The European Regional Development Fund was set up 1975 to stimulate economic development in the least prosperous regions of the European Union (EU), promoting economic and social cohesion by correcting the main regional imbalances and participating in the development and conversion of regions, while ensuring synergy with assistance from the other Structural Funds. As EU membership has grown, the ERDF has developed into a major instrument for helping to redress regional imbalances. The Scottish Government manages the ERDF in Scotland.

The ERDF contributes towards financing the following measures: (i) productive investment to create and safeguard sustainable jobs; (ii) investment in infrastructure which contributes to development, structural adjustment and creation and maintenance of sustainable jobs, or, in all eligible regions, to diversification, revitalisation, improved access and regeneration of economic sites and industrial areas suffering from decline, depressed urban areas, rural areas and areas dependent on fisheries; development of the endogenous potential by measures which support local development and employment initiatives and the activities of small and medium-sized enterprises; and (iii) investment in education and health.

The areas in which these measures provide support include development of the productive environment, research and technological development, development of the information society, protection and improvement of the environment, equality between men and women in the field of employment, and cross-border transnational and inter-regional co-operation.

In Scotland, Structural Funds are the significant source of European Union funding for economic development in Scotland. Programmes run over a seven-year period. From 2000-2006 Structural Funds spending provided over £1.1 billion of support for Scotland, supporting the Executive's aims of boosting economic growth and improving productivity in Scotland while reducing economic and social disparities.