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What is the most appropriate level of government from which to develop and apply regional polices? Consider this question from the point of view of regional policy in contemporary Europe. Within each country there are areas that have differing levels of income per capita meaning that the inhabitants of the area may have a different standard of living. This is generally caused by the location of employment and the movement of labour force to those areas, leaving home areas with fewer resources to live with, thus cause disparities within regions (areas of statistical analysis). These regions will therefore be generally poorer resourced and will need to either help itself or be helped by richer areas in order to get to a level that is acceptable.

It is generally wanted that all areas become equal and can compete with one another effectively in order to get economically efficient. In order to do these governments must develop policies, which help these regions (regional policy). These can either be developed at the level of the region’s government, in Europe this would be the member state for example the UK i.e. Westminster, or at the higher level of government i.e. the European Union (EU) commission in Brussels. It is important for each region to get the right policies for itself as differing regions will need differing forms of help therefore the level at which these policies are developed and implemented are important and must be achieved to the best level that they can be, in order for them to work.

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Regional policy, principally, within the EU came into existence during the 1970’s with the European Social Fund (ESF) and European Agricultural Guidance and Guarantee Fund (EAGGF); this was used to finance the Common Agricultural Policy (CAP). This came with the formation of most states when they joined together to form the, what was then the European Committee. These two elements formed the Structural Funds, which was part of the European Regional Development Fund (ERDF) in the 1975. In the formation of the Single European Market (SEM) reforms (1989) occurred to regional policy in order to allow it to be of some use to the new member states and give it a future within the plans of the EU, the joining of member states with a Single European Currency.

These reforms were reassessed and changed in 1992 with the collapse of the Exchange Rate Mechanism and the boom-bust period of the time. The financial situation of this era meant that regional policy was being used due to the deprivation of certain regions caused by high unemployment at an increased level i.e. more funds were required in order to get out of the depression of the early 1990’s. The Maastricht Treaty of 1992, meant that in the future (now in place) the states would come together as one Single European market, sharing currency and of course monetary policies. This has the impact that the disadvantaged states need to be helped in order to allow the free market to work to what it was imagined to do create competition for Europe to become an efficient market. This therefore led to the EU starting up a cohesion fund in order to help these regions out.

Regional policy within the EU was therefore primarily developed in response to the disparities that were evident between the nation states. With the opening up trade in the EU through the removal of both financial barriers and non-tariff barriers, the regions that have poorer resources are being flooded by competition from cheaper producers. In the EU these regions tend to be the peripheral regions that are dominated by small firms unable to compete against large efficient multinational companies.

These areas also have the disadvantage of not being near the centre of the EU, where they would have the ability to exploit their geographical location by being accessible by most of the markets. These central areas of the EU also have well trained labour forces and high-level amounts of infrastructure due to their richness. Thus allowing them to have an even greater starting position over the peripheral regions within the EU. It is this disparity that the EU’s regional policies are trying to remove.

There are two main levels at which the regional policies within the EU can be developed and applied, the first is at the EU level itself and the second is by the member state and then on at the member state’s own regions, though is to be considered as a sub level. These are formations of centralized and decentralized policies and applications, both the development of policies and the actual application of them can also be completed either by centralized or decentralized policies.

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