This paper analyses the outlook for regional funding under the next Multiannual Financial Framework of the EU for which the Commission has proposed new criteria. The starting point is the so-called Berlin formula, developed from a blend of national and regional indicators. In reality, the allocation for any region depends not only on the state of the region, but also heavily on the income level of the member state in which this region is located.
The modifications to the Berlin formula proposed by the Commission would accentuate the importance of the national component, despite the fact that the EU cohesion policy is supposed to aim at lagging regions, not countries.
Growth in Italy has been below the EU average for some time. This means that the poorer Italian regions should be entitled to a higher amount of cohesion policy funding. However, the increase one could expect on this count is limited given the modifications to Berlin formula proposed by the Commission.
The application of the new formula would lead to a somewhat lower allocation for Italy overall (especially for the Mezzogiorno) for two reasons: i) Italy is still a relatively prosperous member state, ii). There are caps to the increase of cohesion policy funding to which regions can be eligible even if their relative income position has worsened a lot.
Italian Universities and research institutes benefit less from EU funding than one would expect given the size of the Italian economy from competitive support for research and innovation programmes under Horizon 2020. This underperformance is not due to political decisions as the research funding of the EU is allocated strictly on scientific merit.
In the area of research and innovation there is as well a strong north-south divide within the country. Creating high quality research institutions in the south might be a more promising way to use cohesion policy funds than building roads or railways. It should receive more attention and funding from national and EU policymakers.
This paper was originally published on the website of the Laboratorio LUISS sul Mezzogiorno and can also be accessed here.