Regional Policy Priorities of Latvia until 2020

1. Regional Policy Priorities of Latvia until 2020 Ilze Goba Ministry of Environmental Protection and Regional Development State Development Planning Department Regional Development Planning Division Senior Expert

2. Contents Regional development trends in Latvia Regional policy priorities of Latvia until 2020

3. Regional disparities in the European Union Latvia has the most pronounced regional disparities in the European Union Dispersion of regional GDP per inhabitant, %, 2008 (NUTS 3 regions)

4. Regional disparities – GDP and non-financial investment GDP difference in 2008: 2,5x Non-financial investment difference in 2009: 3,4x • During the growth period non-financial investments were attracted much more succesfully in developed regions (Riga) • There is a need for additional incentives to facilitate increase of non-financial investments in territories that are remote from capital city

5. Unemployment: lack of jobs in the regions Unemployment, 2010 Unemployment, 2011

6. Population decrease – depopulation of remote areas Changes in population in local government territories 2006-2011 Over the last five years the population has increased mainly in areas surrounding the capital city

7. Unequal financial resources at disposal of local governments for development Personal income tax revenue in the local government budget per capita in 2008 Personal income tax revenue in the local government budget per capita in 2010

8. Distribution of EU funds investments in planning regions of Latvia 2007-2010 (mln. EUR, %)‏ 2. ERDF investmentsfor entrepreneurship 1. ESF investments 3. ERDF investments for infrastructure

9. Disadvantages of the present investment planning approach Sector approach dominates, municipalities and regions have to adapt to centrally determined support conditions Investments are not concentrated in development centres – limited effect on diminishing of regional disparities Investments are not based on real needs of territories - the importance of planning at local level is reduced It is not possible to coordinate in time investments related to different sectors Municipalities do not have the opportunity to implement activities related to different sectors in a single project using the integrated approach It is not possible to timely and flexibly react and adapt to changes in local situation (availability of financing for implementation of projects etc.)

10. Spatial development perspective Latvia 2030 Policy directions: • accessibility and mobility • polycentric structure of settlement • development of spaces of national interest – development centres, rural areas, Riga agglomeration, Baltic Sea coastal area, Eastern border area • At the moment National development plan and Regional policy strategy are being drafted

11. Key statements of the draft Regional policy strategy Strengthened capacity of regions and local municipalities • A new public investment planning system • Entrepreneurship and innovation • Wider circle of stakeholders involved in promotion of regional development (sector ministries, entrepreneurs, NGOs, local community)

12. A new system for public investment planning/provision of support for territorial development • Key principles: • Latvia 2030 target areas (specific support directions) • Regional and local development programmes as an investment request for territories (place-based approach) • The “basket” of public services at each level of settlement (criteria) • Earmarked amount of public investments to each local government and region (limiting competition between municipalities)

13. Key support directions for target areas • Transport infrastructure • Provision of public services • Business infrastructure (industrial sites, communications etc.) • Specific support for individual target areas (renewable energy, harbors, creative industries, tourism and cultural heritage etc.)

14. “Basket” of public services • The desirable set of services as a set of criteria for planning and providing public investments in territories of Latvia in the coming years • Determines services in particular sectors (health, culture, sports, education, social care etc.) to be provided at each level of settlement and hierarchy of services • More services are providedat higher levels of settlement • “Basket” of public services includes only those services that are suited for territorial differentiation

15. Earmarked amount of public investments to each local government and region • Purpose: to preclude unproductive competition between municipalities for public investment • The idea of territorial quotas: to determine the amount of funding earmarked for each territory (region, municipality) for implementing investment projects planned and justified in their development programmes in the framework of territorial development support measures Principles: • Distribution of funding between regions, earmarking more funding to lagging regions • Concentration of funding in development centres

16. The implementation of regional policy for target areas according to support directions is going to be delivered: • at local level –implementation of local government functions and projects (including joint local government projects) • at regional level –implementation of planning regions functions (planning of public transport in the region as well as other competencies) and projects of regional significance • at national level (in the framework of support measures of sector policies) –infrastructure objects of national significance and/or objects owned by state which simultaneously are crucial for development of support areas (e.g. state owned main, regional and local roads) European Territorial Cooperation as one of the implementation tools and source of financing for regional/local projects

17. Capacity and autonomy of municipalities (I) • To increase the role of municipalities in promoting entrepreneurship • amendments to the relevant legal acts to expand rights of municipality to deal with its property and simplify the procedure for lease • to ensure measurement of administrative burden created to entrepreneurs by municipalities, elaborating proposals for reduction of the burden • to provide support for creation of entrepreneurship specialist position in every region and municipality • To expand the set of available statistics • To provide operation of regional development monitoring and evaluation system

18. Developing regional and local innovation systems • To elaborate and implement pilot projects to create innovation systems at local and regional level • To promote more active involvement of municipalities in aligning education with local labor market needs • To train employees of municipalities and regions to deal with issues connected with promotion of innovation and development of clusters • To provide municipalities/regions support for promotion of innovative entrepreneurship, by organizing competition of best development ideas, training courses for authors of innovative business ideas, entrepreneurship days • To develop local and regional networks of mentors • To provide municipalities and regions with information about international support instruments for promotion of innovations at local and regional level • To promote best practice (local, as well as international) in promotion of innovation • To foster creation of local identity products and promotion in market

19. Questions?ilze.goba@varam.gov.lv

20. The current tools for implementation of regional policy