Regional policy

Although the European Union is one of the richest parts of the world, there are large internal disparities of income and opportunity between its regions. The May 2004 Enlargement, followed by accession of Bulgaria and Romania in January 2007 has widened these gaps. Regional policy transfers resources from richer to poorer regions.

The argument for regional policy is that it is both an instrument of financial solidarity and a powerful force for economic integration.

The major Italian experience of regional policy is the Cassa per il Mezzogiorno, set up in the mid-1950s to foster economic development in southern Italy. Originally intended to last for six months, it survived well into the 1994.

New roads, irrigation projects and developments in infrastructure were built in an area where local communities who had suffered seriously from poverty, de-population and high levels of emigration. Tourism projects attempted to exploit Calabria’s beaches.

UK regional policy was born during the economic depression of the 1930s, when heavy industries in the north were devastated.

Assisted Areas were established, within which companies could acquire grants or capital allowances - known as Regional Selective Assistance - in return for protecting jobs.

The overall pattern of policy changed little in the next forty years. Despite criticism by a 1970s Royal Commission that it was "Empiricism run mad; a game of hit and miss played with more enthusiasm than success", governments of both parties maintained Assisted Areas. It was not until the 1980s Thatcher government that regional policy was significantly rolled back, with Assisted Areas substantially reduced in size.

Increasingly UK policy must operate within the EU regional policy framework, with its strong injunctions against unfair competition (generally meaning state aid).

The post-1997 Labour administration reorganised regional policy, with RSA replaced by Selective Finance for Investment in England Scotland.

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Wikipedia