What is EoRPA?

1. Regional Policy under Crisis Conditions: Recent Developments in Europe and PolandProfessor Douglas Yuill and Dr Martin FerryPresentation at Ministry of Regional Development, Warsaw, 14 December 2009

2. What is EoRPA? • EoRPA is the Gaelic word for Europe • It is also the short name for the European Regional Policy Research Consortium run by EPRC at the University of Strathclyde, Glasgow • EoRPA funds comparative EPRC research into regional policy developments in all EU countries (and Norway) • The consortium consists of regional policy departments from 10 countries: Austria, Finland, France, Germany, Italy, Netherlands, Norway, Poland, Sweden, United Kingdom.

3. EoRPA research outputs • EPRC produced six major reports for EoRPA this year : • Regional dimensions of the financial and economic crisis (EoRPA Paper 09/1) • Regional policy under crisis conditions: recent regional policy developments in the EU and Norway (EoRPA Paper 09/2) • Policy change: a country-by-country review (EoRPA Paper 09/3) • Dealing with demographic change: regional policy responses (EoRPA Paper 09/4) • Crisis, what crisis? Business as usual under EU Competition policy and regional aid control (EoRPA Paper 09/5) • Challenges, consultations and concepts: preparing for the Cohesion policy debate (EoRPA Paper 09/6) • This presentation focuses on national regional policy developments across Europe, before considering recent changes in Poland.

4. Purpose of presentation • Expected a quieter policy phase following period of significant change (start of new policy period etc.). • Economic crisis delivered a major external shock, with potentially significant regional implications. • Aim to chart the main changes taking place – by country and theme, identifying broad trends and country groupings and the reasons for change. • More detailed information, including comparative tables, is available in the published report.

5. Regional policy change: four broad categories • External crisis-driven developments : examples include Ireland, Italy, Germany, France. • Major, internally-induced changes (e.g. legislative reform, strategic reviews): for instance, Denmark, Norway, Sweden, Finland. • Ongoing regional policy adaptations (e.g. developments in policy instruments/strategies or to policy delivery): for example, Poland, UK, Netherlands, Austria, Belgium plus some new Member States. • Developments attributable to the influence of Cohesion policy: mainly the Cohesion countries.

6. Different policy responses: a comparative perspective • Developments in response to the economic crisis: reductions in budgets, focus on national growth – Ireland, Italy, RDAs (England) as well as Hungary, Latvia, Romania, • Regional policy instruments part of crisis response: Austria, France, Germany, plus easing of regional aid conditions (e.g. Spain, Belgium, France, Poland, UK) • Developing conceptual framework (all-region approach, yet region-specific interventions): Poland, Denmark, Norway, Sweden • Growing weight to regional programming and regional-level delivery: England, Sweden, Poland, Netherlands, Denmark, Finland • Perceived need for stronger coordination and cooperation: Austria, Germany, Denmark, Sweden, Finland, France, Poland

7. Changes in the regional problem:comparative themes • A feature of the modern-day regional problem is its differentiated nature: focus increasingly on competitiveness, with challenges viewed from regional/sub-regional perspectives. • The economic crisis has not so far had a major impact on regional disparities, though sub-regional differences have been brought to the fore. • More nuanced view of the regional problem in many countries: French example – both global perspective and “close-up view”; tailoring of regional policy to specific regional needs. • In line with this more refined view of the regional problem, there have been a number of developments regarding how the problem is measured: Denmark, France, Portugal, UK, Poland, Austria.

8. Changing objectives: more growth goals but equity remains important • Over time, regional policy has moved from being a policy primarily concerned with territorial equity to one promoting regional growth and competitiveness. • This trend reflects the growing internationalisation of economic development (also as reflected by the crisis) and the ongoing influence of broader European priorities (e.g. the Lisbon agenda). • On the other hand, territorial fairness continues to underpin most regional policies. • This reflects constitutional imperatives in some countries (e.g. Germany, Italy and Spain) while, in others (e.g. France, UK, Nordics), the focus on equity issues is long-standing and ingrained. • More generally, funding flows still support the most disadvantaged areas (as in Germany and Italy, for instance, but also the United Kingdom, Denmark and Poland).

9. Changing objectives: more growth goals but equity remains important Recent developments of note: • Growing emphasis on growth and competitiveness in Sweden, many new Member States and the Netherlands. • The goal of reducing regional disparities remains a core objective. • Sustainable settlement structures important in the Nordic countries and Slovenia. • Regional capacity building highlighted in Norway, Poland and other new Member States. • More weight attached to specific regional challenges (Finland, Norway) and place-based approach (Poland). • Growing stress on sustainable development and “green growth”.

10. Changes in spatial focus: all-regionemphasis, but funding still targeted Economic crisis has not had a major impact on spatial coverage: • More targeted responses to job losses in specific locations (e.g. France); more funding for designated areas in Germany; wider coverage of SME support in the UK. Non-crisis-related developments: • Strengthening of the all-region approach (e.g. in Nordic countries, Netherlands) though funding still favours traditional problem regions • Growing stress on functional economic areas (France, England, Sweden, also Poland) • Increasing attention to specific categories of area – rural, urban, areas facing structural adjustments.

11. Changing policy instruments; more aid in the crisis but focus on broader policy measures The economic crisis has had a relatively limited impact on regional aid: • Less demanding aid eligibility criteria in France, Portugal, Spain, UK • Stress on aid-based support has grown in Greece, Ireland and some new Member States • Higher ceilings/more extensive coverage in UK, Germany, Finland • Increased budget in Germany, but reduced spending in Ireland, Italy, the Netherlands Nor has the crisis had a big impact on business environment support: • Spending brought forward in France, Portugal, Spain • Reduced levels of regional support in Ireland and Italy • More stress on innovation, international competitiveness and policy coordination (UK, Sweden, Austria, Ireland)

12. Changing policy instruments; more aid in the crisis but focus on broader policy measures Separate from the crisis, regional aid developments have generally been in the direction of reduced levels of support: • This reflects the regional aid guidelines and longer-term trends • German decision to phase out the Investment Allowance by 2014 • Rationalisation of business aid in the UK and Italy; reduced support for manufacturing in the Czech Republic Business environment support continues to grow: • Emphasis on regional programming and strategy development (Denmark, England, Finland, France, Netherlands, Sweden, Poland) • Stress on business infrastructure/innovation support (Austria, Finland, France, Italy, Netherlands, Sweden) • Focus on sub-national delivery of business support (Denmark, France, Germany, Italy, Spain, UK, Poland)

13. Changing implementation: decentralisation,and regionalisation, continuing coordination Limited impact of the economic crisis: • Most significant development in Ireland (structure and remit of departments and agencies under review). Elsewhere, no significant plans, though stress on policy coordination strengthened by the crisis (Denmark, France, Sweden, UK) Moving beyond crisis impacts: • More decentralised regional policy delivery (Denmark, Poland, UK, Netherlands, as well as Germany, Portugal) • Broader admin reforms also lead towards more decentralisation (Nordic countries, France, Latvia, Slovenia plus Spain and Italy) • Capacity constraints recognised (Greece, Cyprus, Romania, Slovakia) Central ministries remain at the heart of regional policy: • Growing focus on steering, coordination, efficiency, accountability

14. Changing implementation: decentralisation,and regionalisation, continuing coordination Over time, coordination has become a fundamental issue: • Enhanced national-level coordination: establishment of national coordination bodies (Denmark, Finland, England plus France, Germany, Italy); use of contractual approach (e.g. UK, France, Poland); informal coordination (Austria, Denmark, Netherlands) • Horizontal coordination at the regional level: mostly via regional strategies and programmes (as, for instance, in Denmark, Finland, Germany, the UK, Belgium, plus via Structural Funds programmes) • Increased policy weight attached to vertical coordination: via national-regional contracts (e.g. Denmark, Germany, Poland) co-funding (e.g. Netherlands plus countries where Structural Funds important) and informal mechanisms (e.g. Austria, Sweden, Norway)

15. Summary conclusions • Overall, this review has confirmed that regional policy is a longer-term structural policy which has not been used to any major extent as an immediate response to the crisis • However, the crisis may have longer-term implications, not least in changing the future context for policy: • For instance, it could have funding impacts (future public expenditure constraints) • It may impact on longer-term perceptions of regional challenges (more stress on sustainability?) • It may also influence policy objectives, instruments and delivery (stress on international competitiveness but with regional-level views of the challenge; focus on programmes/regional strategies; coordination)

16. The Polish perspective “Poland is currently one of the best ‘laboratories’ for regional development in the OECD area and in the EU…” (OECD Territorial Reviews: Poland,2008). • Leading beneficiary of EU Regional policy (€67 billion 2007-13). • Territorial disparities in GDP per capita persistent. • Ongoing process of administrative reform (regional governments established in 1999) • New, ‘place based’ Polish regional policy model currently emerging (e.g. National Strategy for Regional development 2010-2020). Structure: • definitions of the regional policy problem, • objectives, • spatial focus, • instruments, • delivery arrangements

17. Definition of the regional problem • New broader definition: • economic growth at national and regional scales • Regional human and social capital • Developing regional infrastructure • Sub-regional differentiation • National and regional institutional capacity • Sophisticated, multi-layered and detailed approach

18. Changing objectives • NSRD sets new set of strategic challenges: • better use of key urban areas to drive growth • countering processes of marginalisation • creating and absorbing innovation; • responding to negative demographic trends and ensuring full use of labour market resources; • improving the quality of labour resources; • energy security and responding to climate change; • proper use of natural and cultural resources; • improving the quality of transport and ICT infrastructure; • strengthening institutional capacity • Three main objectives: • emphasis on competitiveness rather than compensatory or equity-based principles • aim to spread development processes through ‘polarisation-diffusion’ principle • focus on the capacity of national and regional level institutions • Reflects ‘place based’ model, prominent in current OECD, EU thinking: • endogenous potential of all regions • territorial sensitivity in different policy actions

19. The spatial focus of policy • All regional approach • Pro-equity emphasis on allocation of funding • Algorythm for ROPs, regional contracts, special programme for eastern regions) • New ‘areas of strategic intervention • Focus on areas with problems but also on ‘drivers • Thematic and territorial criteria for designation • Ongoing work to improve coordination in cities and urban areas

20. Regional policy instruments • Territorial Contracts • Negotiated agreements between central, regional and sub-regional actors • Covers objectives, tasks, funding • Combines ‘top down’ and ‘bottom up’ dynamics • Supported by coordinating structures, strategic monitoring, conditionalities, monitoring and evaluation • Aim is to integrate national and regional inputs into regional development policy

21. Administration and delivery • Ongoing regionalisation of some administrative tasks • System for financial administration important, given expanding portfolio • Coordination is key: vertical but also horizontal, particularly between relevant ministries • Growing momentum behind evaluation for policy efficiency and accountability, including at regional level

22. Conclusion • Territorial rather than sectoral emphasis • Competitiveness rather than compensatory agenda • Place-based concept of endogenous growth • Involvement of wider range of actors in design and delivery • Elements of a new Polish regional policy paradigm.