Structural Policies

The main objective is to reduce disparities between levels of development in the various regions. Member states themselves also have to determine what kind of structural policy is most effective. For example, should the state make greater efforts to attract companies to structurally weak economic areas? Does it make sense to accelerate the expansion of infrastructure or establish research facilities or government agencies? In Germany, experience with active structural policy from the 1970s and 1980s has been rather sobering. At present, the central question is how to shape structural change in the regions affected by the phase-out of lignite. In the view of the ifo Institute, the state should limit itself to ensuring a suitable framework is in place, while continuing to leave it to market forces to dictate where companies decide to locate. Otherwise there is a danger of fostering unwise investments, which is expensive and carries the risk that expectations will be disappointed.