Presentation at the launch of the report on Northern Sparsely Populated Areas at the Committee of the Regions, Brussels. For more information see: http://www.oecd.org/gov/regional-policy/oecd-territorial-reviews-the-northern-sparsely-populated-areas-9789264268234-en.htm

1. OECD TERRITORIAL
REVIEW OF THE NSPA
Committee for Regions
Brussels
13 March 2017

2. • Findings – unique attributes of the NSPA in a European context and the
importance of productivity and workforce activation to future growth.
• Overview of recommendations at an NSPA, country and regional scale
– complementary package of recommendations to increase future
prosperity and wellbeing.
• Shared policy challenges – although there is significant internal diversity
there are common challenges related to issues such as population ageing,
service delivery, smart specialisation, and connectivity.
• Recommendation highlights – Adapting policies to the unique
circumstances of these regions, enhancing cross-border cooperation to
address common challenges, and supporting a partnership approach
between national governments and regions.
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas 2
Presentation outline

3. • 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
3
Northern Sparsely Populated Areas
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

4. 4
Relatively strong performance in an OECD
context
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0 10000 20000 30000 40000 50000 60000 70000
GDPpercapitagrowth2000-2012
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.
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

5. 7 Nov 2016 OECD Territorial Review of Northern Sparsely Populated Areas – Working Party on Rural Policy 5
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
GDPpercapitagrowth2000-2012
Initial GDP per capita in 2000 (costant PPP, USD 2010)
NSPA TL3 regions NSPA average Linear (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.

6. 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%
6
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)
SwedenNorwayFinland
Only one of the NSPA regions has been affected by the so-called ‘rural paradox’
whereby productivity growth is generated by shedding labour.
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

7. 7
Growth is concentrating in a smaller number
of places
-1%
0%
1%
2%
3%
4%
5%
-5000 0 5000 10000 15000 20000
Averagegrowth
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.
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

8. 8
NSPA regions lag country averages on key
measures
-20
-15
-10
-5
0
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.
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

9. 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)
9
Recommendations at a regional, country and
NSPA scale
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

10. Policy themes Key challenge
Demographic change and
labour markets
Population ageing which will reduce the size of the future labour force, and there are
structural problems in local labour markets including higher levels of youth
unemployment and welfare dependence.
Service delivery innovation Demographic change and fiscal consolidation continuing to place pressures on public
infrastructure and services.
Infrastructure and
connectivity
Remoteness from markets and long distances between urban settlements, which is
compounded by an often challenging topography and harsh climate (e.g. maintenance
costs).
Increasing entrepreneurship The sustainable development of the NSPA is dependent upon facilitating new
businesses in areas such as ICT related services, tourism, niche manufacturing, and
food production.
Smart specialisation and
low-density economies
Research and innovation resources are limited across the NSPA and high technology
sectors constitute a small part of these economies. Because home markets are small
growth will come from developing the tradeable sector.
Linking indigenous
communities with regional
development
The Sami have an important role in regional economies; however, the connections
with regional and rural development strategies are often inconsistent and weak.
10
Common challenges facing NSPA regions
Summary of policy challenges for NSPA regions
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

11. • Continue to ensure that the unique characteristics of the NSPA regions (a
harsh climate, long distances from markets, and a small number of isolated
settlements) are effectively incorporated into national and European level
policy settings for regional and rural development, and service delivery. This
includes:
o Recognising the importance of improving infrastructure for connectivity;
o The need to focus scarce economic development resources in areas of absolute advantage;
and,
o Accounting for the higher unit costs of delivering public services (due to remoteness, low
population densities, and the harsh climate).
11
National and EU support for low density
economies
Sweden allocates close to 20% of its ERDF
allocation to addressing transport bottlenecks
and broadband access which is mostly
allocated in the northern regions.
Lapland’s smart specialisation strategy is
focussed on exploiting and commercialising arctic
resources and conditions, and combines sectoral
and cross-cutting approaches.
Norway has a system of regionally
differentiated employer social contributions
with a 0% rate applying in Finnmark and
northern Troms (compared to 10.6% in the
southernmost zone).
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

12. • Enhance existing cooperation across the NSPA with a focus on addressing shared
challenges and opportunities with objectives such as:
o 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).
o Improving the functioning of labour markets, for example, by harmonising certification
and skills requirements for similar occupations, and facilitating cooperative arrangements
between educational institutions.
o 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.
o 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.
12
Enhancing cross-border collaboration
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

13. Finland Norway Sweden
Setting up self-governing directly
elected regions which will receive
healthcare and social services from
municipalities, and some regional
development functions from national
agencies.
White Papers on regional and
municipal reform (greater
autonomy and improving horizontal
and vertical coordination
mechanisms).
Proposals to enlarge the
geographic boundaries of
regions and shift to County
Councils taking responsibility
for regional development in the
north.
• Broaden existing Regional
Development Programme to
include commitments from key
national Ministries that achieve
mutually agreed productivity
enhancing outcomes.
• Strengthen the role regions in
setting priorities and coordinating
regional and rural development
funding at a regional level.
• Establish more effective
governance arrangements to
address skills mismatches at a
regional level.
• Further incentivise collaboration
and joint ventures between the
three northern counties (e.g.
prioritising improvements to the
transport network).
• Aligning the geographic
boundaries of administrate offices
of national ministries at a regional
level.
• Strengthen the role of the
northern counties in the
implementation of the
Government’s High North Policy.
• Strengthen the role regions in
setting priorities and
coordinating regional and rural
development funding at a
regional level.
• Ensure that proposals for
regional mergers properly
consider the costs and benefits
of these changes for
communities in low
density/sparsely populated
areas.
• Allocating a competency for
spatial planning to the body
responsible for regional
development in the region.
13
Strengthening the regional level and encouraging a
partnership approach within each country
ReformcontextKeyrecommendations
13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

14. THANK YOU FOR YOUR
ATTENTION
1413 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas