The European Union has its own “language of development.” It is the language used to write strategies, allocate billions of euros, and assess how regions are performing. It is spoken in Brussels, in capitals, and in small communities across Europe. Without this language, it’s impossible to win a grant, defend a project, or simply communicate with international partners. This language is the EU’s Cohesion policy.

At first glance, it does seem complex and accessible only to a narrow circle of specialists: it has dozens of interlinked concepts, principles, instruments, and funds; institutions, acronyms, objectives, indicators. But behind this complexity there is not bureaucracy for bureaucracy’s sake, but a clear logic: how to ensure that every region of Europe — rich and poor, urban and rural, central and border — has equal opportunities for development.

Why should Ukrainians know this? First of all, because Ukraine is already speaking this language. Our recovery, reforms, and regional strategies are all aligned with the objectives of Cohesion policy. International partners assess our projects using these very criteria. And when Ukraine becomes an EU member, we will not merely be recipients of assistance — we will be full participants in this policy, with the right to vote, the right to funding, and the right to influence decisions.

Secondly, because it means access to resources. European grants, cross-border cooperation programmes, investments in communities — all of this is written in the language of “the five policy objectives,” “AROPE indicators,” and “functional areas.” Those who don’t command this language lose before the competition even begins. Those who understand it can attract funding to their community, oblast, or region.

Finally, because we need a shared language within the country itself. When European integration departments, project managers, local self-government bodies, and experts use the same terms, work speeds up dramatically. “Convergence” stops being an abstraction, the “partnership principle” ceases to be an empty declaration, and “territorial cohesion” is no longer something unclear. We begin to talk about the same thing.

What is this publication about? The authors did not aim to cover everything. This is not an encyclopedia and not an official document. Instead, the Swiss–Ukrainian project UCORD, in cooperation with the European Association of Development Agencies (EURADA) and the Decentralization portal, did something different: they selected the most important cohesion policy terms and explained them not in isolation, but in relation to one another — so that after reading one section, you understand how it connects to the next.

This is the first part, “Key Terms.” More will follow.

The contents of this publication are the sole responsibility of the author(s) and do not necessarily reflect the views of the Swiss Agency for Development and Cooperation, or NIRAS Sweden AB.

What concepts shape our understanding of EU Cohesion policy?

Cohesion policy is the EU's primary investment policy, aimed at reducing economic, social, and territorial disparities within the Union. As stated in the Ninth report on economic, social and territorial cohesion (2024), "with its regional focus and place-based approach, Cohesion policy is one of the most visible expressions of European solidarity [and] an integral part of the European growth model…".

In 2021-2027, the EU Cohesion policy has set a refined list of 5 policy objectives:

• a more competitive and more innovative Europe (PO1)
• a greener, low-carbon transitioning towards a net-zero carbon economy (PO2)
• a more connected Europe by enhancing mobility (PO3)
• a more social and inclusive Europe (PO4)
• a Europe closer to citizens by fostering the sustainable and integrated development of all types of territories (PO5)

The legal basis for EU Cohesion policy is provided in Articles 174-178 of the Treaty on the Functioning of the EU. In particular, Article 174 states that "to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion." It also highlights that "particular attention shall be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross-border and mountain regions."

Why is particular attention paid to these regions? The answer to this question is in the logic behind the EU Cohesion policy. By supporting growth and development in less developed or challenged areas, the EU ensures that its territory develops harmoniously overall. For example, regardless of your location within the EU, you can be sure of fair access to education, employment, and services. In other words, there are no disparities between EU regions within the three dimensions of EU Cohesion policy: economic, social, and territorial.

Historically, under the 1957 Treaty of Rome, the economic and social cohesion was already at the core of EU Regional Policy. As stated in its official summary, the Treaty established the European Economic Community (EEC), at the time comprising Belgium, Germany, France, Italy, Luxembourg, and the Netherlands, as well as its common market. To guide its key aim of transforming the trade and production conditions within the EEC and to serve as a step towards closer political unification, one of its specific goals was to "ensure the economic and social progress [...] by joint action to eliminate trade and other barriers between them."

However, the actual birth date of the EU Cohesion policy came on 24 June 1988, when the Structural Funds were integrated into an overarching policy framework. As noted by Danuta Hübner, Member (2004-2009) of the European Commission responsible for Regional Policy, in the InfoRegio Panorama magazine in 2008, "discovering Europe's economic geography has since then marked a radical turn for EU, national and regional policies alike. Identifying the regions in most need, defining priorities, involving local institutions and imposing common management, control and evaluation standards — all these elements have not only created tangible results but also a unique system of multi-level governance".

Later, the 2007 Lisbon Treaty added a third dimension to EU Cohesion policy: territorial cohesion, which focuses on transforming the unique features of Europe's diverse territories to ensure harmonious development of all. Today, Cohesion policy embodies these three dimensions, remaining among the key pillars of the European project.

To understand the core terms of the Cohesion policy, it is helpful to begin by outlining its three dimensions, their objectives, indicators, and relevant concepts, which together form the mechanics of the EU's regional policy.

The economic dimension focuses on reducing disparities in prosperity and fostering competitiveness across Europe's regions. However, it's essential here to keep in mind the deep interconnections between all three dimensions of Cohesion policy, as comprehensive action is needed to ensure harmonious development of all EU regions. It places Cohesion policy at the centre of the EU's growth model and the Single Market, comprising mainly the 27 member states, which ensures the free movement of goods, services, capital, and persons by removing technical, legal, and bureaucratic barriers.

One of the main goals of economic cohesion is upward convergence: a condition that is realised when the performance of Member States improves, moving closer to an ideal policy target, alongside a narrowing of the disparities among them (as defined by Eurofound). The economic cohesion within the EU is regularly evaluated through long-term convergence analyses among its regions. These assessments use various financial indicators, including GDP per capita, purchasing power standards (PPS), labor productivity, employment rates, and broader measures of competitiveness, such as the Regional Competitiveness Index (RCI).

Based on convergence assessments, EU NUTS-2 regions are grouped into three types within the Cohesion policy in the period 2021-2027 (definitions taken from the Ninth report on economic, social, and territorial cohesion):

• Less developed regions present with GDP per head (expressed in PPS, i.e., adjusted for price level differences) below 75 % of the EU-27 average (meaning average across the 27 EU member states),
• Transition regions present with GDP per head (PPS) between 75 % to 100 % of the EU-27 average,
• More developed regions present with a GDP per head (PPS) above 100% of the EU-27 average.

Such classification reflects the relative development levels of EU regions and guides the allocation of Cohesion policy funding and support. Allocation decisions are crucial, as they allow policymakers to address regional needs and build on local successes. Within EU regional policy discussions, we see two contrasting states (also noted in the Ninth Cohesion report):

• Regions on high-growth development path: regions that outperform their peers in GDP, productivity, and employment growth (when the likelihood of doing so is greater than 50%). Such areas are on a high-growth trajectory, with their economic development index (EDI) exceeding 0.5.
• Regions in a development trap: regions unable to retain their economic dynamism in terms of income, productivity, and employment, while also underperforming their national and European peers on these exact dimensions (definition from Diemer, A. et al. (2022) article 'The Regional Development Trap in Europe').

The regional development trap is a complex issue that encompasses both economic and social dimensions. Regions that feel economically disadvantaged — often due to slower growth, a lack of opportunities, or ongoing disparities despite overall EU prosperity — may experience social and political dissatisfaction, a situation known as the geography of discontent. Preventing such outcomes is a primary goal of EU Cohesion policy, which brings us to its second aspect: social cohesion.

According to the research report 'The political dimension of social cohesion in Europe' by Eurofound, the approach to defining the social dimension of Cohesion policy is not academic but policy-oriented: social cohesion focuses on ensuring the well-being of all citizens by reducing disparities, preventing marginalisation, and promoting equal access to opportunities — particularly in less developed regions. In this sense, social cohesion helps shape investments that foster inclusion, participation, and balanced growth across the Union.

While the economic dimension addresses disparities in productivity, competitiveness, and income, social cohesion ensures that the outcomes of growth are inclusive, meaning they reach people in all regions and social groups. This dimension is particularly relevant in the context of the EU's regional classification, as less developed, transition, and more developed areas face distinct social challenges and require tailored approaches to employment, education, healthcare, and social services.

Social cohesion aims to create equal opportunities across the Union by supporting key areas that shape social inclusion and human development, including the labour market, tertiary education, vocational education and training (VET), access to education and childcare, access to healthcare, and policies targeting youth and employment. Together, these areas ensure that economic growth is cohesive and translates into social progress and shared prosperity across all European regions.

The EU's main policy framework in this field is the European Pillar of Social Rights (EPSR). It outlines 20 principles in three groups: equal opportunities and access to the labour market, fair working conditions, and social protection and inclusion. Together, they ensure fair and well-functioning labour markets and welfare systems, driving convergence towards better working and living conditions across Member States.

Within the Cohesion policy reporting, progress towards social cohesion is monitored through a set of key areas:

• Employment (measured through indicators such as the employment and unemployment rate, the youth employment rate),
• Skill development (tracked by participation in tertiary education, adult learning, and VET),
• Poverty reduction (assessed through indicators like the share of people at risk of poverty (AROP, share of people with an equivalised disposable income (after social transfer) below the at-risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income after social transfers) and at risk of poverty or social exclusion (AROPE, percentage of a population representing the sum of persons who are: at risk of poverty, or severely materially and socially deprived, or living in households with very low work intensity)),
• Gender equality and equal opportunities (monitored by the gender employment and education gap, and women's representation in government and leadership positions),
• Attitudes towards migrants and other minorities (evaluated through data on labour market participation and surveys on social inclusion and discrimination).

The economic and social aspects of Cohesion policy aim to enhance prosperity and promote inclusive growth. However, the outcomes of these policies are influenced by the unique characteristics of different regions in Europe. The territorial dimension translates these goals into strategies that consider the specific features of each area, addressing geographic disparities and ensuring that all regions — whether urban, rural, remote, or border areas — can fully benefit from the EU's growth and social initiatives. This approach focuses on balanced development, ensuring that no region, regardless of how remote or disadvantaged, is excluded from the benefits of integration.

Understanding territorial cohesion starts with statistical geography. EU regions are classified according to the NUTS (Nomenclature of Territorial Units for Statistics) system, which divides the territory into comparable levels for planning, monitoring, and allocating cohesion funds. The three NUTS levels correspond to population thresholds: NUTS 1 (major socio-economic regions, 3 to 7 million inhabitants), NUTS 2 (basic regions, 800,000 to 3 million inhabitants), and NUTS 3 (small regions, 150,000 to 800,000 inhabitants). For more details, see the article on Statistical Regions.

Another key concept used in EU territorial classification is territorial typologies — systems that divide territories into types based on specific characteristics. According to Eurostat's Methodological Manual on Territorial Typologies, these typologies are grouped into grid, local, and regional categories, which are further classified as urban-rural, metropolitan, coastal, border, island, and mountain (learn more in the Statistical Regions article).

Within the Cohesion policy reporting, for analysing different trends, different relevant typologies are used, for example: the NUTS‑3 metropolitan typology — for territorial economic trends, the degree of urbanisation — for exploring social aspects by clearly distinguishing urban centres from other areas, and the specific geographical characteristics — for ensuring that unique features are appropriately considered in policy and planning.

Beyond the statistical and geographical aspects, Cohesion policy also recognises the functional realities of space — how people and economies interact across administrative boundaries. A Functional Urban Area (FUA) is a term used to describe a wider aggregate consisting of a city and its surrounding commuting zones. The term Functional Rural Area (FRA) is designed to cover all territories outside FUAs. These are complex terms developed to make data on various territories comparable across the EU. Defining territories this way allows the EU to design people-oriented interventions that reflect actual regional dynamics. More information on FUAs and FRAs is available in publications, including the Methodological manual on territorial typologies by Eurostat, the EU-OECD Definition of a Functional Urban Area, and Developing a Definition of Functional Rural Areas in the EU by the JRC.

Mobility is another key component of territorial cohesion, reflecting the ease with which people and goods can move within and between regions. It is assessed using a combination of accessibility and proximity indicators, which measure both the physical infrastructure and the effectiveness of transport networks (for example, the density of road and rail networks, travel times to major urban centers, and access to key services such as schools, universities, and healthcare facilities). These indicators help identify which regions enjoy better access to essential services and where targeted investments are needed, supporting both economic opportunities and social inclusion.

To support overall cohesion, the EU also emphasizes cross-border cooperation (CBC) — a unique mechanism intended to benefit regions that directly share a land or maritime border with the EU, as well as their counterparts on the EU side of the border. Such areas are called border regions, and, according to the Ninth Cohesion report, they account for more than 40% of the EU's landmass, 30% of its GDP, and 30% of its population, comprising some 150 million people. The border typology for all EU regions is available in the Eurostat database.

Although often distant from metropolitan centres and facing unique administrative, legal, and cultural challenges, border areas can be vibrant hubs of social and economic activity and demonstrate high growth potential. Thus, targeted CBC programmes help harness the growth potential of border regions and strengthen cohesion across the EU and beyond.

At a larger scale, macro-regional strategies are, as defined by the European Commission, integrated frameworks endorsed by the European Council, which may be supported by the European Structural and Investment Funds among others, to address common challenges faced by a defined geographical area relating to Member States and third countries located in the same geographical area which thereby benefit from strengthened cooperation contributing to achievement of economic, social and territorial cohesion. Macro-regional strategies, for example, those for the Baltic Sea or Danube regions, demonstrate how territorial cohesion extends beyond individual projects, providing a framework for coordinated action across multiple policy fields and governance levels.

In essence, territorial cohesion ensures that the EU's development model is spatially balanced. It links the economic and social dimensions by addressing the "where" of policy — ensuring that place-specific challenges and potentials are fully integrated into the Union's approach to growth, inclusion, and sustainability. By doing so, it transforms diversity from a barrier into a source of strength for Europe as a whole.

Having examined the economic, social, and territorial dimensions of EU Cohesion policy, it is essential to understand the principles and mechanisms that underpin this ambitious policy in practice. These principles shape how the policy is designed, implemented, and financed — and ensure that the funds allocated deliver real impact on the ground.

At the heart of Cohesion policy is the principle of partnership. According to the Common Provisions Regulation (CPR) (Regulation (EU) 2021/1060), this key principle ensures 'the involvement of regional, local, urban and other public authorities, civil society, economic and social partners and, where appropriate, research organisations and universities'. Such cooperation ensures that policies are tailored to local realities and that the voices of those directly affected are heard and considered.

The cooperation is outlined in relevant programmes and Partnership Agreements (PAs), which serve as reference documents for programming interventions. It defines the strategy and investment priorities chosen by the relevant Member State. It presents a list of national and regional programmes that it seeks to implement, as well as an indicative annual financial allocation for each Operational Programme (OP), which is a national or regional plan detailing the PA's objectives, including economic and other targets.

Every Member State negotiates a PA with the European Commission within each programming period — multiannual financial cycles, usually lasting seven years, that set the strategic priorities and funding framework. These are aligned with the EU's broader Multiannual Financial Framework (MFF), which defines the EU's overall budget and spending priorities.

Effective implementation of OPs depends on a nation/region's absorption capacity — its ability to plan, manage, and spend EU funds efficiently. To put simply, the higher the capacity, the higher the rate of absorption, the percentages of EU funding that the European Commission has paid to Member States' OPs at a certain point in time. However, it is not simply done.

As presented in the research' Absorption rates of Cohesion policy Funds', many challenges can weaken a program's relevance and objective achievement, thus its absorption rate: legal delays, limited government quality, political instability, low GDP, insufficient matching funds, poor infrastructure, limited innovation and investment, vulnerability to crises, low knowledge spillover capacity, limited labor force, and inadequate digitalization. It is crucial to understand the factors that influence absorption and how they relate to the impact of the Cohesion policy.

Returning to the key concepts and principles, closely inter-linked to the principle of partnership is the concept of multi-level governance, which reflects the inclusion of at least the following partners:

• Regional, local, urban, and other public authorities;
• Economic and social partners;
• Civil society bodies (environmental, NGOs, social inclusion, fundamental rights, disability rights, gender equality, non-discrimination);
• Research organizations and universities (where appropriate).

Because Cohesion policy involves multiple actors and funding sources, it operates under the principle and rules of shared management for funds whose management is shared between the EU and the Member States. As further elaborated in the Glossary for EU regional policy, in 'shared management' funds, Member States implement national programs, allocating funds to recipients. They are responsible for developing and maintaining compliant, effective management and control systems, which prevent and correct irregularities. The Commission supervises by verifying system function and making financial corrections as needed.

Another core principle of the European Union's Cohesion policy is additionality. As defined in EU Law, it is a principle that aims to ensure that the Structural Funds complement, but do not replace, equivalent public expenditure of a Member State. Put simply, the goal is to create added value — the projects seeking EU funding should demonstrate that their objectives are more realistically reachable or, in general, greater in scope and impact if EU structural funds support the national allocation of funds.

Cohesion policy is also guided by the principle of subsidiarity, which, as defined in Article 5(3) of the Treaty on European Union, dictates that decisions should be made as close to the citizen as possible. It necessitates continuous evaluation to confirm that action at the EU level is only undertaken when more effective than national, regional, or local alternatives. This means the EU will not act (except in areas of exclusive jurisdiction) unless its involvement proves more effective.

Subsidiarity is closely linked to the principle of proportionality, which governs how the EU uses its competences, ensuring that any Union action goes no further than what is necessary to achieve Treaty objectives. Іt requires the EU to choose the least intrusive and most appropriate measures to meet its goals, mirroring the logic of subsidiarity.

All the principles mentioned contribute to defining features of Cohesion policy, such as its people- and place-based approach. Rather than applying a single model across Europe, the policy adapts to the specific strengths, challenges, and needs of each region and its communities. This ensures that interventions are targeted, relevant, and effective — whether they aim to support innovation in metropolitan areas or improve basic services in rural ones.