Cohesion for competitiveness

Policy Brief

The EU is now confronting a variety of unprecedented challenges, such as climate change, demographic shifts, rising inequality, and geopolitical pressures, all within a constrained fiscal environment.

A place-based approach is crucial for the EU’s industrial strategy to succeed, leveraging regional diversity to meet its objectives. By examining the three main targets of competitiveness, strategic autonomy, and decarbonisation individually, it becomes evident that mobilising the EU’s full economic potential requires each region to contribute effectively, rather than creating a divide between productive and recipient regions. This policy brief reviews the academic evidence and demonstrates that achieving these targets simultaneously demands comprehensive regional development to harness all economic resources across the continent.

Strategic autonomy and resilience against disruptions are also critical for the EU’s future. The EU’s experience during the early pandemic highlighted the risks of over-reliance on single sources for critical goods. To ensure strategic depth and autonomy, the EU must develop thriving, diverse regional economies that foster international cooperation and secure supply chains. Based on existing academic literature, this policy brief shows that place-based policies are a prerequisite to achieving strategic autonomy.

To fully realise its industrial strategy and address regional inequalities, the EU must not only focus on emerging industries but also continue strengthening its place-based and cohesion policies. Effective regional development is key to mobilising all available resources and preventing further disparities. Academic evidence, recent reports, and opinions from European institutions underscore the importance of cohesion policy in fostering economic convergence and regional integration, advocating for an update to better align with the EU’s evolving goals of competitiveness, strategic autonomy, and decarbonisation. Integrating cohesion policy more deeply into these objectives will be essential for achieving a cohesive and prosperous EU.