More commonly known by their acronym, ERDF are doled out by the European Union (EU) to assist disadvantaged ("divergent" in EU-speak) areas. The funds were primarily shaped during 1988-9, and subsequently tuned in the 1993 Maastricht Treaty. ERDF funds are alotted for EU "objectives":
Development and/or adjustment of regions lagging behind the EU as a whole. "Lagging" is defined as having regional per capita GDP less than 75% of the EU average.
Assistance in changing regions in industrial decline
facilitating development and productivity of rural areas (mostly agricultural)
Promoting development in areas with very low population density (i.e. in nothern Nordic states).
ERDF are part of the "structural funds" that comprise about 36% of the EU budget. The priority of funding is by objective, with the overwhelming majority of ERDF supporting objective-1 plans.

ERDF funding is assigned to areas identified in medium-term (5 year) plans called Single Programme Documents (SPD). SPD are primarily written by local member states with some outside assistance.They are formally accepted by the Council. All ERDF grants specifically reference sections of a particular SPD. The definition of SPD is politically interesting.

The role of the EU in regional development is contentious as it runs in parallel with the programmes of the member states. The EU is committed to the principle of "subsidiarity" (devolving as much power as possible to the local level), but recognizes that it is in the interest of all members to "smooth" variations between regions. Practically, the EU must at least compensate for the inability of member states to practice traditional montetary policy as they converge on a common currency (EMU, and Single European Market--SEM). Convergence toward SEM requires these macro issues be settled; the EU attempts to settle them whilst not revealing too much federal ambition.

The success of ERDF will be seen in the very long term as convergent effects finally overcome short-term divergence (a cursory examination of per capita GDP will highlight the regional differnces in the EU, especially in contrast to long integrated areas like the US and Australia). ERDF appear likely to increase in importance and serve as an important form of stabilizing macro policy over the long term.

meta: more linkage is forthcoming. Your suggestions are (very) welcome.

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