REVIEW OF THE NSPA NSPA OECD Follow - up Forum Brussels 14 March - - PowerPoint PPT Presentation

OECD TERRITORIAL REVIEW OF THE NSPA

NSPA “OECD Follow-up Forum” Brussels 14 March 2017

• 2016 OECD regional outlook – productivity performance of rural areas and

policy implications.

• Findings of the NSPA study – unique attributes of the NSPA in a

European context and the importance of productivity and workforce activation to future growth.

• Recommendations at an NSPA, country and regional scale –

complementary package of recommendations to increase future prosperity and wellbeing.

• Thoughts and questions to progress implementation – EU/ national/

regional levels

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 2

Presentation outline

3

Who are the high performers?

Amongst top performers 54% were rural (pre-crisis):  33% rural close to cities  21% rural remote Declined to 41% (post crisis)  31% rural close to cites  9% rural remote

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

4

What are the key drivers of productivity growth?

➢ Tradable activities are key for rural close to cities and remote rural ➢ Proximity to cities - a minimum level of density is key for economies of scale/scope and delivery of goods and services.

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

5

Policy implications

1. Identifying drivers in rural areas – Tradables (manufacturing), renewable energy, natural resources, services, fisheries, forestry, agriculture, tourism, natural amenities – Finding the niche (smart specialisation) 2. How to add value in these domains – Policy focus on enabling factors: skills, accessibility, market intelligence, institutions, innovation 3. Urban – rural linkages – Infrastructure and connectivity – Shared governance and policies 4. Demographic trends and forward looking policies – Address long term cost enhancing efficiency in service provision (planning, ICT) – Mitigation and adaptation to climate change

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

• NSPA collaboration established in 2004 (14

regions across 3 countries)

• 2.6 million people over an area of 532 000

square kilometres, which is comparable to the population of Rome inhabiting the entire area of Spain.

• Share common territorial characteristics (low

density, resource-based, and harsh climate)

• Special status recognised in Accession treaty

for Sweden and Finland to join EU in 1995

• Increasing economic and geo-political

importance to EU and respective countries

6

Northern Sparsely Populated Areas

14 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

7

Relatively strong performance in an OECD context

• 4,0%
• 2,0%

0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 10000 20000 30000 40000 50000 60000 70000 GDP per capita growth 2000-2012 Initial GDP per capita in 2000 (constant PPP, USD 2010) OECD TL3 regions NSPA TL3 regions OECD average

Benchmarking GDP per capita performance in NSPA regions, 2000-2012

Note: GDP per capita growth is measured as the average yearly growth rate between 2000 and 2012. Source: OECD (2016), "Regional economy", OECD Regional Statistics (database)

Within the context of the OECD these regions are relatively wealthy and generally growing above average.

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 8

Process of convergence within the NSPA

Nordland (NO) Troms (NO) Finnmark (NO) South Savo (FI) Pohjois Savo (FI) Northern Karelia (FI) Kainuu (FI) Central Ostrobothnia (FI) Northern Ostrobothnia (FI) Lapland (FI) Västernorrland (SE) Jämtland Härjedalen (SE) Västerbotten (SE) Norbotten (SE)

• 0,5%

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5% 15000 20000 25000 30000 35000 40000 45000 50000 55000 GDP per capita growth 2000-2012 Initial GDP per capita in 2000 (costant PPP, USD 2010) NSPA TL3 regions NSPA average Linjär (NSPA TL3 regions)

GDP per capita performance of NSPA regions

Note: GDP per capita growth is measured as the average yearly growth rate between 2000 and 2012. Source: OECD (2016), "Regional economy", OECD Regional Statistics (database),

NSPA regions are becoming closer in GDP per capita which could enhance the potential for fruitful collaboration among the NSPA regions.

Productivity Population Employment Activity rate Västernorrland 0.5%

• 0.9%
• 0.5%
• 0.1%

Jämtland Härjedalen

• 0.1%
• 0.9%

0.1% 0.1% Västerbotten 0.2%

• 0.5%

0.2% 0.1% Norrbotten 0.6%

• 0.9%

1.1%

• 0.1%

Nordland

• 0.1%
• 0.9%

0.0% 0.0% Troms

• 0.8%
• 0.5%

0.1%

• 0.1%

Finnmark

• 0.7%
• 0.9%

0.6%

• 0.1%

South Savo 0.7%

• 1.1%

0.4%

• 0.2%

Pohjois-Savo 0.1%

• 0.6%

0.4% 0.0% Northern Karelia 0.5%

• 0.7%

0.1% 0.1% Kainuu 0.0%

• 1.3%

0.4%

• 0.1%

Central Ostrobothnia 1.6%

• 0.4%

0.1%

• 0.1%

Northern Ostrobothnia

• 0.3%

0.3% 0.0% 0.0% Lapland 0.8%

• 0.9%

0.2% 0.0%

9

Productivity and workforce activation important to future growth

Decomposing GDP growth in NSPA regions (1999-2012)

Source: Own calculation based on OECD (2016), OECD Regional Statistics (database)

Sweden Norway Finland

Only one of the NSPA regions has been affected by the so-called ‘rural paradox’ whereby productivity growth is generated by shedding labour.

13 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

10

Growth is concentrating in a smaller number

• f places
• 1%

0% 1% 2% 3% 4% 5%

• 5000

5000 10000 15000 20000 Average growth 2007-2013 Number of establishments in 2007 Finnish LLMs Norwegian LLMs Swedish LLMs

• Log. (Total NSPA LLMs)

Establishment growth in NSPA Local Labour Markets (LLMs)

Source: Own calculation. The size of the bubbles represent the estimated number of workers within the LLM.

Larger local labour markets are generating business and employment opportunities at a faster rate.

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

11

NSPA regions lag country averages on key measures

• 20
• 15
• 10
• 5

5 10 15 20 Environment Housing Life satisfaction Education Safety Jobs Civic engagement Accessibility to services Community Income Health North and East Finland Nord-Norge Middle Norrland Upper Norrland

Well-being in NSPA (TL2) regions, difference with national averages

Source: Own calculation based on OECD (2016), "Regional well-being", OECD Regional Statistics

Closing the gap on the country will depend on raising incomes. In turn, this depends upon increasing productivity.

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

Scale

• No. of recs

Main themes NSPA wide 6

• National and EU support for low density economies (economic

development, infrastructure, and public services)

• Re-focusing cross-border collaboration and better linking it with

national policy decision-making Country level Finland 15 Ensuring there are competencies, incentives and mechanisms for regions to:

• Engage entrepreneurs in SMEs in smart specialisation linked to

absolute advantages

• Improve access/use of broadband and collaborate on prioritising

transport investment

• Improve labour market matching
• Engage with sectoral ministries and facilitate a partnership

approach to the delivery of key national policies Norway 12 Sweden 11 Regional level 7x Finnish regions 67 Better mobilise endogenous assets by:

• Identifying areas of absolute advantage and value-adding to them
• Working with municipalities and local businesses to improve labour

market matching and facilitate service delivery innovation

• Better coordinating and aligning planning, investment, and

maintenance of infrastructure at a regional and local level

• Facilitating bespoke cross-border collaboration (e.g. shared

transport corridors, common tourism destinations) 3x Norwegian regions 38 4x Swedish regions 30 179 (total)

12

Recommendations at a regional, country and NSPA scale

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

• Enhance existing cooperation across the NSPA with a focus on addressing shared

challenges and opportunities with objectives such as:

• Adopting a more integrated approach to infrastructure planning, investment, and

maintenance including identifying new ways to work with the private sector (this includes improving cross border planning and investment coordination to facilitate improved east – west linkages).

• Improving the functioning of labour markets, for example, by harmonising certification

and skills requirements for similar occupations, and facilitating cooperative arrangements between educational institutions.

• Encouraging a more coordinated approach between NSPA regions to smart

specialisation which builds upon core areas of absolute advantage, provides better support for SMEs and start-ups for example by addressing barriers such as access to finance, and facilitates access to external markets.

• Better linking Sami communities with regional and rural development policies to help

create new employment and business opportunities for local communities. Formalise this work programme with national governments by linking it with the Nordic Council.

13

Enhancing cross-border collaboration

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

• Cross-border collaboration is justified when common externalities can be addressed and to

increase visibility with the national/ EU level: what is the vision for the NSPA collaboration and the most important issues for you to collectively focus on over the next 10 years? In this sense the vision and strategy will determine the structure …

• Systemic links between the collaborative efforts of NSPA regions with the decision making

processes of national ministries is weak and inconsistent: what is the best structure or structures to strengthen these linkages, including between EU supported cross border programmes and key cross-national decision-making bodies (Arctic Council, Nordic Council and Barents Cooperation)?

• NSPA regions are involved in seven different EU funded cross border programmes and there is an
• pportunity to now explore synergies and complementarities: how can you streamline these

efforts, reduce administrative complexity, and focus them on a smaller number of strategic priorities?

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 14

Some observations and questions – cross border collaboration and governance

• Key argument: strategically important, relatively prosperous but face strategic challenges, and

EU funding plays a key enabling role in lifting productivity

• Extra support for low density areas is broadly consistent with practices in other OECD

countries that face these challenges e.g. Canada and Australia. The rationale is based on the higher unit costs of delivering public services and the additional barriers faced by business (e.g. access to finance and distance).

• Future changes to support should be clearly tied to policy objectives and provide

transparency about the costs and results from it. Future changes to ESIF funding for these places should account for:

• The importance of physical infrastructure for improving connectivity
• The need to focus scarce resources in areas of absolute advantage, and facilitating value-adding linked to

them

• The impacts of “permanent disadvantages” (remoteness, low population densities and the harsh climate)

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 15

European Structural and Investment Funds: the big picture!

• Regional agencies tend to operate in a silo fashion and orientate investment strategies to

different European funding streams, which reduces scope for co-invest with national governments and the private sector. How can you develop a more coherent approach to ERDF, EAFRD, and the ESF at a regional level?

• There is also scope to better package ESIF between regions where it can generate cross-

border benefits and significant private investment. What incentives could be put in place to encourage cross-border collaboration and the pooling of resources?

• There is also scope for national governments/ regions to work together to “scale up”

business and investment opportunities (clusters/ infrastructure projects) to develop sufficient scale to access European (and other) loan facilities. What are the skills/capabilities, governance and funding gaps which could be addressed to realise these opportunities?

17 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 16

Increasing the efficiency and effectiveness of European funding

Theme Key recommendations Infrastructure and connectivity

• Better coordinating infrastructure planning, investment and maintenance

at a regional level (and informing national priorities)

• Co-investment in broadband

Innovation and entrepreneurship

• Adapting national innovation programmes and instruments for rural

economies

• Facilitating access to capital for start-ups and SMEs
• Incentivising cross-regional collaboration (e.g. R&D)
• National tourism strategies and “scaling up” destinations

Service delivery and skills

• Incentivising cross-regional collaboration
• “Rural proofing” national rules and regulations
• Facilitating/ diffusing innovations in service delivery and procurement
• Support/ resourcing for skills assessment and matching

Governance

• Linking regional and rural development policies
• Agreements to adapt sectoral policies to regional conditions
• Skills, capacities and autonomy for regional political bodies

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 17

National governments and the NSPA regions

• Vision and structure: How do you organise better collectively? EU Macro-region, Nordic Council,

loose network …

• EU-level and national governments: Importance of the coordinating role of the national

ministries responsible for regional and rural development

• Regional level: What are we doing already (but could do better)? What are the gaps? Who and

how including prioritisation, timing, costs and interdependencies

• “What works” in implementation:

– Look after your own backyard first! Quick wins to build momentum and build credibility – Utilise existing networks and relationships – Champions matter (political and administrative) – Collaborative approach to building understanding and ownership within regions – Importance of regular events and milestones to monitor progress and celebrate achievement

18

Initial thoughts on next steps

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

• Facilitating linkages with other OECD projects (e.g. South Sweden, Review of Mega-region of

Western Scandinavia)

• Involvement in other OECD activities e.g. OECD Network of Mining Regions (TBC) or as peer

reviewers on OECD projects

• Seminar on low density economies in November 2018 (TBC) – special focus on the

implementation of the NSPA recommendations

• Options with higher level of commitment (financial/ time):

– Work with individual regions or groups of regions (Territorial Reviews of regions, thematic reviews e.g. rural service delivery, indigenous communities, and reviews focusing on municipal and regional reforms) – 2-3 year implementation programme (mix of activities including regular implementation workshops, further analysis on key issues, seminars with international experts, policy tool-kit to guide delivery) – Monitoring Review of the NSPA – probably in 3-5 years time (assessment of progress and new analysis on 2 key policy issues)

14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 19

Next steps/ implementation: potential role of OECD

THANK YOU FOR YOUR ATTENTION

20 14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas

chris.mcdonald@oecd.org