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Regional policy implementation practice and
perspectives in Latvia
Raivis BremšmitsIlona Raugze
Ministry of Environmental Protection and Regional Development
National Development Planning Department
Contents
1. Regional development trends in Latvia
2. Regional policy implementation practice in Latvia
3. Regional policy perspectives in Latvia untill 2020
Regional disparities in the European Union
Latvia has the most pronounced regional disparities in the European Union
Dispersion of regional GDP per inhabitant, %, 2008 (NUTS 3 regions)
Regional disparities – GDP and non-financial investment
Ne-finanšu investīcijas uz vienu iedz.(LVL)
0
500
1000
1500
2000
2500
3000
3500
2005 2006 2007 2008 2009
Rīga
Vidzeme
Kurzeme
Zemgale
Latgale
GDP difference in 2008: 2,5x
Non-financial investment difference in
2009: 3,4x During the growth period non-financial investments were
attracted much more succesfully in developed regions (Riga)
There is a need for additional incentives to facilitate increase of non-financial investments in territories that are remote from capital city
Unemployment: lack of jobs in the regions
Unemployment, 2011
Unemployment, 2010
Population decrease – depopulation of remote areas
Over the last five years the population has increased mainly in areas surrounding the capital city
Changes in population in local government territories 2006-2011
Unequal financial resources at disposal of local governments for
development
Personal income tax revenue in the local government budget per capita in
2008
Personal income tax revenue in the local government budget per capita in
2010
Regional policy target areas
Development centres (national and regional development centres)
Specially supported territories
The current tools for implementation of regional policy
Target areas Support directions Source and amount of funding
Development centres
- revitalization of deprived territories in Riga
- support to development of competitiveness, accessibility and attractiveness factors of urban environment and city-regions, facitilating revival of urban environment, entrepreneurship and development of technologies, social inclusion and urban – rural partnership
ERDF priority 2007-2013 „Polycentric Development”
Specially supported territories
- support for development of entrepreneurship
- tax allowances on personal income tax and enterprise income tax (special procedure for writing-off depreciation of fixed assets and special procedure for covering losses)
Activity "Co-financing to the investments in micro and small-sized enterprises operating in the specially assisted territories“) (public funding: 30,9 M EUR)
517 777 458; 97%
14 103 938; 3%
Darbības programma "Uzņēmējdarbība un inovācijas"
Aktivitāte "Atbalsts ieguldījumiem mikro, maziem un vidējiem komersantiem īpaši atbalstāmajās teritorijās (ĪAT)"
Balanced Territorial Development – one of the horizontal priorities – coordination of sector and territorial priorities
Territorially targeted EU funds activities (support for specially supported territories etc.)
Conformity criteria/Criteria for evaluation
Regional quotas
Differentiation of co-financing
Territorial aspect in EU funds
ESF investments in planning regions of Latvia 2007-2010 (mln. EUR, %)
Rīgas reģions; 41,3; 65,6%
Latgales reģions; 8,0; 12,8%
Zemgales reģions; 6,5; 10,4%
Kurzemes reģions; 5,4; 8,6%
Vidzemes reģions; 1,7; 2,7%
ERDF investments for entrepreneurship in planning regions of Latvia 2007-2010
(mln. EUR, %)
Rīgas reģions; 47,2; 50,8%
Kurzemes reģions; 24,8;
26,7%
Vidzemes reģions; 7,9; 8,5%
Latgales reģions; 7,3; 7,9%
Zemgales reģions; 5,7; 6,1%
ERDF investments for infrastructure in planning regions of Latvia 2007-2010
(mln. EUR, %)
Rīgas reģions; 197,6; 26,7%
Latgales reģions; 154,8; 20,9% Vidzemes
reģions; 131,8; 17,8%
Kurzemes reģions; 129,6;
17,5%
Zemgales reģions; 126,4; 17,1%
EU funds investments having local impact, per capita (01.01.2007-
01.02.2011), LVL
Disadvantages of the present investment planning approach
• Investments are not concentrated in development centres – limited effect on diminishing of regional disparities
• Investments are not based on real needs of territories - the importance of planning at local level is reduced
• Sectoral approach dominates, municipalities and regions have to adapt to centrally determined support conditions
• It is not possible to coordinate in time investments related to different sectors
• Municipalities do not have the opportunity to implement activities related to different sectors in a single project using the integrated approach
• It is not possible to timely and flexibly react and adapt to changes in local situation (availability of financing for implementation of projects etc.)
Spatial development perspective Latvia 2030
Policy directions:
accessibility and mobility settlement as the economic development, human life and work environment spaces of national interest – Baltic Sea coastal area, Eastern border area, Riga agglomeration, rural area etc.
Regional policy long term results and performance indicators (Latvia 2030)
• Increasing the pace development of lagging regions to minimize divergence from average GDP per capita of the country, facilitating diminishing of regional disparities
• Facilitating a polycentric settlement structure, maintaining the existing proportion of urban/rural inhabitants 70%/30%
• Limiting the decrease of population in regions
Population density in planning regions, 2008
Population density in the territories of local governments, 2008
2030
Implementation of Latvia 2030 in medium-term: key statements
Strengthened capacity of regions and local municipalities
A new public investment planning system
Entrepreneurship and innovation
Wider circle of stakeholders involved in promotion of regional development (sector ministries, entrepreneurs, NGOs, local community)
A new system for public investment planning/provision of support for
territorial development
Key principles:
Latvia 2030 target areas (support directions for territories)
Regional and local development programmes (investment request)
The “basket” of public services at each level of settlement (criteria)
Earmarking of public investments - territorial quotas (limiting competition between municipalities)
Support directions for target areas set by Latvia 2030
Support directions for development centres
Support directions for rural area
Support directions for Riga metropolis area
Support directions for Baltic Sea coastal area
Support directions for Eastern border area
Support directions for development centres
• development of entrepreneurship/ business infrastructure for attracting investors (industrial sites, communications, resort infrastructure) according to economic specialisation of a particular territory
• development of regional and local transport infrastructure to ensure accessibility of jobs and services to inhabitants of rural areas
• provision of public services according to the basket of services defined for centres of national and regional significance
• infrastructure for innovation, culture and creative industries
Local municipalities eligible for support:National and regional development centres set by Latvia 2030
Support directions for rural area
• competitiveness, productivity, modernisation, cooperation of rural entrepreneurship, promoting innovative solutions and introduction of new technologies within rural production and processing
• diversification of rural economy, increasing employment in rural areas, production of renewable energy, craftsmanship, rural tourism
• preservation of natural resources, traditional rural landscape, biological diversity
• strengthening capacity of local action groups (continuation of LEADER approach)
• provision of public services according to the basket of services defined for rural area
Municipalities eligible for support:
Municipalities that do not contain a national or regional development centre and area of municipalities that contain a national or regional development centre that is located outside the centre
Support directions for Riga metropolis area
• improvements of Riga city and Riga agglomeration transport infrastructure and public transport system
• promoting qualitative urban environment
• preservation and development of cultural heritage, culture and tourism infrastructure
• development of creative industries and creative urban blocks
Municipalities eligible for support:
Riga city and surrounding municipalities
Support directions for Baltic Sea coastal area
• development of coastal business infrastructure to reduce the impact of seasonality on the economic development patterns of the area
• development of small ports and harbours
• development of health tourism activating the use of resort resources
• promoting the use of renewable energy (wind and sea-water)
• improvements of nature quality – mitigating the impact of climate change on the sea-coast, reducing coastal pollution
• actions to improve shipping security
Municipalities eligible for support:
Municipalities on the coast of the Baltic Sea and Riga sea gulf
Support directions for Eastern border area
• construction and reconstruction of transport infrastructure to promote transit through Eastern border (local roads and streets as a part of infrastructure for border-crossing, railway infrastructure (stations) etc.)
• development of logistics infrastructure and services related to transit
Municipalities eligible for support:
Municipalities on the border with
Russia and Belorussia
The role of development programmes of municipalities and regions
• To assess resources at disposal of territory (natural resources, infrastructure, human resources), to present a clear vision and solutions for more efficient use of the resources
• To facilitate targeted planning of actions and investments (basis for drawing up the annual budget)
• To facilitate attraction of investments from all the available sources (a basis for planning support from national budget, basis for attraction of foreign and local private investments)
• To facilitate recognizable image of the territory (territory marketing)
Defining the set (“basket”) of public services to be provided at each level of settlement:
justification and application
• The Spatial Development Perspective of Sustainable Development Strategy of Latvia until 2030 defines levels of settlement (development centres)
• The desirable set (“basket”) of services – the content of development centres
• The desirable set of services as a basis or set of criteria for planning and providing public investments in territories of Latvia in the coming years
Basket of public services displays:
• services in particular sectors (health, culture, sports, education, social care etc.) to be provided at each level of settlement
• hierarchy of services: at higher levels of settlement more services are provided including all services available at lower levels of settlement
• services provided in the framework of both national and local government functions
NB! The set (“basket”) of public services includes only those services that are suited for territorial differentiation
The approach used for determination of basket of public services to be provided
at each level of settlement• Principles for determination of desirable basket of services:
– the present location of services according to settlement structure
– the frequency/regularity of provision of particular services according to request (services provided more frequently have to be provided at the lowest possible level of settlement)
– the type of service (base service necessary to all groups of population or specific service necessary only to particular groups of population)
– priorities and criteria for the amount of services and their location provided in the framework of sector policies (number of custumers required to ensure optimum availability of a service and cost-efficient operation of institution providing it)
• Negotiations with sector ministries, Association of Local and Regional Governments
Earmarking of public investments (territorial quotas)
• Purpose: to preclude unproductive competition between municipalities for public investment in implementation of territorial development support measures and to provide municipalities the opportunity to take more responsibility for development of respective territory
• The idea of territorial quotas: to determine the amount of funding earmarked for each territory (region, municipality) for implementing investment projects planned and justified in their development programmes in the framework of territorial development support measures
Principles:
• Distribution of funding between regions, earmarking more funding to lagging regions (criterion: GDP per capita in statistical regions (NUTS 3))
• Concentration of funding in development centres (criteria: population, proportion of inhabitants living in urban areas, tax revenue, network of roads etc.)
Identification of the request for investment in municipalities
Regarding the funding necessary for:
• implementation of the set (“basket”) of public services
• infrastructure necessary for development of entrepreneurship
• reconstruction of roads that connect development centres with surrounding territory of municipality
• other needs of the specific target areas that are not related with above mentioned investments
Territorial and thematic approach for planning support
• Territorial approach
• for implementation of functions of regions and municipalities
• for reducing regional disparities
• for challenges relevant only in a specific regional policy target area
• for provision of integrated support for particular territories
• Thematic approach
• for implementation of national level functions
• for the entire territory of the country (to ensure uniform standards)
• serving the national interests
• for initiatives of „excellency”
Roles of stakeholders participating in investment
planning Sector ministries:
• thematic support measures
• methodological guidance for municipalities
• assesment of requests for investment of municipalities
Regions
• participation in elaboration of territorial development support measures
• regional projects
• facilitation of municipal cooperation
Municipalities
• development programmes as requests for investments
Capacity and autonomy of municipalities (I)
• To expand and diversify sources of income for municipalities– to allow municipalities to determine the real estate tax rate
for its territory in the framework of nationally defined tax rate range – to consider possibility to transfer part of the tax revenues from
taxes related to entrepreneurial activity to municipal budgets – to revise and improve the existing municipal finance
equalization system– to facilitate access of municipalities to financial instruments,
by considering ratifying Paragraph 8 of Article 9 of the European Charter of Local Self-Government and elaborating proposals for long term conditions regarding loans for municipalities
• To increase the role of municipalities in promoting entrepreneurship
– amendments to the relevant legal acts to expand rights of municipality to deal with its property and simplify the procedure for lease
– to ensure measurement of administrative burden created to entrepreneurs by municipalities, elaborating proposals for reduction of the burden
– to provide support for creation of entrepreneurship specialist position in every region and municipality
Capacity and autonomy of municipalities (II)
• To expand the set of available statistics– Provide municipalities statistical data for free of charge – To accelerate the processing of statistics according to
territorial division– To ensure public access to statistics gathered under the
National statistics programme– To ensure recalculation of historical data according to
situation after administrative territorial reform
• To provide operation of regional development monitoring and evaluation system – To elaborate indexes/indicators, adaptable to national
investments, EU funds implementation in regional division– To provide elaboration and operation of Territorial
Development Planning Information System, Regional development indicators module
– To elaborate and implement the method for evaluation of planning documents impact on territorial development
Developing regional and local innovation systems
• To elaborate and implement pilot projects so as to form an innovation systems at local and regional level
• To promote more active involvement of municipalities in aligning education with local labor market needs
• To qualify employees of municipalities and regions to deal with issues connected with promotion of innovation and development of clusters
• To provide municipalities/regions support for promotion of innovative entrepreneurship, by organizing competition of best development ideas, training courses for authors of innovative business ideas, entrepreneurship days
• To develop local and regional networks of mentors• To provide municipalities and regions with information
about international support instruments (basically EU level instruments) for promotion of innovations at local and regional level
• To popularize best practice examples (local, as well as international) in promotion of innovation
• To foster creation of local identity products and promotion in market
