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Cohesion Policy Support for Local Development: Best Practice and Future Policy Options

Final report of the study commissioned by Directorate General for Regional Policy, European Commission This study was written by Marjorie Jouen, Head of the project (ADETEF, Notre Europe) Katalin Kolosy, Head of project (AEIDL) Jean-Pierre Pellegrin, senior expert (AEIDL) Peter Ramsden, senior expert (AEIDL), Péter Szegvari, Senior expert (City Consult) Nadège Chambon, Junior expert (Notre Europe).

Final report of the study commissioned by Directorate General for Regional Policy, European Commission This study was written by Marjorie Jouen, Head of the project (ADETEF, Notre Europe) Katalin Kolosy, Head of project (AEIDL) Jean-Pierre Pellegrin, senior expert (AEIDL) Peter Ramsden, senior expert (AEIDL), Péter Szegvari, Senior expert (City Consult) Nadège Chambon, Junior expert (Notre Europe).

This report is available inFrench and English.

Executive Summary

During the 1980-90s, local development provided both re- sponses to growing unemployment in distressed regions suffering from the collapse of manufacturing or traditional industries, and promises of a new future for areas that were lagging behind, both rural and urban. With the 2008-2009 crisis, several experts and policy makers contemplated the idea of reinvesting the local development approach that had been neglected in recent years. As the debate on the next programming period is about to be opened, it is time to bring fresh thinking on what should be done by the EU cohesion policy to support local development and how this can be achieved.

The report draws upon a six-month team work and an incre- mental process which allows to formulating comprehensive recommendations for local development best practice and policy options for support to local development initiatives within the cohesion policy.

Local development initiatives are sometimes defined as area-based integrated strategies mobilising a large number of local stakeholders using specific methods, such as part- nership. This definition focusing on the inputs is correct but incomplete; it has also to take into account the explicit ob- jectives pursued by the strategy (outputs) which are crucial for the local partners specifically in terms of socio-economic results and better living conditions. It has to include the developmental dimension of the strategy, with its long term objectives and the structural change that can be achieved (outcomes).

The added value of local development lies more in its long- term – even very long-term – outcomes rather than its imme- diate outputs, either quantitative or qualitative. Its strength derives from its resilience, its low costs of implementation, and its close connection with the social and territorial Eu- ropean model. Its weaknesses come from its small size, the difficulty of systematisation or standardisation, and its limited though generally positive quantitative results. Accordingly, local development represents a complementary method rather than an alternative one, deeply related to an area-based approach.

From the mid-80s until 2000, the EU interventions were marked by continuous political effort to transform the spon- taneous phenomenon of local development into a genuine component of European economic development, through an increasingly sophisticated and varied range of interven- tions, programmes and measures. By contrast, the 2007- 2013 provisions and regulations can appear disappointing. It seems that while regulations do not prevent the co-fi- nancing of local development projects, they do not promote it and frequently have the effect of discouraging it. The major problem stands precisely in the current dispersal of local development in the programmes.

Even successful local development projects lose any potential as demonstration projects. A major weakness also comes from the almost uni- versal lack of investment in reliable and solid mechanisms to capitalise new working methods, and to transfer know- how in other geographical, economic or national contexts.

Nevertheless, it seems relevant to continue in the direction already started and to strengthen EU support for local de- velopment. Now, there is a need for new local development approaches for coping with the economic crisis and its social consequences, and for addressing carbon reduction which calls for changing behaviours and not just technological innovation.

The future EU support to local development should pass the test of subsidiarity, which means that it should clearly show that it will provide additional benefits. It has also to take into account the other EU policies and the past experi- ence. This leads to a set of 10 criteria:

– ownership and visibility,

– effectiveness and targeting issues,

– capacity building,

– innovation,

– stable financial resources,

– territorial cohesion,

– feasibility,

– low transaction costs,

– adaptability to different contexts and starting points,

– coherence with other programmes and funds.

Combining different types of provisions and technical ar- rangements, four options have been identified and dis- cussed. Their internal coherence, their strengths and weak- nesses were assessed. Several organisational models were posited.

This analysis has allowed us to define what principles an EU support policy should follow. It should:

– be based on a clear definition of its aims (what type of local development is supported, which kind of area and which sort of issue are to be tackled);

– be visible in the cohesion policy, and consequently detailed in the future regulation;

– incentivise the managing authorities (‘push approach’);

– be sufficiently attractive (‘pull approach’) for the local and regional authorities, third sector and private partners;

– allow the development of sustainable local groups and area-based strategies, in providing adequate support;

– show a ‘marketable’ added value in comparison with the other ‘objectives’; – ensure the best conditions for effective local development;

– be coherent with other programmes or other funds.

Therefore, we recommend that after 2013 every region in each Member State would include a dedicated local devel- opment axis within all regional development programmes. This provision should be targeted on the one hand, to so- cial and economic urban development, and on the other, to local economic development in small and medium sized towns and their fringes, rather than focusing on rural-ur- ban relationships. As regards the territorial cooperation objective, a specific strand targeted on designated areas or places (e.g. mountains, islands…) could be added. A minimum 5% compulsory threshold would be dedicated to lo- cal development in each regional development programme, combined with an indicative threshold of “at least 1%” out of very densely populated areas.

Strategies should be defined by local partnership groups, but the issues and the areas should be pre-determined at EU or national level. Regions (NUTS 2) should be respon- sible for the management, even if the targeted areas must be smaller (below NUTS 3). There would be a minimum/ maximum number of inhabitants in order to secure a critical mass, in terms of human, financial and economic resources to support a viable strategy. The EU support would both involve measures related to strategy and capacity building. There would be an EU-level support unit to assist in the implementation of the measures, and secure networking and capitalisation activities.

The Europe 2020 strategy begins today. Thus concrete recommendations should also be made for the coming months. Firstly, a local development coordination platform should be established to introduce local development in the Europe 2020 strategy and to raise awareness about this approach. The platform should work for simplification of procedures and to guarantee the coherence between the different sectoral policies. In practical terms, it should be created under the form of an inter-services group of the European Commission, which could be enlarged to in- clude officials from the other EU institutions. Its primary task should be the explanation of the possible contribution of local development in delivering Europe 2020 strategy. Another immediate task for the platform’s policy should be to raise awareness of local and regional authorities on the local development method, through a Communication of the European Commission.

Secondly, any opportunity should be seized in the frame- work of the current territorial cooperation objective to sup- port local development networks, in order to create an open space for disseminating good practices and giving more visibility to integrated and bottom-up strategies.