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

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

• 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

• 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

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Northern Sparsely Populated Areas

13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

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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

GD

P p

er c

apita

gro

wth

200

0-2

012

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.


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

GD

P p

er c

apita

gro

wth

200

0-2

012

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.

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%

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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)

Sw

ed

en

N

orw

ay

Fin

lan

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Only one of the NSPA regions has been affected by the so-called ‘rural paradox’

whereby productivity growth is generated by shedding labour.


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Growth is concentrating in a smaller number

of places

-1%

0%

1%

2%

3%

4%

5%

-5000 0 5000 10000 15000 20000

Ave

rage

gro

wth

20

07-2

013

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.


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NSPA regions lag country averages on key

measures

-20

-15

-10

-5

0

5

10

15

20

Environment Housing Lifesatisfaction

Education Safety Jobs Civicengagement

Accessibilityto 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.


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)

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Recommendations at a regional, country and

NSPA scale


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.

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Common challenges facing NSPA regions

Summary of policy challenges for NSPA regions


• 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).

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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).


• 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.

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Enhancing cross-border collaboration


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.

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Strengthening the regional level and encouraging a

partnership approach within each country

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14 13 March 2017 OECD Territorial Review of Northern Sparsely Populated Areas

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

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