This work aims to analyze the impact of both the increased structural transfers and the more decentralized regional policy process through the partnership principle, which were the two main features of the 1988 European regional policy reform. In doing so, Schaub examines the following questions: What has been the impact of European structural transfers on the convergence process of the poorer southern European regions? Has the partnership principle effectively enhanced the performance of regional institutions in cohesion policy? Among the topics covered are: economic integration and European regional policy; convergence modeling of financial transfers on the macro level; methodological aspects of the convergence model; empirical results of convergence in the southern European regions; modeling institutional performance on the micro level; methodological aspects of analyzing institutional performance; Andalusia and European fund issues; the rise of a weak regional base in Algarve; and a comparison of the cases of Andalusia and Algarve.