Functional regions: Which regions and what functions?

1. Functional regions: Which regions and what functions? By Lewis Dijkstra Deputy Head of Unit Economic and Quantitative Analysis Unit

2. Overview • Metro regions • Remote regions • Rural regions • Labour Market Areas

3. Metro regions: Why and how? • A better understanding of the role and performance of large agglomerations in the EU • A basis for comparisons with metropolitan regions outside the EU • Based on the Urban Audit’s larger urban zone and a sensitivity analysis • Agreed with the OECD • Based on a joint analysis of Eurostat, REGIO and OECD

4. Growth is more concentrated in less developed Member States

5. Capital metros play an bigger role in less developed Member States

6. Metro region conclusions • The difference in GDP per head between the capital metro and the rest of a country is likely to shrink in the medium term • This means that growth is likely to spread to other regions and will become higher in non-metro regions than in metro regions • Public policies can facilitate this process • OECD has adopted this approach and applied it to the US, Mexico and Canda • See Regional Focus 1/2009

7. Remote regions: Why and how? • Predominantly rural regions cover a wide variety of situations • New classification creates more homogeneous groups • The proximity to cities is critical. Cities can offer access to public services such as higher education and health care, a more diverse economy, a potential market

8. Step 1:All cities UA + UMZcalculate travel time

9. Step 2: Apply to 45 minute threshold

10. Remote rural region conclusions • Remote rural regions are less productive than non-remote regions • Remote rural regions are more likely to face population decline • Economic growth favours rural regions close to cities • Lower access to services such as universities and hospitals • An analysis in North America finds the same trends

11. Rural regions: Why and how? • OECD classification in predominantly urban, intermediate and predominantly rural is contested • Methodology leads to distortions: • cities in large municipalities become rural • villages in small municipalities become urban • New approach used a clustering of high density grid cells which avoids distortions • Is being developed in close cooperation with DG AGRI, Eurostat, JRC and the OECD

12. Objective of rural regions • Create a more comparable definition of rural regions • Create classification with less extremes i.e. avoid that Member States are entirely urban or rural • Create a new classification of LAU2 which could be used in surveys in a similar manner as the Labour Force Survey level of urbanisation classification

13. Labour Market Area Simulations • Variation in the size and approach to defining NUTS 3 regions which reduces comparability • Commuting distorts GDP per head at NUTS 3 level • Labour market areas are a better unit of analysis • Many Member States have defined their own Labour Market Areas • LAMAS are NUTS 3 groupings based on metro regions and national labour market areas

14. LMAs: available geometry

15. LAMAS

16. LAMAS next steps • Analysis of the LAMAS to assess their socio-economic situation and performance • Eurostat will develop a harmonised labour market area definition which can be applied to the entire EU

17. Functional regions and Cohesion Policy • In the current period, functional regions can be addressed in a variety of ways: • Global Grant • Multi-regional programmes (but not between RCE and Convergence) • Macro regions • European Grouping for Territorial Cooperation • The 5th Cohesion Report will include the proposals for the next period.