ECONOMIC DEVELOPMENT AND COHESION POLICY AS FINANCIAL INSTRUMENT

The wide disparity in income level is a problem from social point of view, but it is also a problem from the political perspective. Government needs to ensure that all parts of the countries benefit from increased economic prosperity and employment. Article 158 of the Treaty makes it clear that cohesion requires the reduction of disparities between the levels of development of various Union regions. It must ensure that the European funding that have been allocated contributes effectively to the European policies objectives. Establishment of the common market did not itself offer a solution to economic problems faced by member States. The concept of cohesion may be regarded as designed to allow all regions to compete in the internal market. The Union funds should seek to promote equality between levels of development and employment. It is important to evaluate the financial instruments of European policies contributing to economic and social cohesion of member states. The need for redistribution changes as integration reaches higher stages. The customs union, common market and economic and monetary unit create conditions for using different policies and instruments in order to relocate resources within regions. In this paper the effect of European Union cohesion policy on economy growth is discussed. More specific attention has been paid to the following sets of measures: redistribution schemes and ways of development, the use of European Union policies in levels of integration and cohesion. The object of the research is the aspects of implementation of financial instruments aiming social and economic cohesion in Lithuania. The research methods used in the work – the analysis of literature and statistical data