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, they are: under the Cohesion Policy: the European Regional Development Fund (ERDF) the Cohesion Fund (CF) the European Social Fund Plus (ESF+) under the Common Agricultural Policy (CAP): the European Agricultural Fund for Rural Development (EAFRD) under the Common Fisheries Policy (CFP): the European Maritime, Fisheries and Aquaculture Fund (EMFAF)
ESIFs constitute the great bulk of EU funding, the majority of total EU spending (nearly half of all ESIF allocations are realised as expenditure in the "real economy" through third party purchases), and are among the largest items of the budget of the European Union. Apart from them, there are also other EU funds that have the potential to contribute to the regional development, in particular the European Agricultural Guarantee Fund (EAGF), the Connecting Europe Facility, the InvestEU Programme, the Horizon Europe, or the Erasmus+.
It is up to the European Parliament and the Council of the European Union to define the tasks, priority objectives and the 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 under singular objectives is the Gross National Product per capita (GNP p.c.) level. This is subject to criticism based on the fact that GDP p.c. is unable to reflect the real socio-economic reality of regions. Some groups (e.g. Beyond GDP) and organisations propose the creation of a set of alternative indicators that could substitute the GDP and its derivates.
Funds 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 the NSRFs and OPs proposed by the member states, 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 start to be 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. 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.