The reform of the Structural Funds, aimed at favouring the catch-up of Europe's poorer regions, is a major issue for the Union. At the same time, Europe is preparing for enlargement, which will increase regional disparities, while the Union's net contributor countries are seeking to reduce their financial transfers to Europe. An examination of the trends in national and regional disparities shows that while income differentials between countries have been reduced, such is not the case for regional disparities. The reason for this is to be found in the rising wealth of Europe's richest regions, and it leads to questions concerning the optimal allocation of structural funds. This is essentially a political matter, as neither economic theory nor empirical analysis provide clear answers to these problems. It is an issue touching on the economic and social objectives of Europe's regional policy.
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Article provided by CEPII research center in its journal La Lettre du CEPII.