ABSTRACT
This chapter considers the regional effects of economic integration and the range of policies which are available to achieve regional balance in a European economic and monetary union. The first section identifies some conflicting views on the regional effects of integration and argues that benefits of market completion are likely to be unevenly distributed —with the greatest benefits acccruing to regions in which industries with economies of scale and highly innovative sectors are most prevalent. In addition, it is argued that it would be dangerous to assume that macroeconomic shocks with asymmetric regional effects will not occur in economic and monetary union (EMU). The second section is concerned with the broad outlines of a Community system of policy to achieve regional balance. Four possible types of Community policy to assist convergence are identified-structural policies, macroeconomic co-ordination, budgetary transfers and differential application of other Community policies-and their merits assessed. The central conclusion is that all four types of policy are necessary in the Community now. In the final section these arguments are used to assess the discussion of cohesion and cohesion policies in the recent Delors Report on Economic and Monetary Union.
