interregionally immobile and vertical linkages exist or when vertical linkages are combined with interregional labour mobility (Ascani et al. 2012; Ottaviano and Puga 1998). In contrast, NEG models predict an inverted-U-shape pattern with intersectoral mobility but interregional immobility of labour. The immobility of labour (or non-tradeable goods) works as a dispersion force in the economic geography (Ottaviano and Puga 1998; Puga 1999). Nevertheless, an inverted-U-shape pattern is even possible with interregional mobility of labour, when transaction and transport costs are also assumed in the perfectly competitive market, which most often is the agricultural sector in the NEG models (Krieger-Boden 2000; Fujita et al. 2001).
 
10
The explanatory weakness of the NEG models in this case is due to the problem that researches must be able to evaluate the exact phase (start, medium, end or somewhere in-between) or amount of transport and transaction costs of the process of integration (Lammers and Stiller 2000, p. 20; Schindler 2005, p. 115, p. 20). Such an indicator does not exist yet. Nevertheless, there are many attempts in the literature to derive concrete policy implications out of the NEG models (Baldwin et al. 2003; Krieger-Boden 2002; Lammers and Stiller 2000; Ottaviano 2003).
 
11
See also (Krieger-Boden 2002; Puga 2002). For a more comprehensive discussion concerning the potential ambiguity of lower transaction and transport costs see (Puga 2002, p. 394ff.; Baldwin et al. 2003, p. 476f.).
 
12
Concerning the question if an inverted-U-shape pattern seems plausible in the European case, see e.g. Forslid et al. (2002), who find such a relationship for Europe.
 
13
Transport and transaction costs have been considerably declined on a global scale in the last centuries (see, e.g., Schlichting and Heinrichs 2010, p. 4).
 
14
For a detailed discussion see, e.g., Holtzmann (1997), Schmidt (2010), p. 41ff.) or Schöndorf-Haubold (2003).
 
15
This amounts to approximately 35.7 % of the total EU budget for that period or just over € 49.6 billion per year. Since all regional policy programmes are co-financed by the member states the total available budget for the regional and cohesion policy is almost € 700 billion (European Commission 2012b).
 
16
Article 5 paragraph 1 of the Council Regulation No. 1083/2006 exactly defines the regions eligible for funding from the structural funds under the convergence objective. These are regions whose GDP per capita, measured in purchasing power parities and calculated on the basis of Community figures for the period 2000 to 2002, is less than 75 % of the average GDP of the EU-25 for the same reference period (European Council 2006).
 
17
“NUTS” stands for the “Nomenclature of Territorial Units for Statistics”. It is a geocode standard for referencing the subdivisions of countries and regions in the member states of the EU developed and regulated by the EU.
 
18
For a precise definition, which regions are eligible for an ECF grant, see article 5, paragraph 2 of the Council Regulation No. 1083/2006 (European Commission 2012c).
 
19
Until 1950, according to the recommendations of the United Nations (UN), migration or a change of residence was defined as permanent when it exceeds a period of more than one year. Since the 1960s a permanent change of residence is defined as one, that lasts longer than five years (Han 2000, p. 7).
 
20
Concerning the 2+3+2-restrictions on the free movement of labour in the EU since its eastward enlargement in 2004, see footnote 8.
 
21
For a more detailed discussion of the “Insider-Advantage Approach towards Immobility” (see Fischer et al. 2000).
 
22
A good overview concerning this topic is given by Berthold and Neumann (2003b), Braunerhjelm et al. (2000), the Social and Economic Council (2001) and Tassinopoulos and Werner (1999).
 
23
Although this is not officially put out as a policy objective by EU policymakers.
 
24
Additionally, other exceptions from the principle of the free movement of labour have been enacted, namely the “Posting of Workers Directive”, which should be an instrument to prevent “unfair” competition on working conditions and wages in the cross border provision of services or the 2+3+2-system (see footnote 8).
 
25
In the current planning period 2007–2013 there is only one single instrument of pre-accession assistance for the potential EU member states Croatia, Iceland, Montenegro, the Former Yugoslav Republic of Macedonia, Serbia and Turkey called “Instrument of Pre-Accession Assistance” (IPA) which is continuing this kind of preventive migration policy within the future regions of the EU.
 
26
In Table 2 of their paper they report the coefficients of two different models (model 3 and model 5) they have estimated. Taking net immigration flows among EU-15 member countries over the period 1986–1996 as the dependent variable, they find an average statistically significant negative impact of the structural funds on net migration of −34.18 % (10 % significance level) and −41.83 % (5 % significance level). Their sample contains 371 observations, while the structural funds expenditures are constructed as a share of GDP at the country level. They also included country and time fixed effects in their regression to account for cultural and geographical characteristics, as well as for common shocks to intra-EU migration.
 
27
Controlled Migration is often preferred because it is of course well-known, that migration can not only have positive effects. In contrast, large emigration or immigration within a short period of time can have deteriorating economic effects (widening of the income gap, brain drain, unemployment, wage reductions, etc.) on sending and receiving regions (Kureková 2011a; The Economist 2012).
 
28
The core objectives are the assurance of the free flow of goods, services, capital and workers as well as the reduction of intra-European transaction and transport costs (see discussion in Sect. 2). Additionally, some authors propose to realign the spending of the EU budget away from inter-country and interregional redistribution to the provision of European public goods (Feld 2004; Feld and Schnellenbach 2007), unconditional financial transfers between countries and regions and a monitoring process of EU and national policy measures and their effectiveness (Krieger-Boden 2002, p. 24).
 
29
See footnote 15 for a breakdown by EU- and co-financing.
 
30
One can also find critique of such a simplified comparison in the literature. Ester and Krieger (2008) argue that the mobility gap between the EU and the US is smaller. They compare the mobility levels within EU member states and between the federal states of the US which they find to be a more reasonable comparison because one compares equal cultural, social, political or language areas. Nevertheless, the internal mobility in the US still remains higher than intra member state mobility in the EU.
 
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Metadaten
Titel
The EU structural funds as a means to hamper migration
verfasst von
Peter Schmidt
Publikationsdatum
01.02.2013
Verlag
Springer-Verlag
Erschienen in
Review of Regional Research / Ausgabe 1/2013
Print ISSN: 0173-7600
Elektronische ISSN: 1613-9836
DOI
https://doi.org/10.1007/s10037-012-0070-5

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