Place-Based Policies of the European Union: Contrasts and Similarities to the US Experience

The European place-based policy framework was established in the European Treaties and has a current budget of $60-70 billion per year. This paper identifies key features and directions for its future development with respect to three place-based problems: traditionally lagging regions; contemporary distressed (or left-behind regions), including those facing the structural challenges of the energy transition; the challenge of spreading prosperity faced with the uneven geography of technological clusters and routine technology-based manufacturing. We analyze the place-based features of EU Cohesion Policy, its commonalities and differences with place-based policies in the US. We evaluate policies against a structural backdrop of long-term convergence in the two continents and the contemporary geography of spatial divergence, using both historical perspectives and recent policy evaluation evidence. Key differences are identified in policy programming, implementation, budgeting and time horizons. While there has been evidence of the reduction of disparities and regional reconversion as a result of place-based policies on both continents, there are also serious impediments to effective implementation in both. These limits have to do with how well policy is designed with respect to economic geography fundamentals as well as political economy and organizational problems in policy design, implementation and governance. The paper concludes by drawing some general lessons on the design of place based policies and examines some of the issues that are particularly relevant for Europe.