Book review, Economics, Education and Science

The emphasis in the policy is always to ensure that the Union’s contribution to regional development adds maximum value. However, the member states must be active in their own regional policies aimed at increasing competitiveness. This is an undoubtedly positive side of a recent book by Swedish researchers.

Although, in theory, Swedish central government has generally withdrawn from decision-making and strategies in regional policy, local governance in this sector have been coordinated by regions, which increased the latter’s capacity. For better coordination, about hundred Swedish regions established a “laboratory” for knowledge sharing and capacity building. Ten authors in the book (edited by F. Rokar and P. Tallberg) described regional development in various policy areas providing eloquent formulation of regional model development in Sweden.*)

*) Developing Regions for Regional Development (Eds.). : Linderoths Publ., Sweden; –Reglab. 2014. - 135pp.

Regional policy in the EU

Among three EU regional policy funds: European Fund for Regional Development (EFRD), European Social Fund (ESF) and Cohesion Fund a  special EU fund - European Regional Development Fund - operates in all member states and co-finances with governments efforts in physical investments; though funding is mainly concentrated on the poorest regions in terms of GDP per head. The Cohesion Fund co-finances mainly transport and environment projects in the member states whose GNP is less than 90% of the EU average.

See: http://ec.europa.eu/dgs/regional_policy/index_en.htm

These funds contribute to three EU objectives: 1.Convergence, 2. Regional Competitiveness and Employment, and 3. European Territorial Cooperation. In the EU, the “regional objectives” concern about 85 regions with a total population of  over 154 mln (in 18 member states) and per capita GDP at less than 75 % of the Community average, and another 16 regions with a total of 16.4 mln inhabitants and a GDP slightly above the threshold. 

The budget under the Convergence objective is €282.8 bln for the coming six years; it is split in the following way:  €199.3 bln for the convergence regions, while €14 bln are reserved for the “phasing-out” regions; and €69.5 bln for the Cohesion Fund (it applies to 15 States).

Main competing priorities in the MFF (EU Budget for 2014-20) (in %): cohesion: about 34% (reduction from 37% in the previous MFF for 2009-13); agriculture & fisheries: about 29 % (an increase from 27% previously; CAP would receive a total of € 361,5 bln over 7 years which makes it more than € 50 bln per year; by 2020 the CAP budget will represent 1/3 of the EU budget); competitiveness: about 13% (increase from 11% before; spending on research and competitiveness are becoming important feature in the new budget; and rural development and environment: about 10%. 

The European Social Fund (ESF) plays a fundamental role in supporting EU member states' investment in human capital and thereby in strengthening the competitiveness of the European economy as it is emerging from the crisis. Every year the ESF assists over 15 million people in Europe by helping them to upgrade their skills, facilitating their integration into the labour market, combating social exclusion and poverty and enhancing the efficiency of public administrations.

In 2014-2020, for the first time in the history of EU Cohesion Policy, the EU budget for cohesion represents about 23% allocated to the ESF.

Swedish regional model: new approaches

Global economic crisis made a negative impact on nation’s regions: companies were closing down, unemployment increased with early retirements and general stagnation. Hence regional policy becomes an expensive matter: about 6,5% of GNP is allocated for weaker regions (p.30).  The authors argued that “the time is gone… with principle of  promising public services and jobs for each and every farm, even in the very outback of the country”. (p. 31).

The new principle - “Life and growth in all of Sweden” means creating conditions for regions to develop by their own capacity and their own possibilities. The new regional policy, as one of the authors argued (J. Edling in “Logic of Regional Growth”), was “to crate competitiveness in the whole country” while using other forces than “just market investments” (ibid).

Optimal solution lies mainly in focusing on raising awareness of economic responsibility rather than “instituting different kinds of financial support for regions and companies”; projects that are not part of regional strategies should be avoided. 

Another solution lies in increasing weak regions’ economic integration by coordinating available resources. This is done by providing adequate expertise, R&D and skills to regional companies alongside various financial instruments facilitating regional growth.

Finally, support from the EU structural and social funds shall be coordinated with the regional development reforms and “directed towards creating 6-8 strong regions with a bigger economic autonomy” (p. 32).  

Though it is still rather unclear how weak regions can increase their ability to “connect to global economy”, authors insist it should be done mainly through export potentials. One thing is clear enough: regions can prosper by combining industrial and business development, through closer connections in infrastructure, education and labour market policies.  

E-health as an example

The book shows how different regions in Sweden are dealing with various policy areas’ problems and how the “regional potentials” and institutional capacities combine providing a real impact. One of such examples deal with a very perspective and urgent policy, i.e. e-health issues, in “e-health in Norrbotten” article by A. Lindberg & K. Sjaunja.

Interest for distance bridging technologies and infrastructure for ICT was a priority in Nordic states since 1995. For the Baltic States these aspects are important as well in view of demographics and geography, i.e. aging population, decreasing welfare and increasing number of dependants; hence, increasing number of people with ill health. Besides, communication infrastructure in low density regions becomes problematic.

In contrast to Sweden, the Baltic States are subject to all possible EU funds; however for them the task to make the right priorities is equally important. For example, health care shall be quickly accessible with adequately safe medicine and doctors’ quality. Emulating from Sweden, the Baltic States can start this work with regional centers for distance bridging health, DBH or/and with local universities.

“E-health solutions are environmentally friendly, as they decrease travel for staff, patients and their relatives. They give increased access to leading experts and lower costs. It is a wise use of human resources and finances” (p.60).

A positive sign is that in most Baltic States’ regions there already exist advanced ICT infrastructure, e.g. most homes have PCs.

It has to be acknowledge in the conclusion: the book is a good reference source to the study of regional policies in the Nordic States, which should be on a shelf of any scientist or academic in European studies.