The instruments of regional policy in European countries

John Bachtler and Sara Davies

Presentation to the Norwegian Ministry of Local Government and Modernisation, Oslo, 20 March 2015

Possible options for Norway

Regional policy in other European countries

Norway’s regional development challenges

& instruments

2 Sara Davies , European Policies Research Centre, University of Strathclyde

Overview

Sparsely populated regions• Low population

density• Market access• Narrow sectoral

structure

Skills mismatch• Skill shortages in

some regions• Fewer skilled jobs

elsewhere• Pockets of high

unemployment

All regions• Framework

conditions• Clusters• Bottom-up

strategic capacities

3 Sara Davies , European Policies Research Centre, University of Strathclyde

Key development challenges in Norway

Periphery

• Regional Investment Grant & Regional Risk Loan• Social Security Concession• Action zone• Small capacity building measures

Skills

mismatch

• Assessments of transport infrastructure impact on local labour market size

All/Any regions

• Global centres of expertise• Centres of expertise• Arena programme• Urban development strategies

4 Sara Davies , European Policies Research Centre, University of Strathclyde

Main regional policy instruments in Norway

Context & capacity

Business

(Market access)

costs

Quality of life

Agglom-eration effects

5 Sara Davies , European Policies Research Centre, University of Strathclyde

Regional policies for sparsely populated regions

Norway Other countries

Higher education (networks) National National (e.g. FI SE UK)

Public research facilities National DENational

Business parks & related infrastructure

National AT DE EE FI FR IT CH

Education & training facilities – F2F or ICT

National DENational

Local capacity & strategy building

Bulyst, LUK, Programme for Small Municipalities

AT DE HU PT CH

6 Sara Davies , European Policies Research Centre, University of Strathclyde

Building context & capacity in sparsely populated regions

Norway Other countries

Investment grants Regional Investment Grant

EU28 except AT EE NLDK only SMEs

Loans & interest rate subsidies

Regional Risk Loan AT DK FI FR DE IT PT ES SI UK

Guarantees AT BE DE FI SI UK

Tax relief & credits BG HR CZ FR GR MT SK CH

Seed capital funds Seed capital funds

Venture capital funds DK FI

Aid for business training HR CZ DE EE SE

Aid to SMEs/start-ups only BE DE HR CY CZ DK LT PT SE

7 Sara Davies , European Policies Research Centre, University of Strathclyde

Building business strengths in sparsely populated regions

Norway Other countries

Transport infrastructure BG EE FR IT NL ES National

ICT & broadband DE HR National

Transport aid FI MT SE

Subsidised ferry travel HR UK

Other costs eg • Wage subsidies• Relief on social

contributionsSocial security concession

• AT CZ EE FI FR DE GR LT LU MT PL PT RO SK SI

• BE(B) BG RO SK ES SE

Aid to visit trade fairs etc PT SE

Exporting/marketing advice National

8 Sara Davies , European Policies Research Centre, University of Strathclyde

Reducing (market access) costs in sparsely populated regions

Norway Other countries

Expand the pool of skilled labour National

Assess LM effects of transport infrastructure

National

Support local supply chains National National (local/regional agencies)

Knowledge spillovers - business networks

National DE UK

Entities tasked with building/ supporting links to external agglomerations

National AT DE IE UK

9 Sara Davies , European Policies Research Centre, University of Strathclyde

Building agglomeration effects insparsely populated regions

Building quality of life insparsely populated regions

10 Sara Davies, European Policies Research Centre, University of Strathclyde

Norway Other countries

Solidarity mechanisms Action zone DE IT ES

Fiscal equalisation & interpersonal redistribution

Yes Most countries

Grants/loans for local infrastructure

BG HR CZ EE FR RO SI

Support for households in Action Zone HR EE FR LT

Funding for local services MERKUR EE

Funding for ethnic/ linguistic minorities

EE IE

Raise skills

Spread effects

Labour mobility

Policy coord-ination

Reduce job costs

11 Sara Davies , European Policies Research Centre, University of Strathclyde

Regional policies to address skill mismatches across regions

Reduce employment costs in structurally weaker regions

Norway Other countries

Wage subsidies CZ EE FR DE LT LU MT PL RO SK SI SE UK

Relief on social contributions Social Security Concession

BE BG RO SK ES SE

Raise skills of target groups Norway Other countries

Grants for training workers HR CZ DE EE SE

Policy coordination Norway Other countries

Local partnerships on skills National

12 Sara Davies , European Policies Research Centre, University of Strathclyde

Support for employment and skills

Support economic spread Norway Other countries

Transport infrastructure Assess LM effects BG EE FR IT NL ESNational

Transport aid HR FI MT SE UK

ICT/broadband National DE HRNational

Planning regulations National

Support labour mobility Norway Other countries

Public transport National National

Public employment services National National

13 Sara Davies , European Policies Research Centre, University of Strathclyde

Support for economic spread and labour mobility

Regional strategy building

Regional enterprise & innovation

Broader policies

14 Sara Davies , European Policies Research Centre, University of Strathclyde

Policies to enable all regions to contribute to national prosperity

Norway Other countries

Broader economic & social policies

National National & EU level

Support for existing strengths/clusters

Arena, Centres of expertise,Global centres, Urban dev’t strategies

DE FI FR NL

Funding for enterprise & innovation

National NationalEU Cohesion policy

15 Sara Davies , European Policies Research Centre, University of Strathclyde

Enabling all regions to contribute to national prosperity

Financial instruments Bottom-up

strategies

16 Sara Davies , European Policies Research Centre, University of Strathclyde

Shift of emphasis in EU Cohesion policy

Loans & low interest rates

Guarantees Seed capital

Venture capital

Business angels

Disadvantaged areas only

AT CZ DK DE IT NO SI ES SE

BE DE SI SE CH

NO DK IT UK

Favour disadvantaged areas

FI FR HU PT UK

FI IT FI HU

Regional delivery of national funds

FI FR CH FI FR FI FI SE UK

Sub-national funds

AT DE PL UK AT DE PL DE AT DE FR UK

17 Sara Davies , European Policies Research Centre, University of Strathclyde

Financial instruments with a regional dimension

+ -

Administrative costs

Risk of displacement

Demand vs supply?

Regional funds = small

Evergreen

EU CP rules

Market gap

18 Sara Davies , European Policies Research Centre, University of Strathclyde

Financial instruments for regional development

Holistic strategies forregional development

Norway Other countries

Top-down strategies – NUTS 1 or NUTS 2

Action zone (FI) FR IT NL NO PL CHEU Cohesion policy

Packages for smaller regions undergoing structural change

EE FI FR LV MT NL SI

Packages for economic zones with potential

BE IT LV LT PL UK

Bottom-up strategies in smaller regions

AT HU PT CHEU Cohesion policy

19 Sara Davies, European Policies Research Centre, University of Strathclyde

Main themes Type of region Local involvement

Integrated sustainable urban development (ISUD)

Environmental protection, Social inclusion

Urban Delegation of some tasks to local level

Integrated territorial investments (ITI)

RTDI, SME competitiveness, Low carbon economy, Social inclusion

Mostly urban but also others

Significant e.g. strategy design & implementation, project selection

Community-led local development (CLLD)

Varied Urban, rural, peri-urban

Significant but not including strategic management

20 Sara Davies , European Policies Research Centre, University of Strathclyde

Integrated territorial developmentin EU Cohesion policy 2014-20:

5% of funds ring-fenced

+ -

Administrative burden

Depends on local capacity

High local expectations

Politicised decisions

Holistic strategies

Local control –> builds capacity

Accountability

21 Sara Davies , European Policies Research Centre, University of Strathclyde

Integrated territorial development strategies

Socio-economic

need

Other policies

Institutional context

Evidence of effects

Funding available

22 Sara Davies , European Policies Research Centre, University of Strathclyde

Factors affectingregional policy options

Context• Gaps in HE,

R&D, education/ training infrastructure?

Business• Guarantees• Tax relief• VC funds• Training aid• Start-up aid

Costs• Transport

links• Transport aid• Aid to visit

trade fairs

23 Sara Davies , European Policies Research Centre, University of Strathclyde

Possible options for sparsely populated regions

Skills • Funding for

training workers

• Active labour market measures

Coordination• Local

partnerships

Economic spread• Transport

infrastructure?• Planning

regulations

24 Sara Davies , European Policies Research Centre, University of Strathclyde

Possible options to address skill mismatches

Financial instruments• Guarantees• Venture capital• Business angels

Territorial strategies• Areas undergoing

structural change• Areas with potential• Bottom-up strategies

25 Sara Davies , European Policies Research Centre, University of Strathclyde

Possible options for all / any regions

Europe

• Wide variety of RP instruments• New EU initiatives (FI & territorial strategies)

Norway

• Varied challenges• Range of existing instruments

Options

• Possibilities for different aspects of RP• But need to tailor to economic & policy context

26 Sara Davies , European Policies Research Centre, University of Strathclyde

Summary of conclusions

Thank you for listening

More Information is available at:

http://www.eprc.strath.ac.uk/eorpa/default.php

27 Sara Davies , European Policies Research Centre, University of Strathclyde