The making of local development: Highlights from Integrated Territorial Projects

1. The making of local development: Highlights from Integrated Territorial Projects Marco Magrassi Investment Evaluation Unit Department for Development Policies - Ministry of Economy of Italy Evaluation Open Days in Roma July 4th, 2006

2. CONTENTS • Main features of Integrated Territorial Projects • Methods and issues in project identification and selection • Some lessons and open questions

3. Defining Integrated Territorial Projects (ITPs).... INTEGRATED TERRITORIAL PROJECT: Formal Definition from the CSF 2000-06 “Composite project for the development of an area, which includes a set of different interventions that all contribute, in interaction with each other, to a common development strategy, devised by local actors in response to concrete needs and opportunities.”

4. The“WHY” question: policy goals and assumptions behind ITPs... “Local knows better”: bottom-up development planning  better and strategic projectchoices Local level coordination of multi-sectoral interventions  synergies, stronger results Local level partnerships between municipalities, public institutions, private sector  stronger government and governance It is fair to devolve expenditure power to local level, elected bodies

5. The basic ITP scheme… CORE OBJECTIVE (Strategic idea: provides coherence, integration) Example: To increase cultural tourism Unified Project Management (one municipal govt. chosen to lead project) Detailed operations of different nature Historic preservation Environment (restoring buildings, cleaning polluted sites) Infrastructure (Roads, telecommunications Tourist Info points) Productive sector (Support to local mfg. of typical products) Human Resources (training skills needed in the tourism sector) Measurable Expected Outcomes: Increased N. of visitors, Employment, reduced out-migration Local ITP partnership selects single investments (10 to 50) and present them to the Region as “package” Single investments at different stages in technical design Regions evaluate/approve ITP as a whole package of projects

6. Integrated Territorial Projects are important in Italy… Almost € 6-billion in 7 ROPs in Southern Italy OBJ.1 ( 20% CSF resources) About 160 projects, more than 6,000 investments In Obj. 2, many Regions autonomously decided to adopt ITP model.(e.g. Tuscany Region 30% of the ROP)

7. Municipalities covered by ITPs in Southern Italy: almost 2,000 (more than 90% of total)

8. What are the goals that municipalities have selected to improve economic and social welfare? Core Objectives… Distribution of Core Objectives by Thematic Category 60 50 40 Number of ITP 30 57 20 23 20 10 12 10 8 2 0 Industrial Develop. Agriculture Food Tourism Culture Environment Natural Parks Transport networks Generic objective Urban Develop. Category Core Objective

9. ITP with special features: 1. Single-municipality (urban) ITPs: 22 projects in medium/large cities (more than € 1 billion) 2. Sector-based integrated and inter-municipal projects (social services, industrial development) --sectors and target areas selected through Regional plans

10. Min Mean Max Number of Municipalities 1 16 145 Population 2.509 181.224 (median 86.263) 1.322.612 Total Funding (millions of €) 3.545 41.764 (median 31.274) 191.478 Investment per capita (€) 30 404 (median 330) 4.129 A very diversified universe…

11. ITP by Region and incidence on total EU Regional Funds available (2004 figures. Currently is more)

12. ITP identification and selection

13. Issues in ITP identification and selection • ITPs provide opportunity to examine the “negotiated approach”: • A selection procedure that pursues quality through cooperation between Region and final beneficiaries • Sometimes, it combines cooperative and competitive elements • Here, we examine it for ITPs, but was applied in many priorities and measures (also sector-based)

14. Molise Negotiated, mixed Puglia Negotiated, top-down Sardinia competitive, bottom-up Campania Negotiated, mixed Basilicata Negotiated, mixed Sicily Competitive, bottom-up Calabria Negotiated, top-down Competitive, negotiated and mixed slection procedures in the ITP experience...

15. Two types of identification and selection procedures A: competitive, bottom up B: negotiated, top down Regions divide all territory, group municipalities, allocate funds ex-ante Regions established bidding criteria for municipalities and published a call for projects Municipalities associate; prepare project following Regional geographical, financial, and sometimes sectorial decisions Municipalities associate. Prepare and submit detailed project proposal Regions appraise and approve projects according to project quality and other criteria Regions appraise and approve projects once they reach a minimum quality standard

16. Regional Criteria for ITP identification and selection Competitive CfP (Sicily) Negotiated ex-ante (Calabria) Proposals evaluated and attributed max 100 points • Max 25 projects in all Region • ITP areas cannot be in more than one Provincial territory (gminas) and should be sub-provincial in size • Planning/project quality (max 30 points) • Contribution to regional priorities (20 points) • Technical sustainability (8 points) • Environmental sustainability (8 points) • Financial sustainability (8 points) • Socioeconomic and institutional sustainability (8 points) • Administrative and management sustainability (18 points) • 7 Medium and large cities would be granted specific resources • Funds distributed ex-ante according to demographic criteria

17. Tuscany example: role of the Provinces (powiats) in ITP identification and selection… • Region established rules; divided funds equitably among Provinces • Then delegated to 10 Provinces tasks of “animating” and assisting the territory to organize and prepare project proposals (Reg provided TA funds) • Inter-municipal associations presented projects • Provinces developed a first scoring and ranking of projects • Regions evaluated and approved; but Provincial ranking incorporated in the scoring formula…

18. Advantages and risks in competitive CfP + more freedom for municipal initiative (demand-based) + better project quality + in theory, more transparent - increases conflicts/political costs - difficult to properly evaluate - can penalize poorer final beneficiaries who are more in need Advantages and risks in ‘negotiated’ procedure - reproduce top-down, centralized policy process (supply-based) - less incentive for quality (but…) - less freedom for territory to self-organize + more equitable in distributive terms + implement regional strategy + reduce political conflict

19. From goal setting, to programming, to implementation: General lessons from urban ITPs

20. Evaluation evidence from 2000-2006: the South… Lessons from 22 Integrated Projects in medium/large cities totaling € 1 billion+ currently in implementation Ambitious goals of combining economic transformation with social development

21. Were strategic goals reached? A proxy answer from types of investments actually financed... Sectorial distribution of 490 investments in 20 urban projects (% of total funds) Half of total resources in transport,roads and public space ...“traditional” investments prevail.

22. If this was programming of 22 urban projects, how is implementation going? Apparently, it confirms mixed results... • Urban infrastructure still dominates, but also well on social services • Economic and innovation investment (enterprise support, economic infrastr.) very slow implementation • In Central-Northern Italy, things don’t go much better (EU zoning problem)...

23. Also...lack of strategic planning negatively affected effectiveness of urban development funding Evaluation evidence that fed negotiation strategy for 2007-13... • Minor investment in urban competitiveness, economic infrastructure, FDI promotion, internationalization • Little financial engagement of the private sector • Very few projects involve metro-area or city-region (e.g. Catania, Cagliari) • Urban development strategies were rushed, often week • “Institutional” bottlenecks: financial administration, municipal internal organization, project management, City-Region inter-govt. relations, engineering/procurement cycles....

24. Overall lessons

25. Overall lessons (1)… • In weaker territories, a “radical” bottom-up approach has strong limitations…Regions and other actors must assist continuously • In stronger territories or larger urban areas, you can decentralize more and have ambitious goals (innovation, growth). But still does note come “naturally”... • Partnership with civil society and private economic actors crucial, but very difficult to build... • Better projects where local govts. have some capacity/experience in development planning? • Financial streamlining, project management design/resources, crucial issues to fix in 2007-13

26. Other questions to discuss… • What role for Regions in defining boundaries and selecting territories? Better piloting or comprehnsive policy ? What balance b/en top-down and bottom-up? • (a) Larger cities, (b) small (or rural) municipal networks, (c) sector-based local policies…should we diversify strategic and operational approaches? How? • The “timing” issue:local coalition & strategy-building takes time, but projects must advance and disburse…How to pursue both?