EUROPE 2020: a strategy in search of a regional policy rationale?

Abstract

This article critically examines the European Union's (EU) 10-year strategy Europe 2020; A European strategy for smart, sustainable and inclusive growth, in the context of the financial and fiscal crisis and the fifth Cohesion Report produced by the European Commission in 2010. It does so in order to develop the argument that without a regional policy rationale that rests on the application of industrial policy as a fulcrum for integrating the different components of the domain governance of Europe 2020, its objectives may not be realised. The article concludes with a speculation on how fuzzy set analysis could be used as an evaluation methodology in order to contribute to policy analysis of how these components may be better integrated in developing the EU's key strategy for the rest of the decade.

Keywords:

• Europe 2020
• EU Governance
• financial and fiscal crises
• regional and industrial policy
• fuzzy set analysis

Notes

1. Fiscal federalism is the process of transfers within a currency union, for example the USA. A system of fiscal federalism has two elements. First, a re-distributive one between richer and poorer sub-national territories. Second, an insurance one in order to mitigate the differential of external shocks on sub-national territories. The lack of such a systems is deemed as a fundamental flaw in the Eurozone system; this has contributed to the ongoing fiscal crisis in the EU.

2. Hysterisis is a system that exhibits path-dependence. In the case of the EU the tendency to pursue policy within the same parameters, whilst incorporating changes in variables at the margin (see Martin and Sunley 2006).

3. Domain governance is a term coined by Rob Paton at the Open University, to cover the different functions of public policy and how they are managed in an institutional setting.

4. OMC is a means of governance in order to integrate public policy instruments into a more co-operative decision-making framework (see Budd 2007 for a contextual explanation).

5. The crowding out thesis suggests that increases in public investment and expenditure will be at the expense of less private resources being available in the economy, particularly as the economy reaches full capacity.

6. Policy hysterisis is a term derived from the economics of labour markets in which current behaviour of these markets strongly influenced by their past, leading to a form of path dependency for participants. In the context of public policy, it refers to the tendency of path dependency in decision making, even in the face of very changed circumstances, for example the eurozone crisis.