European Union

"This paper provides a concise analysis of the potential impact of globalisation on regional income disparities in Europe and of the role of neighbouring countries in this process in the period up to 2020.
The analysis is part of a broader project of DG REGIO, which, together with the World Bank and the Bertelsmann Foundation, has established the Regional Future Initiative, a network of experts looking at the future of regional trends. The objective of the network is to analyse and build a consensus on the future impacts of key challenges (globalisation, climate change, demographic change and migration, energy risks and social polarisation) that regions will face in the perspective of 2020 and to elaborate and discuss possible responses. The output of the network should provide a basis for policy discussion and choices in the coming years.
The paper is based upon a new analysis produced by the Regional Future network itself as well as prior research by international institutions and scholars. The project covers 5 challenges and the discussion of each challenge has been designed to avoid overlaps so far as possible. In the final phase the analysis of each challenge will be merged to produce two broad scenarios for European regions in 2020.

(...) After a review of relevant literature and hypotheses, the paper proceeds to examine the characteristics and dimensions of globalization as it affects Europe and neighbouring regions. The analysis focusses on countries first and then on regions (NUTS2). At the country level, the scope of the analysis is wider and benefits from the extensive availability and reliability of national data. The more limited availability of data at the regional level narrows down the scope of the exercise but nevertheless allows us to point out peculiar geographical patterns which are particularly relevant to cohesion.
The country-level analysis of globalisation (§ 2.1-2.2) provides a basis for examining the strength of individual Member States in different branches of trade (manufactures, services, raw materials and energy etc.) and other external income sources. A set of indicators is then used to calculate an index of sensitivity of individual regions in the face of globalization opportunities and pressures (§ 2.3). Three groups of regions are identified on the basis of this index: highly beneficiary, intermediate and vulnerable regions.
The final chapter looks forward to 2020 and considers prospects for European countries under two different scenarios for the world economy and European economy as a whole (§ 3.1-2). Finally, by combining insights stemming from the country-level analysis and the index of regional sensitivity the paper assesses the potential impacts of globalisation on regions in 2020 (§ 3.3)".

"This paper provides a concise analysis of the potential impacts of key challenges such as globalisation, demographic change, climate change, energy and new social risks on regional disparities in Europe in the period up to 2020. The challenges reviewed here are relevant for other parts of the world as well as Europe and will require responses at many levels - global, European, national, regional and local.

This paper is particularly concerned with regional impacts and more especially the potential effect of new challenges on convergence or divergence of trends in regional income and well-being within the European Community and neighbouring areas. The present paper is based upon 5 thematic workshops held between March and June 2009 in Brussels and the background papers prepared by experts in preparation of the workshops. The paper is also based upon a new analysis produced by the Regional Future network itself, as well as prior research by international institutions and scholars. The study team has carried out the analysis using a definition of the challenges considered more suitable for the aim of the study on regional disparities; definitions which would allow to identify and measure effect on disparities more directly were adopted. Furthermore, we avoided as far as possible the overlapping between definitions of challenges and their manifestation, which we call features of the challenge. This approach implies that each feature has been analyzed only within one challenge, even if it was relevant for others as well. The purpose was to clarify and simplify the conceptual framework of the analysis in which the number of links among challenges is very high and their direction and sign is difficult to define. In other words, we made sure that each individual feature of the challenges was analyzed once, in coherence with the challenge boundaries set by its definition.

This method allows us to make clear hypothesis on the two sided nature of each phenomenon and of its features; many features of the challenges in fact can benefit as well as penalize regions depending on the economic and social structure, the geography and location and also the geo-economic position of each region. Most of these factors are strongly influenced by the National characteristics of the Member State to which they belong. To carry out the analysis we defined a model based on a definition of sensitivity to the challenge which summarizes the vulnerability of each region under that challenge and gives us a parameter to estimate the likely impact of the challenge on its economic performance. The sensitivity parameters of each region were then related to a set of hypothesis of challenge intensity (scenarios), namely how fast and how strong the challenge impact would affect EU regions and give rise to income disparities."

The definition of the globalisation process is particularly difficult. Globalisation is not an unequivocally defined statistical variable which is directly measurable (like GDP and Trade) or indirectly computable (like Ageing and Migration), but rather the multifaceted synthesis of a vast number factors of different nature - economic, social, technological etc. – which are often difficult to find into current statistics. Beside, globalisation is a bundle of different dynamics, which means that it became quickly impossible to operate a clear cut distinction between its causes and effects.

One of the consequences of these complexities is that the measurement of globalisation and the notion of its impact are not universal, but vary accordingly to the specific interests of the analysis. In the context of our exercise, we look at globalisation as a process of international (market) integration, where local economies and social systems experience a rapid increase of their sphere of action and their reciprocal interdependence. According to this definition, globalization assumes the characters of a structural development of the economic system. Cyclical events, though with profound consequences as the recent financial and economic crisis, do not modify the pattern of the analysis since it is believed that their influence is temporary and will not change the
direction of long term trends.

A first way of sketching globalisation according to this definition is by measuring the evolution of the share of trade in GDP. In addition, the role of investments is of everincreasing importance, since companies have supplemented trade with investments and moved from geographically concentrated goods and services production networks to geographically disperse ones. The brief analysis presented in the next section attempts to offer an idea of "the openness boom" spreading around the world and the EU with its Member states.

Section 3 attempts to identify the main advantages and disadvantages of globalisation for EU stakeholders. Globalization gives the EU greater access to other countries' markets and resources, while granting other countries greater access to the EU, one of the largest and wealthiest markets in the world. Overall, this process has been mutually beneficial.

However, the benefits have not always been evenly distributed across the EU territory and economic sectors.

Considering that productivity, employment and education are the main elements which transform the challenge posed by globalisation into an opportunity, section 4 briefly presents the projected regional pattern of these variables for the 2020.

Finally, section 5 presents the main findings of the regional analysis carried out with the "globalisation vulnerability index". The index synthesises the overall position of the EU regions in respect of the variables analysed in section 4 and compares their different position vis-à-vis the challenges posed by the globalisation process.

This paper summarizes main findings on the impact of climate change on temperature and precipitation, outlines some of their impacts on socio economic conditions as well as identifying vulnerable regions. Conclusions are drawn in respect of the impact on the regional growth potential, sustainability and equity. The analysis on which the findings of the note are based are uncertain to some degree, as they relate to projections of climate conditions in the future. There are also significant uncertainties involved in presenting impacts on a regional level which result from modelling results which are based on more aggregated data.

There is a great diversity of demographic dynamics across the globe. Some world regions will experience steady population growth, whilst others will face severe population decline. Population growth in Europe will slow down considerably relative to the United States and the emerging economies of China and India and Europe is the second most rapidly ageing world region, after Japan. Europe's immediate neighbourhood, the Middle East and North Africa region has the world's second fastest growing population, after sub-Saharan Africa. Demographic developments in South East Europe and in the European CIS countries will be similar to that in the EU. Future migration flows towards the EU will mainly arrive from the Mediterranean region, in view of differences in living standards and population trends exacerbated by natural resource constraints.

There are however wide variations in demographic patterns between and within Member States. Regional variability will depend on various factors such as fertility rates, migration flows, gender, health, disability and the demographic patterns of ethnic groups. Three important processes – notably population decline, shrinking working-age population and an ageing population - will have a marked effect on regions. These variables have been combined in a demographic vulnerability index, mapping the regions which will be particularly vulnerable to demographic challenges. Around one third of European regions will face population decline, located mainly in Central and Eastern Europe, Eastern Germany, Southern Italy and Northern Spain. The highest shares of elderly population will be found in Eastern Germany, North-West of Spain, Italy and some parts of Finland. In Central and Eastern Europe, the impacts of
ageing will be delayed owing to their younger population. However, significant increases in their old-age population are expected in the long run.

The share of working-age population is expected to be particularly low in several of the Finnish, Swedish and German regions. The magnitude of decline in the working-age population shows significant variations. Some regions in Bulgaria, Eastern Germany and Poland will be particularly hardly hit, with a decline exceeding 25% by 2020. Demographic change will potentially impact on regional growth through a shrinking labour force. The extent to which a shrinking labour force will constitute a drag on growth will largely depend on the educational attainment, productivity of the labour force and on future participation rates. Ageing will lead to significant increases in public expenditure, in particular on pension, health and long-term care. Ensuring access to high quality public services will constitute a major challenge for European Member States and regions. Increasing urbanisation will impact on environmental sustainability, in particular on the use of natural resources and eco-systems. The socio-economic integration of migrants and marginalised groups of society will be precondition to mitigate the complex effects of an ageing population.

The significant regional divergence in demographic patterns will most likely generate a substantial asymmetric socio-economic impact on European territories, which might further increase regional disparities in Europe.

Today's global financial and economic turbulence adds a high degree of unpredictability about the future of the world economy. In this context, it is even
more important to examine the extent to which Community policies are adapted to future challenges that European regions will face in the coming years and what the role of Community Policies should be in responding to these challenges. The reflection process on the future of cohesion policy takes place in the context of the budget review, following the mandate received in 2005/2006 "to undertake a full, wide-ranging review covering all aspects of EU spending, including the Common Agricultural Policy, and of resources, including the United Kingdom rebate, and to report in 2008/2009". In this context, the Commission launched a public consultation based on its Communication "Reforming the Budget, Changing Europe" adopted on 12 September 2007. This consultation paper presented the Commission's approach to the budget review. It sketched out the new policy challenges which could have a significant impact on where the Union directs its efforts in the future and, at the same time, made an assessment of the added value of EU spending, a condition for choices on future spending priorities. Among the challenges identified, the following four may be of particular relevance for European regions:

-Globalisation is driving scientific and technological progress, making the European dimension ever more important in boosting knowledge, mobility, competitiveness and innovation. The opening up of huge new markets creates vast new opportunities for Europeans, but it will at the same time test Europe's
capacity to further adjust to structural change and manage the social consequences of that change. The transformation to a knowledge and service economy is as profound as the earlier changeover from agriculture to industry.

-Demographic change will transform the age and employment structure of our societies, raising important issues of both economic efficiency and intergenerational equity. Migratory pressure will have a particularly strong effect on Europe, due to its proximity to some of the world's poorest regions and those likely to be worst affected by climate change and natural resource constraints.

-The impact of climate change on Europe's environment and its society has become central to the European agenda, challenging policymakers to reflect on how best to respond with the policy instruments at the EU's disposal. This applies both to efforts to mitigate climate change by tackling the growth in
greenhouse gas emissions and the need for measures to adapt to the consequences of climate change.

-Secure, sustainable and competitive energy represents one of society's main challenges. Limited supply, increased global demand and the imperative to cut
emissions have led to a new realisation of the need to move towards a lowcarbon
economy in Europe.


Together these challenges will impact on the development of Europe's economies and societies over the coming years. This document seeks to explore the regional effects of these challenges in the medium-term perspective of 2020. It seeks to illustrate which regions are most vulnerable to these challenges, as a step towards a better understanding of the potential pattern of regional disparities that these challenges will generate. Regional disparities in economic output and income in the European Union are far more extreme than in similar economies such as the US or Japan, particularly following recent enlargements. The richest regions are eight times richer than the poorest regions. The key cohesion challenge will therefore continue to be the integration and convergence of the new Member States, in spite of impressive GDP growth rates in recent years. Growth in the countries which have been the largest beneficiaries of the policy in the period 1994-2006 – Greece, Spain, Ireland and Portugal – has been marked, although development needs persist in some Southern European regions, Eastern Germany and peripheral areas. In short, the primary dimension of regional income disparities in the EU remains East-West, with a weaker North-South dynamic and core-periphery pattern at both EU and national levels. One question that this document seeks to address is whether the new challenges will further consolidate this pattern or generate new territorial disparities. Such an exercise is, by its very nature, limited; it simplifies a complex reality and focuses on a single regional level.4 It cannot substitute for a detailed analysis of specific national and regional contexts, nor take into consideration the capacity of Member States and regions to respond. As with all prospective work, this exercise is based on assumptions which appear reasonable today, but which may or may not correspond to future reality.

This report is an update and extension of the previous trend scenarios for development of energy systems taking account of transport and GHG emissions developments, such as the “European energy and transport - Trends to 2030” published in 2003 and its 2005, 2007 and 2009 updates1. The purpose of this publication is to present the new "EU Reference scenario 2013" ("Reference scenario" later in the text). This Reference scenario was finalised in July 2013. It focuses even more than previous ones on the energy, transport and climate dimensions of EU developments and the various interactions among policies, including now also specific sections on emission trends not related to energy. Its time horizon has been extended up to 2050. It reports for the first time on EU28 including Croatia. Moreover, the modelling process has included four rounds of consultation of Member States experts on Member State specific assumptions and draft modelling results. The responsibility for the results rests, however, with the authors of the scenario who were commissioned to do this work by Directorate General for Energy, Directorate General for Climate Action and Directorate General for Mobility and Transport.

This new update is based on the latest available statistical year from EUROSTAT at the time of the modelling (the year 2010). In comparison to the previous version, the newest macro-economic data already shows the statistical effects of the on-going EU's economic downturn in activity of different sectors as well as energy consumption and GHG emissions. The demographic and economic forecasts reflect recent projections by EUROSTAT and the joint work of the Economic Policy Committee and the European Commission (DG ECFIN) respectively. The "Ageing Report 2012"2 has been the starting point of this exercise giving long term population and GDP growth trends up to 2060 while the short and medium term GDP growth projections were taken from DG ECFIN.

The recent boom in shale gas development and exploration of unconventional oil reserves are increasing the fossil fuel reserve basis and thus changing the projections about the developments of international fuel prices. The fuel prices have been updated in the new scenario to take into account the recent developments. Significant progress has been made towards the achievement of the targets set out in the EU Energy and Climate Package, and new legislative measures, most notably the Energy Efficiency Directive3, have been adopted at EU level. Several changes have occurred at national levels as well.

This report focuses on trend projections understood in the sense of a Reference scenario. Similar to the Reference scenario latest update from 2009, this Reference scenario starts from the assumption that the legally binding GHG and RES targets for 2020 will be achieved and that the policies agreed at EU level by spring 2012 (notably on energy efficiency) as well as relevant adopted national policies will be implemented in the Member States. Following this approach the Reference scenario can help enlightening the debate on where currently adopted policies might lead the EU and whether further policy development, including for the longer term, would be needed. This Reference scenario can therefore also serve as benchmark or reference for assessing the impacts of envisaged policy initiatives at EU level in the areas of energy, transport and climate. Some technology development forecasts have changed since the latest update in 2009 both in positive way: faster than expected development for solar PV technology and negative: slower than expected developments for CCS and remote off-shore wind technologies.

Furthermore, international events, such as the Fukushima nuclear accident of March 2011, have changed the perception related to nuclear power generation and tightened the security requirements for nuclear technologies. In the context of climate change policies, specific Copenhagen/Cancun pledges for 2020 have been also set in other world regions, which have been considered in the world energy price modelling part of this exercise.

This report analyses the economic and budgetary impact of an ageing population over the long-term.

In 2010, the ECOFIN Council gave the Economic Policy Committee (EPC) a mandate to update its common exercise of age-related expenditure projections by 2012 on the basis of a new population projection by Eurostat.

The long-term age-related expenditure projections provide an indication of the timing and scale of changes in economic developments that could result from an ageing population in a ‘no-policy change’ scenario. The projections show where (in which countries), when, and to what extent ageing pressures will accelerate as the baby-boom generation retires and average life span in the EU continues to increase. Hence, the updated projections of age related expenditure and the associated sustainability assessments provide important insights on both the economic impact of ageing and the risks to the long-term sustainability of Member States’ public finances reflecting new economic environment, affected by a durable impact of the current crisis, and further reform effort by EU MS.
This report, presented to the ECOFIN council in May 2012, details the expenditure projections covering pensions, health care, long-term care, education and unemployment transfers for all Member States.

The report is structured in two parts. The first describes the assumptions underlying the population projection, the labour force projection and the other macroeconomic assumptions. The second part presents the projection of expenditure on pensions, health care, long-term care, education and unemployment transfers. A statistical annex gives a country-by-country overview of the main assumptions and results.

"The objective of the Scenar 2020-II study was to refine and improve the identification of major future trends and driving factors – and the perspectives and challenges resulting from them – provided by the initial Scenar 2020 study (December 2006) on the future of European agriculture and the rural world. In this respect the study does not aim at evaluating the impact of potential policy changes but to compare how the agricultural sector might evolve under different, and somewhat extreme, pathways which, to a large, although not full extent, follow the assumptions of the first study.

To reflect elements of the public debate, without prejudging future policy proposals, three policy scenarios are proposed within Scenar 2020-II.

The first is a 'Reference' scenario, in which reference policy decisions are carried forward in the time period of the study. For illustrative purposes it assumes a 20% reduction of CAP budget in real terms, the implementation of a Single Payment System (SPS) as of 2013, full decoupling, a 30% decrease in direct payments (DP) in nominal terms and a 105% increase of the European Agricultural Fund for Rural Development (EAFRD). Trade agreements are synthetically represented, e.g. the WTO Agreement is based on the December 2008 Falconer paper. To some extent this reflects similarities with the 'baseline' scenario of the first study.

The second is called 'Conservative CAP' scenario, and keeps the overall level of the budget devoted to agriculture but changes the balance between pillars. It assumes a continuation of the results of the Health Check (HC) after 2013, a flat rate (regional model) implemented at national level, coupling as HC, and a 15% decrease of direct payments in nominal terms, a reduced (45%) increase of EAFRD. Trade policies are maintained as in the Reference scenario.

The third is a 'Liberalisation' scenario, in which all agricultural trade-related measures are discontinued. The CAP budget is reduced by 75% in real terms, all direct payments and market instruments are removed, and there is a 100% increase of EAFRD. Like in the previous study extreme scenarios were chosen in order to test what would be the maximum range of impacts the agricultural sector would be faced with over the medium term.

"This paper is built around ‘trends, tensions and transitions’ in the Euro-Mediterranean space. In ‘trends’ we examine the way in which critical issues in the region are evolving and how they might develop over the next twenty years. ‘Tensions’ considers how these trends will interact to generate stresses at different socio-political levels. ‘Transitions’ explores some options for intervention to correct malign tensions and benefit from benign ones; the particular choice of the ‘transitions’ is based on the four themes of cooperation described above: managing conflict; win-win projects; deeper economic integration and eventually moving towards a Euro-Mediterranean Community".