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Northern Sparsely Populated Areas - Launch of OECD report, Brussels, 13 March 2017

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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

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Northern Sparsely Populated Areas - Launch of OECD report, Brussels, 13 March 2017

  1. 1. OECD TERRITORIAL REVIEW OF THE NSPA Committee for Regions Brussels 13 March 2017
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 14. THANK YOU FOR YOUR ATTENTION 1413 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

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