EU support for Irish Regions

IMPACT OF THE EU STRUCTURAL FUNDS IN IRELAND (1989-2006)

The European Union’s Regional Policy, through the Structural Funds, has played an important part in the transformation of the Irish economy, in particular by bringing about the rapid convergence of Irish living standards to EU levels during the 1990s. Since joining the EU in 1973 Ireland has received over €17 billion in EU Structural and Cohesion Funds support.

The Structural Funds' contribution to economic and social development in Ireland was one of a range of causal factors, which were mutually reinforcing. Budgetary consolidation, tax and fiscal reform, and wage moderation achieved through social partnership, all helped to greatly improve Ireland's international competitiveness, making the economy particularly attractive for foreign direct investment (FDI). Sound macroeconomic policies were complemented by structural measures, particularly in the education and training areas, and reforms of the tax and social protection systems, which ensured the availability of skilled labour and promoted the growth of the labour force to meet market demand.

The Structural Funds contributed by increasing the net capital inflow into the economy and, more importantly, by co-financing structural measures for regional development, infrastructure and human resource development. As the Second Cohesion Report indicated "Ireland is an example of 'good practice' of the first order" as it "demonstrates what can be achieved if Structural Funds assistance is integrated into a coherent policy which, in particular, maintains healthy macroeconomic conditions and which is supported by social consensus.

Structural Funds Programmes in Ireland
    1989-1993 1994-1999 2000-2006
    € million € million € million
         
(1) National Development Plan (Total) 12,275 16,800 57,111
(2) (of which) Co-financed Investment 8,339 10,383 7,680
(3) (of which) Structural/Cohesion Funds 3,672 6,921 3,739
(4) (2) as % of (1) 67.93% 61.80% 13.45%
(5) (3) as % of (1) 29.91% 41.20% 6.55%

Evolving use of Structural Funds in Ireland There has been a gradual evolution towards regional development in Ireland during the three programming periods since the Structural Funds were reformed in the late 1980s.

1989-1993: The strategic priority of the 1989-1993 National Development Plan (NDP)/Community Support Framework (CSF) was to promote development at national level, an objective that was facilitated by the fact that, since the establishment of the ERDF in 1975, Ireland constituted a single NUTS II region for purposes of the Structural Funds. The regional input during this programming period was limited to the single function Sub-Regional Review Committees, which had no statutory basis and very limited resources.

1994-1999: The subsequent NDP/CSF, covering the six-year period 1994-1999, aimed to consolidate, and build on, the achievements of the first programming period and, once again, the strategic thrust was national rather than regional. These two investment programmes were highly successful in their objective of promoting national development, and the co-financed investment under the two CSFs contributed significantly to bringing about the convergence of living standards between Ireland and the rest of the EU. The Economic and Social Research Institute's macroeconomic model indicates that the cumulative long-term structural impact of the first two CSFs was to raise Ireland's GNP level by about two percentage points above the level that it would be without them. The employment impact was also estimated as very positive.

The 1994-99 CSF was implemented within sectoral programmes. The establishment of the eight Regional Authorities in 1994 provided a review of the implementation of these programmes at the NUTS III level. However, on the negative side, it was evident from the mid-to-late 1990s that a very spatially imbalanced pattern of development was taking shape. The mid-term review in 1997 indicated that the regions in the more prosperous east and southern parts of the country, which had started out on a relatively more developed basis, were prospering to a much greater extent than those in the west, northwest and midlands.

2000-2006: In view of this spatially imbalanced pattern of growth, and the problems it was potentially storing up in terms of sustainable development, the strategic thrust of this NDP is balanced regional development. To facilitate this, the government proposed, and secured European Commission approval for, the revision of regional boundaries and the creation of two separate NUTS II regions, the Border, Midlands and Western (BMW) region and the Southern and Eastern (S&E) region. Regional Assemblies were established for these new regions. For the first time the NDP, including the Structural Funds and related national co-finance, was allocated in accordance with the new NUTS II structure and regional programmes were also introduced. This process was accompanied by new administrative and management arrangements, with each Regional Assembly responsible for managing a regional programme and chairing its monitoring committee.

THE IMPACT OF THE COHESION POLICY

European cohesion policy has been very positive for Ireland. Through the Structural Funds, European Regional Policy has helped enormously to bring about economic recovery and sustained high levels of growth and employment.

Why have the Structural Funds been so successfully applied in Ireland?

  • Assistance from the Structural Funds has been integrated into a coherent national policy framework, as identified by the 2nd Cohesion Report.

  • Timing was a very important factor; the substantial increase in Structural Funds payments during the early 1990s provided a real, and a psychological, boost at a critical point in economic transformation, allowing investment to be sustained at a point where continued retrenchment might otherwise have been required.

  • A third factor concerns investment priorities, and in particular the importance attached to investment in human resources, education and training, which has been a key factor in making Ireland attractive for foreign direct investment and which was greatly facilitated by the Structural Funds. Ireland is unique among cohesion countries in this regard, having allocated up to 35% of its Structural Funds to human resource investments, compared with an average of around 25% for other cohesion countries.

  • Finally, the Irish experience with the Structural Funds has been very positive from a process point of view; the Structural Funds 'acquis' has had a very beneficial effect on governance and public administration, in areas such as monitoring and evaluation, multi-annual programming and social and regional partnership, which have been promoted as an integral part of the programming for the Structural Funds In Ireland.

The cohesion policy has contributed hugely to the financing of investment programmes since 1989 and has also helped to shape the priorities of these programmes and exposed policy makers and administrators to new and innovative approaches. Over time the cohesion policy has proved to be flexible in responding to changing circumstances and is well recognised as an important contribution to promoting regional development in Ireland.

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The N25 Youghal Bypass, Co. Cork