OECD TERRITORIAL REVIEW OF THE NSPA NSPA “OECD Follow - up Forum” Brussels 14 March 2017
Presentation outline • 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
Who are the high performers? Amongst top performers 54% were rural Declined to 41% (post crisis) (pre-crisis): 31% rural close to cites 33% rural close to cities 9% rural remote 21% rural remote 3 14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas
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 4
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 Urban – rural linkages 3. – 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 5
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 14 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas 6
Relatively strong performance in an OECD context Benchmarking GDP per capita performance in NSPA regions, 2000-2012 OECD TL3 regions NSPA TL3 regions OECD average 10,0% 8,0% GDP per capita growth 2000-2012 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% 0 10000 20000 30000 40000 50000 60000 70000 Initial GDP per capita in 2000 (constant PPP, USD 2010) 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 7
Process of convergence within the NSPA GDP per capita performance of NSPA regions NSPA TL3 regions NSPA average Linjär (NSPA TL3 regions) 3,5% Norbotten (SE) 3,0% Central Ostrobothnia (FI) GDP per capita growth 2000-2012 2,5% Västerbotten (SE) South Savo (FI) Pohjois Savo (FI) 2,0% Kainuu (FI) Jämtland Härjedalen (SE) Northern Karelia (FI) 1,5% Västernorrland (SE) Lapland (FI) 1,0% Nordland (NO) Finnmark (NO) 0,5% Northern Ostrobothnia (FI) 0,0% Troms (NO) -0,5% 15000 20000 25000 30000 35000 40000 45000 50000 55000 Initial GDP per capita in 2000 (costant PPP, USD 2010) 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. 14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 8
Productivity and workforce activation important to future growth Decomposing GDP growth in NSPA regions (1999-2012) Productivity Population Employment Activity rate Västernorrland 0.5% -0.9% -0.5% -0.1% Sweden 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% Norway 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% Finland Kainuu 0.0% -1.3% 0.4% -0.1% 1.6% -0.4% 0.1% -0.1% Central Ostrobothnia Northern Ostrobothnia -0.3% 0.3% 0.0% 0.0% Lapland 0.8% -0.9% 0.2% 0.0% Source : Own calculation based on OECD (2016), OECD Regional Statistics (database) 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 9
Growth is concentrating in a smaller number of places Establishment growth in NSPA Local Labour Markets (LLMs) Finnish LLMs Norwegian LLMs Swedish LLMs Log. (Total NSPA LLMs) 5% Average growth 2007-2013 4% 3% 2% 1% 0% -1% -5000 0 5000 10000 15000 20000 Number of establishments in 2007 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 10
NSPA regions lag country averages on key measures Well-being in NSPA (TL2) regions, difference with national averages North and East Finland Nord-Norge Middle Norrland Upper Norrland 20 15 10 5 0 -5 -10 -15 -20 Environment Housing Life Education Safety Jobs Civic Accessibility Community Income Health satisfaction engagement to services 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 11
Recommendations at a regional, country and NSPA scale Scale No. of recs Main themes • National and EU support for low density economies (economic NSPA 6 wide development, infrastructure, and public services) • Re-focusing cross-border collaboration and better linking it with national policy decision-making Country Finland 15 Ensuring there are competencies, incentives and mechanisms level for regions to: Norway 12 • Engage entrepreneurs in SMEs in smart specialisation linked to absolute advantages Sweden 11 • 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 Regional 7x Finnish regions 67 Better mobilise endogenous assets by: • Identifying areas of absolute advantage and value-adding to them level 3x Norwegian 38 • Working with municipalities and local businesses to improve labour regions market matching and facilitate service delivery innovation • Better coordinating and aligning planning, investment, and 4x Swedish regions 30 maintenance of infrastructure at a regional and local level • Facilitating bespoke cross-border collaboration (e.g. shared transport corridors, common tourism destinations) 179 (total) 14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 12
Enhancing cross-border collaboration • 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. 14 Mar 2017 OECD Territorial Review of Northern Sparsely Populated Areas 13
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