Synthesis Report - European Commission - Europa

Synthesis Report Ex-post Evaluation of the ERDF 2000-2006
2.2.5 Globalisation and enlargement
As noted in the previous chapter, regional development over the period was affected not only by
the rate of growth of national economies and by budgetary policy, but also by the continuing
process of globalisation as well as by the enlargement of the EU in 2004. In economic terms, the
two had a similar effect on regions in the EU15 by increasing the competitive pressure on local
businesses in both the internal market and markets in other parts of the world.
The pressure was especially acute on manufacturers in traditional industries, such as textiles or
clothing, where the process of globalisation meant that specialisation in labour-intensive
activities was no longer a viable option. These activities in a wide range of sectors, and not just
traditional industries, could potentially be shifted to wherever wage costs were lowest, so that
regions reliant on them had to seek new areas of specialisation.
The transition of the Central and Eastern countries from the early 1990s on expanded the
possibilities open to companies seeking low cost locations in which to produce. They were,
moreover, closer to home than developing countries in South-East Asia or Latin America and,
accordingly, posed fewer logistical problems. Their accession to the EU added to their
attractiveness as business locations.
In consequence, there was a significant relocation of labour-intensive parts of the production
process from EU15 regions to those in the EU10, as well as in Bulgaria and Romania, over the
programming period. This was not confined to basic industries, such as textiles, but extended to
more advanced sectors, such as motor vehicle manufacture and electrical and electronic
engineering, where assembly plants, in particular, have been moved to regions where labour
costs were lower.
As a result, while the regions specialising in labour-intensive and more basic activities, especially
in manufacturing, have in most cases been more affected by globalisation and EU enlargement
than others, the effects have been felt by other regions as well. The regions which have been hit
hardest, therefore, include those with car plants, electronic component factories, computer
assembly plants and similar medium-to-high tech manufacturing as well as those specialising in
textiles and clothing, steel production, wood products and other low-to-medium tech industries.
These regions include many which were already experiencing a decline in traditional industries,
such as the Objective 1 regions in ‘Northern’ Member States, though also regions in some parts
of the South, such as Norte, the textile-producing region, in Portugal. They include as well many
of the regions receiving funding under Objective 2 in both the South and North of the Union.
In addition, however, they include regions which have to some extent lost investment because of
the globalisation process and EU enlargement. These are Objective 1 regions, in particular, in the
South of Italy or the Eastern part of Germany, which represented alternative potential locations for
labour-intensive activities but can no longer compete in terms of wage costs with regions in the
less developed parts of the EU10 or in developing countries outside of the EU. In some sense,
therefore, these regions have been deprived of a possible development path as a result of these
events.
The differential effect of globalisation and enlargement on regional economies needs to be taken
into account when interpreting the economic performance of different regions over the
programming period. To the extent that both Objective 1 and Objective 2 regions are likely to
have been more affected than others means that, other things being equal, they would be
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