Introduction
In the previous blogs on European countries (including Portugal, Denmark and Ireland), it was notable that countries with smaller populations such as Estonia (1.3m) and Denmark (5.9m) can more readily take advantage of new digital technologies and through this also build a stronger digital business base.
Technology and digital solutions are an integral part of both the public and private sectors in Denmark and Estonia is frequently referred to as ‘e-Estonia’. This results from Estonia’s early adoption of electronic processes within many aspects of public life, including electronic ID and residency. Estonia has built notable industry strengths in digital, Fintech and Cyber Security.
Denmark’s successful implementation of eHealth has been developed through a strategic approach of working across national health authorities, the regions, the municipalities, and other relevant organisations. This well-connected health infrastructure has enabled eHealth-related businesses to be involved in testing and rolling-out their eHealth products and services, thus growing helping to grow Denmark’s eHealth business cluster.
Whilst smaller countries than the UK might be nimbler and more experimental in developing economic development programmes and initiatives, even small countries such as Estonia can have large regional disparities. The socio-economic differences between the capital of Estonia, Tallinn and the more rural parts of the country have led the Estonian government to take a new approach to regional development by establishing two pilot regional councils to chart a path for development in Central and Southern Estonia to redress regional inequalities.
Selected countries in Europe – regional and intermediate-level governments (OECD Regional Outlook 2023 – Country Profiles)
Sweden, with a population of only 10.5m has over the last 20 years been shifting the responsibility for regional growth policy to the regional level. Regions are governed by a regional assembly which is elected every 4 years in conjunction with the general elections. Swedish law regulating regional development states that the regions are responsible for coordinating the regional development within their regions and that they must work with the municipalities on policy issues related to regional development. However, the law does not stipulate that the municipalities must work with the regions on the same issues which can result in municipalities pushing their own needs with a different policy agenda to its region.
UK – “Centralisation Nation”
By contrast, the UK is one of the most centralised advanced economies in Western Europe despite current and previous governments’ making commitments to devolve power to England’s regions and cities. Since the Regional Development Agencies in England were closed in 2011, the country has had no specific regional development policy framework. The main development in regional economic policy in England over recent years has been an expansion of mayoral combined authorities.
The Resolution Foundation and the Centre for Cities 2022 report ‘Centralisation Nation: Britain’s System of local government and its Impact on the national economy’ sets out that the fragmentation and under-resourcing of subnational government will need to change to avoid stagnation by 2030.
France “Decentralisation Nation”
In comparison, France once a highly centralised country with a similar sized population to the UK has been decentralising its economy. Regions were established in 1972 by means of law and the 'Defferre Acts' of 1982 / 1983 initiated the decentralisation process. The Regions were turned into territorial authorities run by directly elected assemblies and the State’s supervisory powers over local authorities’ activities were abolished.
The French regions have responsibility for regional economic and social development as do the “départements”, but economic development policy within these “départements” must compliment that of its region. “Départements” also have responsibility for business development. Local authorities can build and use their expertise and capacity to deliver at a local level. As with the UK, France has as a share of total public spending a relatively small role for local government as a share of their total public spending, but there is more capacity is dedicated to local economic activity than the UK.
France regionalises its public policies through state-region contracts over 7-year cycles. Subject to state approval, municipalities can also establish urban planning agencies to provide advice on urban planning and land management issues and draft local and inter-municipal plans. There are currently 51 urban planning agencies in France. This includes SAMOA is the urban development agency responsible for the redevelopment of the Island of Nantes referenced in our blog about the creative industries in Nantes. SAMOA also has its own integrated economic development agency.
France has had a national cluster policy since 2004, with the regions developing the clusters locally. As was highlighted in the blog on the Region of Hauts-de-France’s automotive sector, the Region delivered a joined-up and comprehensive strategy building on existing cluster strengths, working with partners on adding skills, R&D, business support, finance but also an ecosystem. The automotive cluster development was also set within the context of a programme of central government support for the electrification of the automotive industry.
Conclusion
Since the Regional Development Agencies (RDA) in England were closed in 2011, the country has had no specific regional development policy framework. The RDAs had similar responsibilities to the administrative regions in Sweden in France, however, unlike these regional organisations, the English RDAs did not have elected regional assemblies. Additionally, at the time it was seen that there was little accountability on how the RDA budgets were spent. In France for example, as well as elected regional assemblies, national policy in relation to the regions is essentially implemented through the State-Region Plan Contracts which also allows for more accountability.
Whilst ‘Levelling Up’ with its funding has been welcomed in several parts of England and the Mayoral Combined Authorities have provided some devolution advantages; the latter has mainly been of benefit to larger city regions rather than in geographies with smaller towns and rural areas. As sub-regions need to demonstrate local capacity and expertise to administer devolved powers; smaller sub-regions with less capacity/capabilities are more limited in making the case to manage devolved funding and powers.
Even countries with considerably smaller population than the UK such as Denmark and Sweden are empowering their regions and sub-regions to address local economic issues to reduce their countries’ regional inequalities. Countries such as France, Denmark and Sweden have a regional development approach which prioritises the competitiveness of their country’s regions but with more power and delivery at a regional level where there is a better local understanding of the sector strengths and more resources for building a supportive ecosystem.
With successive governments making commitments to devolution, it is hoped that the coming years will see effective devolution across the country including outside of the main city regions; with a reduction in deep regional economic and social inequality. It is hoped that eventually, the UK will no longer hold the ‘badge’ of being the most centralised advanced democracy.