Discussion Papers 2001.
Role of the Regions in the Enlarging European Union 7-16. p.
Role of the Regions in the Enlarging European Union
0 Edited by Zoltan Gal, Pecs, Centre for Regional Studies, 2001
EUROPEAN REGIONAL POLICY AND
THE EAST-CENTRAL EUROPEAN
ENLARGEMENT
Gyula Horvath
I.
Regions and towns react differently to the impacts of Globalisation processes
and depending on their features and applied strategies will end up as winners or
losers. Trying to avoid negative impacts local and regional authorities introduce
a number of measures to protect their interests. At the same time, the applied
strategies strengthen the segregation at the expense of amalgamation. The vital
regional cultural movements serve for instance this aim as well as the ethnic
organisations acting almost all around the world with growing success. Yet, it
remains questionable, whether a regional strategy favouring identity is appro-
priate to protect the national or even international position of a given region,
whether it represents an adequate development force in terms of the improve-
ment of the region's productivity. The answer is obviously dependent on the
location of the region, frankly, which region within what macro-region of the
world we talk about. The fordist types of industrial centres, rural regional cen-
tres or global metropolis have of course different features in terms of the tradi-
tionally interpreted reactivity. Yet, the quality of the classical productive fac-
tors is only one of the preconditions of adaptation. The second, new adaptation
criterion — deriving from the functioning mechanisms of networking economy —
is the type, character of the relationships between the organisations and institu-
tions of the region or the town, the possibility of the institutionalisation of
common targets, local incentives, the preparation of local decisions and the
social concerns. This group of new competitive factors implies, that the success
of local and regional development is not any more exclusively dependent on
some narrow economic aspects, but rather on the close coalition and institu-
tionalised co-operation of the actors interested in regional growth.
The result of the dissemination of the post-modern space theory is the grad-
ual spreading of the new regional development paradigm. The development
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
Discussion Papers. Special
8
Gy. Horvcith
idea based on endogenous resources and starting from peripheries is slowly
naturalised in the strategies of less developed regions and even the central re-
gional policy in a growing number of states consider the "bottom—up" principle
as the starting point (Farago, 1991).
Globalisation gives continuous impulse to and in many cases even acceler-
ates the trends of re-structuring of the post-modern economy. The accomplish-
ment of the economic paradigm developed in the 80s can be expected in Europe
in the new millennium's first decades, yet, post-fordist space shaping forces
will also impact for a longer period too. The extension of advanced services
enforcing agglomeration benefits is prognostic and the concentrated decentrali-
sation of these activities will continue yet with different speed in each country.
The speed of spreading is highly dependent on the role of mature tertiary and
quaternary sectors granted by the region in its development strategy, and the
proportion of sectors organised in clusters producing high value added within
the economy. The new approach of regional development — the professional
culture able to alloy the motive powers of Globalisation with local advantages —
will be an important selection factor in the reduction or strengthening of territo-
rial inequalities.
II.
The prospects of the spatial structure of Europe are shaped today only partially
by the national state strategies; the motivating power of global processes and
common policies mostly respecting the former is significantly stronger. It is
therefore not unimportant, which ideas will be born about the future of the sin-
gle European space.
The community policy expresses the target of the member states solving
certain tasks together. The common policies are mostly not regional develop-
mental type and rather serve specific targets. Yet, the Masticate Treaty set the
impacts of territorial sectoral policies in a new light. The competency of the
Committee was significantly extended since several important community poli-
cies (such as the common agrarian policy transportation policy, trans-European
networks, structural policy & competition and environment policy) also serve
regional development targets.
The lessening of the state borders' restricting power within the European
integration, the institutionalised development of the European economic space
and the eastern enlargement of the European Union set the development possi-
bilities of cross-border regions into a new light. Besides community, national
and sub-national frameworks European macro-regions may become important
strategic units in the future as regards the improvement of continental competi-
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
Discussion Papers. Special
European Regional Policy and the East-Central European Enlargement
9
tiveness, the regions with high productivity able to meet the requirements of the
economy of scale and to increase efficiency.
The permanent character of transformation trends of the European econ-
omy's development factors, the quality changes within the European integration
and their impacts on national political systems influence markedly the future
arrangement of the target —, tool and institution system of regional policy.
Within the interrelations of regional development and macro-policy and within
the internal mechanisms of regional policy we can witness significant changes.
The most important lesson of the century long development of regional pol-
icy became by today an organic part of the European approach. The national
and sectoral policies in the majority of European states and the cohesion strat-
egy of the European Union consider the principle of solidarity as the starting
point of social action. And exactly this moment distinguishes the European
model from the social administration practice of other continents. The cohesion
model in economic terms means the moderation of inequalities between regions
and between social layers, enabling the widest possible scale of social layers to
contribute actively to the establishment of the conditions of economic growth
and to share the outcomes of growth. The social dimension of cohesion covers
the highest possible level of employment, the improvement of disadvantaged
social layers' employment chances and the moderation of unemployment. Fi-
nally, cohesion in the political practice is the expression of mutual support
within the state and the European Community, not simply in the form of in-
come-transfer but rather through the common application of means and meth-
ods serving the most optimal utilisation of endogenous resources.
The changes during the previous years imply that the space of regional pol-
icy at the very begging of the new millennium — besides the self determining
rules of economic development — will be determined by two marking factors:
first by the organisational, functional and financing reforms of the European
Union and its eastern Enlargements and second — due to a high extent of the
previous factor — by the new division of power within the national state, the
decentralisation.
The reforms within the European Union shell receive special attention, since
— as seen — regions were granted in the course of the process of strengthening
European cohesion significantly higher subsidies from the structural and cohe-
sion funds of the integration, than from national resources. The final outcomes
of the ca. 25 Billion ECU community subsidies granted for regional develop-
ment are not very promising, since the cohesion analyses report a very slow
decrease of regional inequalities. One of the reasons of the weak implementa-
tion of efficiency requirements is to be detected in the scattered character of
subsidies. The determinative direction of the reforms being prepared presently
is not accidentally the improvement of concentrated utilisation of the resources.
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
Discussion Papers. Special
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Gy. Horvcith
In the course of the delimitation of eligible regions the indigence must be de-
fined by strict criterion and the proportion of eligible population must be re-
stricted to one third of the total number of population within the community.
The investment practice is to be reconsidered, since the multiplication effects
of the investments did not reach the desirable level and — due to different rea-
sons — the absorption ability of the regions did not develop in accordance with
the original expectations. The consistent enforcement of the principle of addi-
tionality — the local, regional and national contribution — seems to be the only
feasible way. The second key issue is the enforcement of the co-operation be-
tween the actors of regional development, the partnership, yet, taking the prin-
ciple of subsidiarity into consideration. Within the system of subsistence and
incentives of the European Union the "ex-ante" evaluation of "cost-benefit"
effects is granted significant importance which could — depending on the pos-
sessed knowledge on the functioning of regional economy and not exclusively
on the solid capital — launch a new process of differentiation between European
regions.
Decentralisation — as the trends of the previous years clearly indicate — is a
general phenomenon in Europe. In 1950 one quarter, by the middle of the 90's
60% of the continent's population lived in federalised or regionalised states. By
the end of the of the new millennium's first decade — leaving the succession
states of the former Soviet Union out of consideration — more than one third of
Europe's population will live in countries, where instead of the state the sub-
national level will have determining role in influencing economic growth. This
quantitative change — according to our present knowledge — will result from the
establishment of the new regional public administration in two countries with
high density, the United Kingdom and Poland.
In the future a principal interest of the national state will be in order to
maintain its influence over the economic policy management to counteract the
impacts of external — Globalisation and integration — pressure by increasing the
decision—making potential within the state borders and the improvement of the
regions' regulated interest enforcement ability. The traditional regional eco-
nomic development practice of the Keynesian economic policy cannot any
more be applied successfully in the new paradigm, the state regional policy may
be replaced by the regions' own policies. Yet, the change of paradigm will not
be an automatic process, the interests of the differently developed regions in
institutionalising regionalism shows significant differences. The most indigent
regions still expect their rise from external — national and international — assis-
tance and therefore their motivations are rather bound with the traditional sub-
sidy systems, than with the wider autonomy to be achieved in the "Europe of
Regions". The engaged followers of regional decentralisation mostly from
among the developed regions, which will be without doubt the beneficiary of
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
Discussion Papers. Special
European Regional Policy and the East-Central European Enlargement
11
the single market, and economic and monetary union. It is therefore no acci-
dent, that at present the co-operation entitled "Four motors of Europe" consist-
ing from the territorially not even contiguous four regions — Baden-Wiirttem-
berg, Lombardy, Rhone-Alps and Catatonia — is considered as the most effi-
cient regional co-operational network.
Yet, regionalism must face several serious challenges before its general
evolution. National governments still have a significant regulating role in
shaping of the relationships between the regions and the European Committee.
Europe's least advanced regions can enforce their interests rather less in the
integration decisions, since exactly the least affluent states have anyway fewer
representatives within the Union's bodies. Also, the competition policy of the
Union strengthens the centralisation effects. The common regional policy is not
able to balance the inequalities deriving from the competitive abilities. The
federal Germany is an expressive example of the fact that regionalism and the
moderation of territorial differences can be reconciled in the governmental tier
too.
Parallel with the irreversible deepening of the European integration the na-
tional governments maintained their key positions at least in three policy areas.
The first determining national state task is the regulation of the administration
of corporate capitalism. Industrial development in the future is impossible
without efficient national monetary systems, as the domestic markets and regu-
lation environment will serve as the most stable starting point for corporate
strategies. The second important central governmental task remains the co-or-
dination of national innovation and technology development programmes. Fi-
nally, the third national tier priorities are labour market and industry policy
tasks. Yet, the success of the two later national functions is highly dependent
on the efficiency of the sub-national public administration in solving partial
tasks. Therefore, regionalisation is one of the preconditions of the national
state's successful functioning since no macro-political task can be implemented
without mature human resources—, education—, training— and business devel-
opment as no balanced competition can be imagined without the co-operation
of the social partners either. The implementation of these tasks is the most op-
timal in the regional tier (Keating, 1998).
The regional consequences of structural transformation, the establishment of
appropriate institution and tool systems for the treatment of territorial inequali-
ties, the harmonisation of sectoral and regional developments and the quality of
co-operation between regional actors are essential factors for associate states —
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
Discussion Papers. Special
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Gy. Horvath
especially for those, where the regional inequalities are similar to or even more
massive than in EU member states.
The ideology of regional and settlement policy during the state socialist era
(the classical theories by Marx, the Utopian urban ideas and the theory of plan-
ning) and the targets deriving from these (proportionate development, modera-
tion of civilisation differences between urban and rural areas, the even spatial
division of free or strongly state-subsidised social allowances) lost their ground
and the developing forces of market economy launched a new wave of differ-
entiation. The dramatic reduction of state subsidies, the change in geographic
directions of trade and the collapse of large state owned companies impacted
the central territories and the peripheries differently.
In East-Central Europe the elaboration of the contents of regional policy
replacing regional planning, the definition of its organisational system and
means, the representation of this policy as independent socio-economic field of
force and its integration into the modernisation tasks can only be implemented
based on different strategies. One variation is the regional policy based on the
dominant role of state and deconcentraled institution system. The second possi-
ble way is the policy based on the decentralisation of state intervention means
and on regional initiatives. The later is the determinant direction of present
Western-European development even in those countries where the ruling politi-
cal forces proclaim the necessity of an emphasised state role in the regulation
of market processes. The co-operative, restructuring-oriented, innovative re-
gional policy may be the efficient strategy for modernisation due to the region-
alisation of the European integration, the upgrading of the territorial-decision
making centres' role within the international division of labour and the geo-
political location of East-Central Europe. We have to consider of course that
the precondition of these cannot be established in all countries and regions even
for the long term. It is therefore probable that for a longer term the characteris-
tic feature of East-Central European regional development strategies will be a
kind of combination of traditional Western-European Regional policy of the
70-80s and of the elements of new regional policy paradigm.
Regionalisation, the regional decentralisation of power, the division of la-
bour between self-governments stands in the crossfire of debates in the Unitar-
ian states of East-Central Europe too. The transformation of the political
system, joining the globalising European economy, the establishment of the
self-governance structure enforcing the principle of civil democracies set the
inter-reactions of the central and territorial-local power as well as the harmoni-
sation of meso tier public administrative functions with the settlement inde-
pendence into a new light.
The central concern in almost all post-socialist states is the political and
functional restructuring of self-governmental basic tiers. The former sub-
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
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European Regional Policy and the East-Central European Enlargement
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national level was either eliminated (like in the succession states of the former
Czechoslovakia) or its functions were significantly cut (Hungary) respectively
transformed (Poland), new territorial tiers were organised (Croatia) or are being
introduced now (Slovenia).
The completion of market economy and the restructuring of economy soon
revealed that neither regional tensions can be lessened, regional policy targets —
formulated in the majority of the countries — implemented nor regional pro-
grammes elaborated without the comprehensive reforms of the territorial me-
dium tiers. Therefore it is not accidental that the reconsideration of the compe-
tencies in the meso-tier — which can not devoid the due revision of the tasks
faced by the modernisation and spatial restructuring of the different states — in
some countries raised the issue of institutionalisation of regionalisation, the
establishment of a low number of territorial units, which are similar in size and
competencies to the meso-tier of the Western-European federalised and re-
gionalised states.
The Unitarian states of Europe — as a consequence of Globalisation, inter-
nationalisation of economy and the deepening of European integration — may
shift towards a new state organisational order in the near future.
The following elements justify the further development and reconsideration
of the medium tier public administration in East-Central Europe:
a) The disintegration phenomena within the self—governmental sphere indi-
cate that legal and incentive linkages are still devoid and the ideal of ex-
clusively "bottom up" and voluntary model proved to be false and base-
less;
b) Due to the practically one tier self-governmental system, there is no re-
sponsible organisation for regional development tasks and therefore the
deconcentrated state organs try to fill this gap; a part of the deconcetrated
state administration penetrating into the medium tier local governmental
vacuum carries out tasks strange to the organisation and its sectorally di-
vided structure causes the lack of co-ordination, information exchange
and interest harmonisation;
c) The disintegration of the self-governmental system and the disfunction-
ing of the deconcetrated public administration encouraged governmental
centralisation efforts and consequently the outlines of a rivalling state
and local governmental model in public administration units of the meso-
tier are emerging;
d) The tendency of nationalisation of the medium-tier counter-effects the
integration processes and this abnormality can only be redressed through
the establishment of the local governmental medium tier.
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
Discussion Papers. Special
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Gy. Horvcith
e) An important task of the territorial public administration could be in the
future the representation and protection of the ideal of territorial co-op-
eration towards the central governmental organs. We have to consider,
that the "Europe of Regions" — as one of the key principles of the Euro-
pean integration — can only function in the case of co-operation between
territorial units with complexity and equipped with similar competencies.
IV.
The future of division of power between the state and the regions seems to be in
East-Central Europe rather uncertain. The perspectives of decentralisation
depend on the harmony of economic efficiency and the success of top—down
steered systemic change. The regional precondition of power delegation is quite
disadvantageous. The organisational frameworks of strict centralisation
survived in the former planned economies, even if the content of central
governance significantly changed. Even in the best case we have to expect a
long decentralisation process. Poland — and possibly Hungary — will establish
the political and institutional frameworks of decentralised power until the
accession of the European Union.
There are three possible pathways of decentralisation, which are imaginable
in East-Central Europe. The choice from among the alternatives is of course not
arbitrary; the historic traditions of the given country, the type of economic
transformation, the level of establishment of market economy institutions, po-
litical power relations and the division of political space structure all impact the
moderation of power concentration. The decentralisation pressure on the cen-
tral state administration is obviously stronger in those countries (like Poland),
where dynamic large urban centres wish to encourage their autonomous devel-
opment and integration into the European territorial division of labour by the
most liberal utilisation of their internal resources and by the help of post-in-
dustrial development factors. Yet, the legitimacy of bottom-up initiatives has to
face more resistance (like in Hungary), where the central area has dominating,
even further strengthening positions in the productive factors improving com-
petitiveness. The example of these two countries is also appropriate to illustrate
that the existence of able regional centres is only a potential advantage, the
decentralisation "suction effect" deriving from the political legitimacy of Hun-
garian territorial self-governments and the legal regulation of regional devel-
opment can somewhat counterbalance the lack of marked, European scale re-
gional centres.
In the first possible decentralisation model the division of labour between
central and regional organs are arranged by clear and explicit regulations. The
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
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European Regional Policy and the East-Central European Enlargement
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development tasks within the competencies of the two different types of organs
are segregated by the size of the territory they effect. The regional authorities
have own resources for the implementation of these tasks, posses wide scale of
planning competencies and they can support the developments of local-gov-
ernments within their competency area form own monetary funds. Depending
on the level of economic development in the region central monetary transfers
may be added to the own and divided funds. This strategy ensures the highest
degree of decentralisation and for the long term it is the most efficient alterna-
tive, yet its implementation requires several — political, constitutional, public
administrative and economic — preconditions. The establishment of regional
self-governance does not yet seem to be a realistic alternative in East-Central
Europe. The assumption that Poland — and presumably Hungary — will take the
way of regionalisation will cause a further differentiation within the region.
The essence of the second decentralisation strategy is, that the centre dele-
gates some specific — planning, development, regional policy — functions to the
regions and an the rest of the regional policy tasks remain the competency of
the central power. The level of power division depends on the type of decen-
tralised tasks, the type of the adaptive institutional system and the means the
regions are equipped with. The second alternative seems (for the short term)
more advantageous for Unitarian states since the preparation of the adaptive
substance requires less efforts and the fundamental transformation of the public
administrative system is also unnecessary, and — the most important is — the
influence of central organs remains unchanged, the administration of regional
developments becomes more complex through the deconcentraled state organs
and their efficiency may also increase.
In the third variation, the division of responsibility between central and ter-
ritorial organs is valid only for certain, ad hoc tasks. A common administrative
organ is introduced for the development of peripheral, backward regions and
the state provides this decision making forum with a part of its monetary re-
sources and assigns the territorial units with the implementation of develop-
ment programmes. This alternative represents the most moderate version of
decentralisation and does not at all require the transformation of the established
order of power. It is not accidental, that most of the East-Central European
states started to elaborate their regional development programmes alongside
this model.
The Hungarian regional development could more or less emancipate itself
from the impacts of these traditional trends of the Eastern-Central European
development, due to the Ministry for Regional Development and Physical Plan-
ning suddenly appearing within the Hungarian governmental structure and to
the assembly of pragmatists, professionals and researchers suggesting the intro-
duction of a consistent regional policy already in the 80's. As a result of these
Horváth, Gyula: European Regional Policy and the East-Central European Enlargement.
In: Role of the Regions in the Enlarging European Union. Pécs: Centre for Regional Studies, 2001. 7-16. p.
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Gy. Horvath
efforts — often similar to fighting windmills — Hungary is the only Central-
European state today which will be able to adapt within a reasonable time a
regional development practice highly compatible with Western—European
regional policies and consequently to access the European Union without
difficulties. Hungary may even become a model economy within this partial
policy. A significant increase of the resources aimed at the strengthening of the
economic and social cohesion of Hungary can be expected from its accession
into the European Union. Yet, the preconditions for the access to the Structural
Funds and efficient utilisation of the resources must be established. Similarly to
the states joining the European Union recently Hungary has to revise almost all
elements of its economic and social policies from the approach of the
adaptation of their targets, functioning mechanisms, institutionalised forms to
the cohesion requirements of the European Union.
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