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Regional Economics


Eva Gajzago

on 3 April 2016

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Transcript of Regional Economics

Class objectives
to enable students to get to know the
economic factors
impacting the development of
spatial processes
, and
to find their way in the theoretical system and analysis procedures of regional economics.
to explore and discuss the
problem of regional economic disparities
to introduce some
regional economic policy
and development
Recommended reading
Studying materials
Materials given out by the lecturer.
Edgar M. Hoover and Frank Giarratani. An Introduction to Regional Economics (1999). The Web book of Regional Science. Regional Research Institute. West Virginia University. (http://www.rri.wvu.edu/WebBook/Giarratani/preface.htm)
What is regional economics?
Origins of Regional Science
Location theories
Regions, regionalization, regionalism
Regional disparities
Regional Competitiveness
Regional policy in the European Union
Regional development strategies and documents
participation in the lessons - max. 3 missed lessons
participation in the teamwork during the lessons
1 presentation about a subject defined by the lecturer (choose one from the list)
1 written essay
final written test
multiple-choice questions
true or false questions
essay questions
Presentation subjects
regional disparities in your home country
regional strategies in your home country
regional development system and strategy of an EU country
introducing your region

presentation - 20 points
essay - 15 points
written exam - 60 points
teamwork +5 points

must fulfill
all the 3
main task to finish the course
Points and Marks
0-50 1
50-62 2
63-75 3
76-88 4
89-100 5
What is regional economics?
Economic systems - dynamic entities, affect the well being of the individuals and social and political fabric.
Regional economics is a framework - spatial character of an economic system can be understood
factors governing the distribution of economic activity over
distribution changes - important consequences for individuals and for communities
Regional science is a field of
social science
concerned with analytical approaches to problems that are specifically
The economic study of regions based on the consideration of
space, transportation cost, and location in production and consumption decisions
. RE studies topics like the migration of labor, the macroeconomic activity in cities and states, and the location choices of firms
Two main research fields:
location theories
spatial distribution of activities
Important questions to define RE
What - where, why - where, how - where?
every type of economic activity: production establishments of factories, farms, and mines, other kinds of businesses, households, and private and public institutions.
location in relation to other economic activity;
proximity, concentration, dispersion, and similarity or disparity of spatial patterns
in broad terms, such as among regions, or microgeographically, in terms of zones, neighborhoods, and sites.
interpretations within the somewhat elastic limits of the economist's competence and daring.
What is region?
Several definitions
an area which a regional economist can study
an area considered as a unit for geographical, functional, social, or cultural reasons (earth sciences / physical geography)
an administrative division of a country (politics)
a part of the earth characterized by distinctive animal or plant life (ecology)
RE is
and connected with several sciences
Political science
Basics Definitions
the course
History of RE
Johann Heinrich von
(early 19th Century) - agricultural land using
location of industries and cities - e.g. wine and movies are made in California or New York and New Orleans are great port cities
complete or partial immobility of land and other productive factors (theory of comparative advantage)
industrialization period - Alfred WEBER, Andreas PREDÖHL, Tord PALANDER
1930s, UK, USA - in political economics, space within countries, territorial disparities
regional competitiveness and equilibration - August
after WW2 - quick development of centers and decline of peripheries (Italy)
settlement optimization (1950s - 1980s) - Walter
William ALONSO
1950s - regional development in national level
1954 - foundation of Regional Science Association International (RSAI)
1970s - regional development in European level
1990 - European Regional Science Association (ERSA)
global economy, recent location theories - Paul
Allen J. SCOTT, Michael STORPER
August LÖSCH (1906-1945)
died, just days after World War II ended, from scarlet fever

(1940): Die räumliche Ordnung der Wirtschaft (The Spatial Organization of the Economy)- location patterns,
expanded on Christaller’s work - begun with a system of lowest-order (self-sufficient) farms, distributed in a triangular-hexagonal pattern

concentration of all activities at one spot
uniform dispersion of all activities over the entire area (perfect homogeneity)
no systematic pattern at all, but a random scatter of activities
Johann Heinrich von THÜNEN (1783-1850)
The Isolated State (1826) - developed the first serious treatment of spatial economics
the basics of the theory of marginal productivity in a mathematically way
Walter ISARD (1919-2010)
principal founder of the discipline of Regional Science - (1975) Introduction to Regional Science - definition of RE
Dept. of RE in University of Pennsylvania
translated into English the works of some of the principal German location theorists
did some work on the location of the U.S. steel industry, and on the costs and benefits of atomic power
Books: Location and Space Economy (1956); Industrial Complex Analysis and Regional Development (1959); and Methods of Regional Analysis (1960).
1956 - founding the Regional Science Research Institute
1958 launching the Journal of Regional Science
Paul KRUGMAN (1953-)
professor at Princeton University
(2008) won the Nobel Memorial Prize in Economic Sciences - New Trade Theory, New Economic Geography
wrote 20 books and published over 200 articles
his interest in economics began with Isaac Asimov's Foundation novels
New economic geography
production will tend to concentrate in a few countries, regions, or cities, which will become densely populated but will also have higher levels of income
Michael PORTER (1947-)
Professor at Harvard Business School
company strategy, the competitiveness of nations and regions
how a firm or a region can build a competitive advantage and develop competitive strategy
Porter five forces analysis, Diamond model
Location decisions
introduce the regions of your country
5 minutes
Decisions are influenced by...
size of the company
types of activities, sectors
place in the hierarchy of the company (supplier, main HQ)
quality and quantity (costs of wages, price of land, logistical costs, overhead costs, HR supply, city services, etc)
time, risks, fixed assets
connections between location decisions and types of company activities
local economies (services, local taxes, image of the city, etc)
Role play 2
you are the leaders of small company producing specific shoes
you wish to open a new factory
where do you want to open it?
what kind of information do you need to decide?
PhD student - Gyor, Szechenyi Istvan University, Doctoral School on Regional Science
lecturer and project manager at CoD
more than 5 years experience - project management, EU, local strategies
Basics of RE
natural resources
spatial concentration
delivery and communication costs
Market imperfections:
natural resources are not mobile, they are immovable
imperfect diversification of products or services
imperfect mobility of products or services
How can natural resources influence the economy of a region?
Give us an example from your home country.
Introduce yourself
Dimensions of RE
Types of spaces and regions
symbolic (ideology, religion, language)
institutional (politics and law)
consumer's - city (economic)
producer's - region (economic)
Symbolic space - languages
Symbolic space - religions
Types of regions
planning or programming (statistics, politics)
nodal (consistent economic places, big cities, agglomerations)
homogeneous (similar attributes)
EU 27 GDP per capita in PPS Index (EU-27 = 100)
Global population density
EU Total average population by NUTS 2 regions
(1 000 inhabitants)
Hungarian wine regions
List some developed agglomeration (cities) of the world.
Why are these regions successful?
social - economical
mental - behavioral
Several sections:
urban economics
location theories
macro or micro RE
positive or normative RE
The determinants of industrial location
The regional economic impact of the arrival or departure of a firm
Immigration patterns
Regional specialization and exchange
Environmental impacts
Geographic association of economic and social conditions
Regional Science is concerned with:
Economic Activity can aim:
1) Natural resource advantages
2) Economies of concentration
3) Transportation costs
Or more formally, there is an:
Imperfect factor mobility
Imperfect divisibility
Imperfect mobility of goods and services
Three Foundation Stones of RE
Why are some regions more developed than the others? What factors affect differences in regional development patterns??

Write down three most important reasons that first comes to your mind.
a geocode standard for referencing the subdivisions of countries for statistical purposes
three levels: NUTS 1, 2 and 3
developed and regulated by the European Union
covers the member states of the EU in detail
used in European Union's Structural Fund delivery mechanisms
The Nomenclature of Territorial Units for Statistics
Normative regions
are the expression of a political will; according to the sizes of population necessary to carry out these tasks efficiently and economically, and according to historical, cultural and other factors;
Analytical (or functional) regions
are defined according geographical criteria (e.g., altitude or type of soil) or using socio-economic criteria (e.g., homogeneity, complementarity or polarity of regional economies).
Types of regions by the EU
1. (1950-1970) Post war regional adjustment
Thinking regionally
Location matters
Cold war programs
New programs in regional science, public funding
Importance of RE is increasing in society
2. (1980-2000) Globalization
Thinking globally
Flexible space
Decreasing support and less public funding
Decreasing importance in society
3. (2000-2010) Environmental and social sustainability
Thinking sustainable
Cooperation in continental level
Financial power
Financial crisis
Political power of developed countries, power of regions
New programs
Increasing importance in society
History of Location Theories
3 main bases of the location
and settlements
Economic and technological spaces
Geography of innovation
Geography of companies and
production systems
The geographic location of economic activity

RE units
for-profit enterprise - local unit, headquarters
non-profit, public - office
households - home
non-transferable (local) inputs and outputs
transferable inputs and outputs
Other factors of settlement decisions
expected time frame
period of life
expected income and cost
expected investments near future location
Role play 1
you are a decision maker in your family
you receives a job in Hungary and you wish to move here together with the whole family
list some pros and contras
What kind of information do you need to collect before you move? - use the list of the factors of settlement and list exact details
1. Is your hometown a good place for foreign investments?
2. Is Dunaujvaros a good place for foreign investments?
List some pros and contras (min. 10)
Regions of Hungary
a geocode standard for referencing the subdivisions of countries for statistical purposes
three levels: NUTS 1, 2 and 3
developed and regulated by the European Union
covers the member states of the EU in detail
used in European Union's Structural Fund delivery mechanisms
The Nomenclature of Territorial Units for Statistics
EU NUTS regions
NUTS1 - 3
NUTS2 - 7 (regions)
NUTS3 - 19+ Budapest (counties)
List some natural resources and name their locations.
List some transferable and non-transferable goods!
Alfred WEBER's industrial location theory
an industry is located where the transportation costs of raw materials and final product is a minimum
a set of simplifications:
location takes place in an isolated region (no external influences)
that space is isotropic (no variations in transport costs except a simple function of distance)
that markets are located in a specific number of centers
perfect competition - a high number of firms and customers,
small firm sizes (to prevent disruptions created by monopolies and oligopolies)
perfect knowledge of market conditions, both for the buyers and suppliers
two special cases:
1. the weight of the final product is less than the weight of the raw material for making the product - the weight losing case
2. the final product is heavier than the raw material that require transport - (a case of some ubiquitous, everywhere available raw material, such as water) the weight-gaining case
three main factors influence industrial location;
transport costs,
labor costs
agglomeration economies
Location thus imply an optimal consideration of these factors.
three stages:
finding the lowest transport cost location
and adjusting this location to consider labor costs agglomeration economies
Transportation is the most important element of the model
Weber's Location Triangle
The optimal location
minimizing transport costs
location of heavy industries - activities using ubiquitous raw materials
M = market
S1 = ore mine
S2 = coal mine
P = minimum of delivery cost, optimal location
What is the problem with Weber's location theory?
Why can't we use it today?
Spatial Location Theory of Lösch
The Four Classical Traditions in Location Theory
Profit maximization approach
isotropic plain
population evenly distributed
identical preferences among population
consumers pay for shipping the products
people act economically rational
profitable factories can enter the market
The correct location of a firm lies
where the net profit is greatest.

(The net profit is the difference between sales income and production costs.)
It is very difficult to pinpoint a single "best" location - it is possible to replace one input (Labour) by another (automated technology) or increase transport cost while reducing land rent (Substitution Principle). With substitution, a
number of different points may appear as optimal locations
a whole series of points exist
where total revenue equals total cost
(of producing a given output)
series of points, connected -
Spatial Margin of Profitability, the area within which profitable operation is possible
Definitions of processes generating a region
Area, space
distribution of space,
making zones
Top down
Bottom up
strong power of society
and economy
to generate regions
regional identity,
decreasing or eliminating geographic 'borders'
death of distance and death of geography
widening, deepening and speeding up of worldwide interconnectedness
networks of interdependence become large and continuous
a quantitative and qualitative change, not only economic
new economics
ciber space
Definition of Globalization
- extensiveness of global network
- intensity of global interactions
- velocity of global flows
– impact of global interconnections on quality of life
4 dimensions of globalization
Global economy is increased by ...
deregulation and liberalization policies
increasing role of infomation and communication technology
4 main process of global competiton
strenghtening competition in all markets
production spread to almost every countries
content of international trade changed
interconnections increased
5 factors forming global economy (P. Dicken)
transnational and global companies
international integrations
new global monetary systems
manufacturing products and services
List some examples:
How can these 5 factors influence globalization?
New spatial levels
supranational economy
national economy
regional/local economy
Do you know any supranational economic area?
Porter's 6 spatial levels
world/global economy
national economy
How can globalization affetct...
the economics of a nation?
the profit of a firm?
your personal life?
Disparity =
Regional disparities =
differences between economic performance and welfare between countries or regions (OECD 2002, 2003)
unbalanced spatial structures in som regions or in different regions
deviations from any conceptional reference division of characters taken as relevant, in association with different spatial levels
the key question of EU policies come from is the question of cohesion (coherence) and a lack of cohesion is measured by disparities size
Make a list of regional disparity factors (differentials)!
In which factors can 2 regions differ from eachother?
Negative and positive regional diparities
Classification of disparities
Vertical perspective:
disparities are changing in accordance with geographical dimension
e.g.: European level, national level, local level
Horizontal perspective:
associating with subject sphere of their occurrence
according to basic attributes
Measuring regional disparities
Hoover index, Robin Hood index
The Robin Hood index, is
a measure of income metrics.
It is equal to the portion of the total community income that would have to be redistributed (taken from the richer half of the population and given to the poorer half) for there to be income uniformity.
Edgar Malone Hoover jr. (1984) An Introduction to Regional Economics, 1984, ISBN 0-07-554440-7
Pay Levels
Living Costs and Real Income
Supply of labor
Work Location Preferences and Labor Mobility
Labor orientation, the demand of labor
Labor costs
Labor quality
Institutional Constraints on Wages and Labor Costs
Complementary Labor
Phisical nature
Economic nature
Social nature
Hoover index in the EU (2004)
In order to eliminate regional disparities in the EU 25
14,1% of the incomes should be transfered from the rich regions to poor regions
Eurostat is the statistical office of the European Union situated in Luxembourg. Its task is to provide the European Union with statistics at European level that enable comparisons between countries and regions.
nation’s competitiveness
the degree to which it can, under free and fair market conditions, produce goods and services that meet the
challenges of international markets
while simultaneously expanding the real incomes of its citizens.
based on superior
productivity performance
and the economy’s ability to shift output to high productivity activities which in turn can generate high levels of real wages.
associated with
rising living standards
, expanding employment opportunities, and the ability of a nation to maintain its international obligations. It is not just a measure of the nation’s ability to sell abroad, and to maintain a trade equilibrium

the degree to which, under open market conditions, a country can produce goods and services that meet the test of foreign competition while simultaneously maintaining and expanding domestic real income
economy is competitive if
its population can enjoy high and rising standards of living and high employment on a sustainable basis. More precisely, the level of economic activity should not cause an unsustainable external balance of the economy nor should it compromise the welfare of future generations.
Regional competetiveness
the ability to produce goods and services which meet the test of international markets, while at the same time maintaining high and sustainable levels of income
the ability of (regions) to generate, while being
exposed to external competition, relatively high income
and employment levels’.”
For a
region to be competitive
, it is important to ensure both quality and

quantity of jobs.

Elements of macro-economic competitiveness:
A successful (economic) performance, typically judged in terms of rising living standards or real incomes
Open market conditions for the goods and services produced by the nation in question (i.e. there is actual or potential competition from foreign producers).
Short-term ‘competitiveness’ should not create imbalances that result in a successful performance becoming unsustainable.
Questioning national and
regional competetiveness
the concept of national competitiveness is
essentially ‘meaningless’ (Krugman,1994)
It is misleading to make an analogy between a nation and a firm;
whereas an unsuccessful firm will ultimately go out of business there is
no equivalent “
” for a nation.
Firms can be seen to compete for market share and one firm’s success will be at the expense of another’s, the success of one country or region creates rather than destroys opportunities for others and trade between nations is well known not to be a ‘
zero-sum game
Competitiveness is simply an other way of saying productivity;
growth in national living standards is essentially determined by the
growth rate of productivity
The IMD’s World Competitiveness Yearbook;
The World Economic Forum’s Global Competitiveness Report;
OECD’s New Economy Report;
Government’s Productivity and Competitiveness Indicators
Measuring national and regional competetiveness
Factors of national and regional competetiveness
You are the leader of a regional development organization. You have to give a strategy to politicians. The subject of the strategy: Increase the competitiveness of the region.
Make a list of tools!
Tools for increasing the comptetiveness of a region.
Are regional disparities good?
Enhanced Economic efficiency
Enhanced productivity
Source: Budd and Hirmis, 2004
Economy level
Firm level
System of regional competitiveness
Provides appreciation of current local economic environment

Identifies weaknesses in the local economy

Encourages a longer term perspective on economic development process

May lead to new marketing and promotional programs for the region
May contribute to wasteful competition among regions

May result in a re-allocation of resources from low-visibility programs to high-visibility programs

May contribute to widening social inequalities

Used as justification for policy makers pet programs
Companies, localization and competitiveness
Spatial concentration of companies
globalization - increasing localization
local extern effects - activitiy of the company have + or - local effects (no payment or fees)
industrial districts
subsidiary trades
Sources of positive local extern effects
Overflow of industrual
positive local
extern effects
Specializing local
labor market
Large industrial
Modern built
Italian industrial areas - clusters
local area
mainly SMEs - spatial and sectorial specification
homogenous actors - similar social and cultral networks, behaviour, ethics
vertical and horizontal business connections, partnership
local community and private institutes develop local economic actors together
Stable business competitive advantages
Spatial economies
power of agglomeration
globalization of business activities
local impregnation
life cycles
Sources of
Connection between
strategy and competition
types of business investments
types of strategies
intensity of local competition
local environment improving investments and continuous development
Input terms
quality and specialization of inputs
resources (natural, human, capital)
quantity and costs of inputs
Demand terms
sophisticated local demand
local consumers (sophisticated, critical, ambitious)
local needs - indicating the change in demand
spacial segments, unusual needs
Supporting and
connected industry
quality and accesability of local supporting and connected industry
presence of competitive local connected industry
Lengyel, Rechnitzer, 2004
How do you think the local environment can promote a company's competitiveness?
List some local terms and conditions which can help companies to gain a better position in the global competition!
A cluster is a geographically proximate group of interconnected companies and associated institutions in a specific field based on commonalities and complementarities (Porter)
sectoral and geographical concentrations of enterprises that produce and sell a range of related or complementary products and, thus, face common challenges and opportunities (UNIDO)
Common factors of a cluster
Collaboration and partership
Specialization and innovation
Geographical concentration
Institutional connections
Combination of several resources and competencies
Competitiveness and competing companies
Lengyel, Rechnizter, 2004
Cluster development
Advanteges of clusters
competitiveness of cluster companies is increasing
productivity of connected companies is increasing
cluster companies become partners in regional development
Types of clusters
living clusters
emerging clusters
potential clusters
clusters governed by politics
dream clusters
Industrial clusters
mega clusters (Greek tourism, Finnish telecommunication)
mezo clusters (milk industry, cheramics)
micro clusters (1or 2 companies, supplying networks)
Regional clusters
Lengyel, Rechnitzer, 2004
Theoretical modell of business clusters
core of the cluster
competing companies
suppliers of raw materials
industrial institutions and organizations
new companies
demand factors
input factors
business partners
suppliers of tools
financial services
manufacturer services
business consultants
connected industries
similar technologies
joint human resources
similar strategies
Supporting (non-business) institutions
educational inst.
training inst.
R&D org.
regulatory and monitoring inst.
chambers and unions
Lengyel, Rechnitzer, 2004
Main objectives:
help each region achieve its full potential
improve competitiveness and employment by investing at regional level in areas of high growth potential, with an added value for the EU as a whole
bring living standards in the countries that have joined the EU since 2004 up to the EU average as quickly as possible.
ERDF - European Regional Development Fund
aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions
direct aid to investments in companies (in particular SMEs) to create sustainable jobs;
infrastructures linked to research and innovation, telecommunications, environment, energy and transport;
financial instruments (capital risk funds, local development funds, etc.) to support regional and local development and to foster cooperation between towns and regions;
technical assistance measures
ESF - European Social Funds
to improve employment and job opportunities in the European Union
supports actions in Member States in the following areas:
adapting workers and enterprises: lifelong learning schemes, designing and spreading innovative working organisations;
access to employment for job seekers, the unemployed, women and migrants;
social integration of disadvantaged people and combating discrimination in the job market;
strengthening human capital by reforming education systems and setting up a network of teaching establishments
Cohesion Fund
aimed at Member States whose Gross National Income (GNI) per inhabitant is less than 90% of the Community average
serves to reduce their economic and social shortfall, as well as to stabilise their economy
finances activities under the following categories:
trans-European transport networks
environment; projects related to energy or transport, energy efficiency, use of renewable energy, developing rail transport, supporting intermodality, strengthening public transport, etc.
Cooperation between regions and countries
European Territorial Cooperation
helping to ensure that borders are not barriers,
bringing Europeans closer together,
helping to solve common problems,
facilitating the sharing of ideas and assets, and
encouraging strategic work towards common goals.
Macro-regional Strategies
The EU Strategy for the Baltic Sea Region
The EU Strategy for the Danube Region
Regions for Economic Change
exchange of good practice between Europe's regions.
Other forms of cooperation and networking
The annual European Week of Cities and Regions ("Open Days") event
The RegioNetwork 2020 online cooperation platform
International Cooperation
Write a list!
What kind of organizations can participate in a
fast food cluster
automotive industry cluster
moblie application cluster
steel industry cluster
Do you know any FUNDs connected to the regional policy of the EU?
Regional development strategies and documents
Content of a strategy
situation analysis, data collection and analysis
areas, fields
expert teams,
socialization and promotion,
overall objectives
Why do you think a regional development strategy is necessary?
Make a list!
Who can participate in the elaboration of a regional development strategy?
government representative
the local public administration;
the local community;
private companies;
the representatives of the civil society
development agencies
higher educational institutes
Problems of the elaboration of a strategy
containing the whole knowledge regarding to a subject
aggregation of themes
separate professional knowledge
need of assets, possibilities, effects
a concept choosen by the government built upon the concerning subject
asset need and effects are consistent
worked out due by political decisions
technics of validation and strategies, programmes and projects
building goals, priorities
fixing long-term goals
what to do in the present
today's possibilities, stepas according to the present possibilities
not a result of the strategy
effects are not always the best
measures following eachother, continuous decision making
not a straight line
how to lead tactics to the strategic goals
elements of the programme
not always on the line
Types of documents
Definition of economic indicator:
Statistical data showing general trends in the economy.
An economic indicator (or business indicator) is a statistic about the economy. They allow analysis of economic performance and predictions of future performance.
Types of EU indicators:
development indicators
input indicators
output indicators
outcome indicators
impact indicators
Output indicators:
located at the level of activities
direct consequences of activities implementes
immediate and concrete consequences
Outcome indicators:
at the level of results
short-term results
level of beneficiaries
Impact indicators:
long-term consequences of outcomes
measures the general objective
at teh level of purpose and overall objectives
Regions 2020
provides a first prospective analysis of the likely regional impact of four of the biggest challenges facing Europe:
demographic change,
climate change, and the
energy supply.
emphesized projects
local projects
action plans
project details
second round socialization and promotion
main partners,
key actors,
civil-business-public area
knowledge transfer
civil forums,
conferences, etc.
Clusters in Finland
bad strategy - want too much, dreams (2 or 3 main areas are enough)
no institutional background for the elaboration - strategy in the drawer
no human resources - key persons, encouraged, strong local influence
no partnership and no cooperation - a lot of people has to be encouraged, harminoze thier interests, cooperation
process of elaboration is not good - assigne projects to strategic goals, responsible persons to projects, felxibility is important
financial problems
time the Commission has prepared a prospective analysis to explore regional impacts of four major challenges in 2020.
Strong differences
in vulnerability of regions to the challenges from globalisation, demographic change, climate change and energy.
Regions intensively
by three or more challenges are primarily located in the South and on the coasts of Western and Central Europe.
Almost all regions will need to find
tailored solutions to meet combinations of challenges.
This will be an important input into the future design of cohesion policy post 2013.
Key Messages
Need for
continuous support
for all European Regions to drive forward regions to focus on the promotion of new approaches, reorientate private and public investments.
Continuous focus on the Lisbon Agenda.
Reinforcement of investments to address the challenges posed by the shift to the
low carbon economy
territorial cooperation
to address common problems.
Lessons for the future Regional Policy
Globalization vulnerability index
Regions of North-West periphery well placed;
Southern and Eastern regions more exposed;
Mixed patterns in Western and Central Europe;
Urban areas better placed.
Demography vulnerability index
33 % of regions will face population decline
Highest share of elderly population (aged 65+) in Eastern Germany, Finland, Northern Spain, Italy
Lowest share of working-age population (aged 15-64) in several Finnish, Swedish and German regions
Rural areas in less favourable position
Demographic change
Climate change vulnerability index
Southern Europe most vulnerable;
170 million people live in strongly affected regions;
North and Western regions less affected, except lowland coastal areas.
Climate change
Energy vulnerability index
determined by national energy policy choices;
Eastern and southern periphery more affected by security of supply.
Ireland, Poland, Czech Republic and Bulgaria face strong challenges
Multiple challenge vulnerability index
Southern, western coastal and central regions in Germany and New Member States are strongly affected
North-Western periphery regions are less vulnerable
Multiple challenges
8 cluster programs in 1997-99:
Wood Wisdom - agriculture and forestry
food industry cluster
telecommunication cluster
2 transport cluster
Well-Being cluster
environmental cluster
adopting cluster approach into the national program of worklife development
Institutional background
Science and Technology Policy Council, STPC
TEKES -national technologic agency
SITRA - innovation foundation
Centres of Expertise, OSKE (21)
SHOK - national level organizations (6)
2001 - research on mega clusters involving 68 sectors and 4000 industrial partership
Indicating 9 key clusters:
information and communication cluster
forestry cluster
metal processing cluster
mechanical engineering cluster
food industry cluster
business service cluster
building and construction industry cluster
energetic cluster
health service cluster
Development of cluster policies:
local/regional phase (1990s): promoting structural changes, research of clusters
national phase (2000-2010): innovation framework, bottom up approach
international phase (2010-): focusing international innovation nodes, strong R&D&I platforms on priority fielsd
Schedule - March 2014
11TH - 15:00-18:45
14TH - 13:00-16:45
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Can you tell us some examples of the 4 dimension?
Global Competitiveness Report 2013 - 2014 - Jennifer Blanke
Changing higher education
Economic crisis
strengthening power of developed regions
changing systems and structures
improving role of information, communication and innovation
higher educational institutes joining global networks and processes
global information and cooperation networks
awareness of natural resources
changing level of regional competition - cities and attraction zones
changing studying area
changing role of information
multicultural and multilingual courses
institutions join global economic processes
online and open courses
global research networks - eg. international co-authorship of publications, co-inventors of patents
new R&D areas (biotechnology, nanotechnology, genetic engineering, etc.)
free flow of knowledge?
changing importance of innovation
innovation can be an outbreak point
changing national and international systems
less governmental support?
new methods: decentralization, deregulation, partnership, cooperation, networking
new aspects: think global, act local
strengthening importance of information and communication
sub national innovation systems
company management belongs to global headquarter but innovation management must be local
lack of resources (human resources)
specific local knowledge became more important
cooperation with local companies - knows local attitudes, customs
creative class, cities are the cradles of creativity
problems of global branding
human side of innovation - people can adapt more slowly than systems (Dahrendorf, 1994 - 6 mth, 6 y, 60 y)
How do you think globalization affects universities?
one of the richest parts of the world
large differences in prosperity levels both between countries and inside individual countries.
wealthiest country, Luxembourg, is more than seven times richer than Romania and Bulgaria, the poorest and newest EU members
The causes of inequality:
longstanding handicaps imposed by geographic remoteness or sparse population
more recent social and economic change
the legacy of formerly centrally-planned economic systems
combinations of these and other things
The impact of these disadvantages:
social deprivation
poor-quality schools
higher levels of unemployment
inadequate infrastructure
to promote growth and
making countries and regions more attractive for
- improving accessibility, providing quality services, preserving environmental potential
innovation, entrepreneurship and the knowledge economy
- pushing regions to capitalise on their strengths and make a more effective and better combined use of European national and regional public funds, developing 'smart specialisation' strategies for growth
creating more and better jobs by
attracting more people into employment
- reversing the ‘brain-drain’, improving workers’ adaptability and increasing investment in human capital.

Available funding:
Regional spending for 2007-13 accounts for over one-third of the EU budget – some €347 billion.
three different sources:
European Regional Development Fund
(ERDF) – general infrastructure, innovation, and investments
European Social Fund
(ESF) – vocational training projects, other kinds of employment assistance, and job-creation programmes.
Cohesion Fund
– environmental and transport infrastructure projects and the development of renewable energy. This funding is for 15 countries whose economic outputs are less than 90% of the EU average (13 newest EU members plus Portugal, Greece and Spain)
the European Union’s ten-year growth and jobs strategy that was launched in 2010
more than just overcoming the crisis from which our economies
addressing the shortcomings of our growth model and creating the conditions for a smart, sustainable and inclusive growth
5 headline targets
- to achieve by the end of 2020
7 ‘flagship initiatives’
- EU and national authorities mutually reinforce their efforts - innovation, the digital economy, employment, youth, industrial policy, poverty, and resource efficiency
European single market, the EU budget and the EU external agenda
EUROPE 2020 priorities
that is:
, through more effective investments in education, research and innovation;
, thanks to a decisive move towards a low-carbon economy; and
, with a strong emphasis on job creation and poverty reduction.
The 5 targets for the EU in 2020

75% of the 20-64 year-olds to be employed

3% of the EU's GDP to be invested in R&D
Climate change and energy sustainability
greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990
20% of energy from renewables
20% increase in energy efficiency

Reducing the rates of early school leaving below 10%
at least 40% of 30-34–year-olds completing third level education
Fighting poverty and social exclusion
at least 20 million fewer people in or at risk of poverty and social exclusion
7 flagship initiatives
Smart growth
Digital agenda for Europe
Innovation Union
Youth on the move
Sustainable growth
Resource efficient Europe
An industrial policy for the globalisation era
Inclusive growth
An agenda for new skills and jobs
European platform against poverty

EU funding is helping to support:
•The development of new technologies
•Cutting edge research
•High-speed internet access
•Smart transport and energy infrastructure
•Energy efficiency and renewable energies
•Business development
•Skills and training
EU innovation strategy
Innovation Union
Regional development plan
Principles of writing a RDP
Content of RDP
governments - top down process or
bottom up process
wellbeing of people
economic, social, environmental problems
human connections
owerview - from leaders point of view
environment analysis
objectives, priorities and goals - hierarchy
resource requirements
risk management
evaluation methods - indicators
Make a list! What kind of project would you write into the regional development plan of your region?
Possible mistakes of a RDP
does not contain bottom ip approach
no special goals - maximum 5 areas
not realistic goals - 'dreams'
not based on regional resources and breakeven points
based on false statistics
'copy of other plans'
no experts involved - omly political viewpoint
no detailed projects, actions
flase indicators
focusing only on economics - social impact is not measured
loose control - into the drawer
Read the given material. What is missing from the plan?
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