Regional Policy in Europe

S.S Artobolevskiy

• Publisher: Routledge
• Year: 2012
• Print ISBN: 9781138164628
• eBook ISBN: 9781135074159
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

Based on the author's extensive research in the field, this book analyzes regional policy for the whole of Europe. Comparing East and West, it offers a new model of regional policy and gives an overview of the direction that it may take in Europe as a whole. Topics covered include: the evaluation of regional policy; its main aims; its "infrastructure" in Western Europe; its form in Eastern Europe; and the development of regional policy from 1917 to the 1990s. The book is intended for professionals and academics working in the areas of regional studies, economics and policy studies.

CHAPTER ONE

Regional Policy within the System of State Socio-Economic Activity

Although this book is devoted to the analysis of regional policy, the author does not overestimate its role in the location of economic activity and the population, and in the solution of territorial problems. Even within the framework of the socio-economic activity of the state (let alone the private sector), there are more powerful factors influencing the processes of regional development.

The main task of this chapter is to show the role of regional policy within an arsenal of state measures, its uniqueness, its theoretical bases and the common trends in its development.

The role of the state in the location of the economy and population

The evolution of the capitalist system in advanced countries during post-war periods is staggering. Shocks, connected with the world economic crisis of 1929-1932, and, later, war (partly a consequence of this crisis) threatened the existence of the system and forced a revision of the socio-economic basis of the capitalist system. The state took on responsibility for the social sphere (for the realization of the concept of a welfare state – for details see below) and introduced strict rules for the functioning of the private sector. Now any private company operates, in advanced countries, within the relatively strict framework instituted by the state. A significant part of its decisions must be co-ordinated with the state, including the location of any new ‘capacities’ (factories, offices etc), and, sometimes, the expansion (modernization) of existing ones. This control is actually stricter than in countries with a planned economy (see Chapter Four).

In the mass media, and even in scientific publications, authors frequently speak of a return to the unregulated market of the 19th century as a more effective model of capitalism. In reality, there is a shift in the methods of state control of the economy (and society) from the direct (the existence of a significant state sector, grants etc.) to the indirect (the encouragement of private companies by the removal of administrative restrictions, the provision of necessary information, the creation of a more favourable investment climate etc.). Even at present, in advanced countries, privatization is initiated and carried out by the state, and represents not a withdrawal of the state from the economy, but rather a shift in the method of its management (‘The privatization’ 1986). In any western model, the market economy is not unregulated. The state does not abandon the economy, but changes the arsenal.

Although the concept of the welfare state emerged in the 1920s and 1930s, its realization started at the end of the 1940s and beginning of the 1950s. Programmes of construction of cheap housing (so-called ‘social housing’) for relatively poor groups of the population in Great Britain, the Netherlands and other countries of the West was undertaken in the 1930s, and the scope of social insurance was expanded etc. However, these programmes were not comparable with those initiated during post-war decades.

At present, in advanced countries, the state guarantees to all citizens a minimum level of income, the availability of affordable housing, education, medical services, and infrastructure (including social). However, the level of state care differs strongly between countries: social housing, for example, is provided almost immediately in the Netherlands, whereas waiting periods are normal within the British system. The quality of the housing, and its position in the social space vary. Similarly, the size of pensions and unemployment benefits etc., differ. Theoretically, within an individual country, the state provides assistance to all inhabitants at one level – where they live. In reality, regional distinctions can be observed in this assistance, frequently linked to purely spatial factors (for example, the geographical position of the area).

It would be incorrect to consider the creation of the concept of the welfare state as purely an enforced measure, an answer to crises. At present, the majority of political forces consider the state to be a body which is obliged to take care of human values and, hence, to ensure a minimum quality of life for the whole population. This does not mean, however, the economies of advanced countries should suffer because of state social activity and indeed, only economic success provides the state with the resources for social programmes. Even the Thatcher proposals – the reduction of public spending, the diminishing role of the state, the reliance on market forces etc. – never put in doubt the necessity of state assistance for the unemployed and national minorities. The emphasis was simply placed elsewhere – on delivering this help to those who really need it, to avoid unnecessary overspending on the support of spongers.

The post-war period was characterized by the strengthening of state intervention in the economy. Stricter control of the development of the private sector was introduced, and the state sector increased. The expansion of the latter was encouraged by the nationalization of a number of economic sectors and industries (electrical power production, coal mining, black metallurgy etc.), which were generally unprofitable and required modernization (but, at the same time, were necessary for the functioning of the economy as a whole). However, not only unprofitable old sectors were nationalized, but also modern and more profitable ones (for example, in France and Great Britain). Even after the denationalization campaign in the first half of the 1980s, the state’s share in a number of sectors of the economy and industry of western Europe still exceeded 50–75 per cent (Williams 1987, p.83). Thus, although there are sectors and industries with virtually no state control, their number is increasing only gradually. State companies generally functioned under the same rules as private companies. This permitted state assistance to them to be minimized, preventing a monopoly situation in a number of cases, and supporting competition in the market etc.

Within the framework of the welfare state, and in the course of realizing new economic policy, the need to regionalize existing structures has become apparent. This has been reflected in the structure of new management bodies (even those relating purely to the economy), which were decentralized to incorporate regional branches. For example, in Japan, the Ministries of Foreign Trade and Industry and Construction have regional branches. There are also regional branches of the Ministry of Trade and Industry, and a number of other ministries, in Great Britain, as well as in France…

For the maintenance of a certain minimum standard of living for the population in peripheral agricultural areas and in central regions (including wider issues such as a sufficient infrastructural provision), the state has to spend a certain amount per head of population. For peripheral agricultural regions, the creation and repair of roads, the maintenance of regular transport connections, and the support of schools, hospitals and libraries, will often require more resources. Distinct regional characteristics require not only the redistribution of state resources, but also the adaptation of policy methods to fit local conditions. Where, for example, in the southern regions of Scandinavian countries the state can interest private business in the realization of certain industrial and infrastructure projects, in northern regions it frequently has to undertake such projects itself (Diem 1979). A similar picture has been observed in Italy, although there it is the South of the country which is in a similar position to the Scandinavian North (King 1985).

Significant spatial differences can be observed (in advanced countries) in the dependence of both the population on social assistance from the state, and of regional and local authorities on financial flows from central government. In regions where there is a concentration both of new sectors/industries and of relatively well-off groups of the population, regional and local authorities receive more in the form of local tax revenues than their counterparts in areas where there is a dominance of old manufacturing industries, and generally more marginal groups of the population. Accordingly, the state has to grant a greater volume of help to the latter regions.

Even the purely social problems which confront the state cannot be solved simply through the transfer of resources from rich to poor regions. Unemployment benefit only partially compensates for the personal negative social-psychological consequences of not having a permanent job. However, the resolution of purely social problems often cannot be achieved without a link to the economic sphere – for many years in Great Britain and France, for example, state companies in old sectors were subsidized with the principal purpose of preserving working places in depressed regions (Williams 1987).

The role of the state in the regulation (and stimulation) of internal migration is very important (and this can be partially attributed to regional policy). At the start of the 1950s in many countries of western Europe, and in Japan, the state stimulated the migration of labour to where employment opportunities existed. This was then considered the best way of dealing with unemployment (later the concept of work to the people came into vogue).

In the 1960s and 1970s, the state had already stimulated the process of suburbanization, the decentralisation of the largest centres, putting significant resources into housing and infrastructure construction in areas close to agglomerations. The migration of the population from agglomerations, especially the most qualified staff, was directly encouraged (eg. through grants compensating the cost of moving).

In the 1980s, the state began to encourage the process of gentrification and huge sums have been spent on the revitalization of the inner city areas of agglomerations, with the parallel support of suburbanization. In general, the dependence of migration movements on state policy is clear. State help (or the absence of it), granted either directly (through the availability of state houses/flats, as in new towns) or indirectly (through the development of infrastructure and the economy in designated areas), leads to the movement of a significant part of the population.

Similarly, the shifts in location of the economy are, to a considerable degree, determined by the state’s activity. The state directly owns a significant part of the country’s economy, and regulates the activity of the private sector. The activity of the state is often dictated by the need to solve social problems, and is not purely motivated by market reasons. For example, the support of old industries, which cannot survive without assistance, encourages the preservation of an existing pattern of location. At the same time, the support of new sector development – micro-electronics, instrument-making, business services etc. – leads to its concentration, in the initial stages of development, in the largest regions and centres.

The infrastructure created by the state has the same significant effect on the location of various sectors and industries in the economy. New facilities gravitate towards highways, new towns, and industrial parks. Among the most dynamic current growth poles are areas adjacent to the largest airports (Schipol in the Netherlands, Orly in France, Heathrow in Great Britain) and ports (Rotterdam, Amsterdam, Antwerp), the development of which is promoted by the state.

The state, largely, supports education and training, culture, public health, the protection of the environment, and housing construction. All this determines the opportunities for a particular region/area.

The power and opportunities for action of local authorities are great, and not only in the social sphere. Current rigid planning control powers can block the progress of any new project, or local authorities can stimulate economic development in an area. Thus, the aims of local authorities can coincide with those of central authorities, although frequently they contradict them (simply because local authorities only take into account the interests of their own areas).

Thus, the dependence of the population and the economy on the state, including in aspects of its location, is clear. In many cases, however, the state does not pursue pre-determined spatial purposes, and does not aim to regulate regional development through intervention. In resolving other problems – such as the improvement of the population’s living conditions, the levelling of social disparities, the reduction of unemployment, the increase in economic competitiveness – the state largely defines the processes of regional development. This knock-on effect of the solution of these other problems can, in many cases, also promote, as well as hinder, crisis in regions. Only within the framework of a government regional policy, as already noted, are spatial purposes regarded by a state as the primary ones. Thus, it should be understood, that all the above mentioned areas of state activity have much more significant effects on the spatial structure of the population and economy, than pure regional policy (Higgins and Savoie 1988). At the same time, the latter is an integral part of a state’s activity. In an analysis of regional policy, the following two extremes must be avoided: regional policy can do everything or nothing. It is better to accept from the start that it is of limited validity.

During the last ten to fifteen years, a key re-evaluation of the role of the state in the regulation of socio-economic development has occurred. Over-expenditure of tax payers’ money, the low efficiency of a huge bureaucratic machine etc. (see below) has been used to explain the inability of a state to deal with many problems. For advanced countries, such statements are not new: intense discussion on the role of the state began in the 1920s and has been periodically revitalized (McCrone 1969, where it is shown in an example of regional policy). In former Socialist countries (at official level) it was only in the 1980s that any doubt was cast on the positive influence of any socio-economic activity of the state.

Marked synchronization in the appearance of the question relating to the role of the state (as well as similar terms emerging in scientific literature and the media) in both East and West European countries points to the possibility that the processes may be uniform, and may be linked to Kondratiev cycles (ie. the differing cycles have uniform consequences in both East and West).

In the 1970s and 1980s, in the majority of developed countries, regional socio-economic disparities have increased (albeit slightly) (Dunford and Kafkalas 1992). The division of advanced countries into a centre and periphery has become more marked. This division is only partially explained by geographical (and economic) factors, and also has a political and social dimension. The periphery becomes an internal colony, controlled from the centre (see Chapter Two). Differences in the quality of life of the population, in its widest sense, are also amplified, and result in the increase of social, and particularly ethnic, tensions (Clout 1986, Williams 1987). In many cases there are also national-ethnic and linguistic characteristics which separate the core from the periphery. One can find examples of this in CIS/Russia, Great Britain, Belgium and France (details later in this chapter).

If, previously, the centre and the periphery differed principally in terms of quantitative parameters, more qualitative factors have currently emerged as highly important. The analysis of population censuses in Great Britain from 1951 to 1991 shows that, in the structure of the manufacturing industry (as well as of the service sector and the economy as a whole), the regions of the country are becoming increasingly uniform, and there is a clear trend towards alignment in some the newest sectors/industries. In reality, a significant part of the newest industries in the North are branch plants of companies based in the South or in other countries, and specialize in mass production. Such branch plants are especially vulnerable during crises (Townsend 1983). Thus, the centre is characterized not simply by a high share of electronics, but also by a prevalence of the company headquarters, research and marketing divisions, and specialised enterprises, often exploiting extensively R&D and highly qualified personnel. Analyzing data of directories of research centres in Europe, one can see that their highest concentration is in a limited number of centres – London, Paris, Brussels, Milan etc. A branch plant economy created in crisis regions, having solved neither the problem of unemployment, nor achieved stability of employment, creates a new set of difficulties. The professional and social spectrum of possible employment occupations has been reduced, the problem of male unemployment has become more acute, the disintegration of the local economy has increased, and the influence of the local authorities has been reduced.

Other parameters of backwardness and crisis have required changes in traditional regional policy, which has become less effective under changing conditions (Gorzelak 1988, Hilpert 1991, Townroe and Martin 1992). Details of the evolution of regional policy will be given later, but an initial brief description of its crisis is provided here.

The current crisis of regional policy is linked to the transition to a post-industrial society, the internationalization of the economy, the move away from the idea that ‘big is best’ in industrial plant size, new stages in technological progress, and the slowing of the rate of economic growth etc. In short, regional policy has ceased to correspond to the new socio-economic reality.

The direction of the reorganization of regional policy is, in many respects, defined by the role of the state in society. In advanced countries, the state ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Introduction
• 1. Regional Policy within a System of State Socio-Economic Activity
• 2. The Main Directions of Regional Policy
• 3. The Mechanism of Regional Policy Realization
• 4. Regional Policy in USSR/CIS/Russia and the Opportunities for the Practical Implementation of Foreign Experience
• Conclusion
• References
• Author Index
• Geographical Index
• Subject Index