COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(94) 322 final 
Brussels, 19.07.1994 
Fifth Periodic Report on the Social and Economic Situatio 
and Development of the Regions of the Community n 
(presented by the Commission) 
Introduction Introduction 
The Fifth Periodic Report on the social and economic 
situation and development of the regions in the 
Community updates the information contained in 
preceding reports and provides further analysis on 
matters relating to regional problems and policy. 
Part A of the report covers the main regional trends 
and differences over the last decade or so in regard 
to output, productivity, employment and unemploy­
ment. Also included are the results of a major re­
examination of demographic trends in the regions 
which focuses on the prospective changes in popula­
tion and labour force for the year 2000. 
Part B examines some of the factors underlying the 
disparities between regions. The analysis builds on 
that undertaken in previous reports, for example, in 
regard to infrastructure where a new statistical data­
base on national and regional endowments is exam­
ined. A chapter is also devoted to the role of research 
and technological development in the regions, 
broadening the analysis presented in the preceding 
report. Entirely new elements include a consideration 
of the trends in foreign direct investment flows (and 
the relative attractiveness of regions to new inves­
tors) and differences in the accessibility of regions 
(including how this can be expected to change as a 
result of improvements in transport). 
Part C of the report describes the situation in the 
Community's problem regions which were eligible for 
assistance under Community regional policies for the 
period 1989-93. The report also provides a first oppor­tunity to consider the next generation of regional 
policies effective from 1994 where there is both 
continuity with the past as well as important innova­
tions. This part of the report also examines Member 
States' own regional policies and the changes which 
have taken place over the last decade or so. 
Part D of the report covers other Community policies 
in the field of economic and monetary integration and 
external policy (enlargement). The latter covers re­
gional aspects of the last enlargement (the situation 
and prospects of the new German Lander), the next 
enlargement (the regions of Austria, Sweden, 
Finland and Norway) as well as examining the re­
gional situation of the countries in the East under­
going extensive economic reform (Poland, the Czech 
Republic, Slovakia and Hungary). 
The report reflects a combination of own research 
and studies carried out by external experts which are 
referenced in the text. 
Legal basis 
The periodic reports are prepared in accordance with 
Article 8 of Council Regulation (EEC) N°4254/88 
(as amended) on the reform of the European Regional 
Development Fund. 
The report was adopted by the Commission after 
consulting the Advisory Committee on the Develop­
ment and Conversion of Regions which expressed a 
favourable opinion on its contents. 
2 3 
Introduction 
\"*' ^'Y'iïYi'"'**:?-/*''* ;*';C:VV, ' * '--^ • 't-y^^^^^^^iv"^-^'^r^,~ ^^7 Table of contents 
Table of contents 
Main regional trends 
Population and labour force to the end of the century 
Trends in output in the regions 
Employment and unemployment trends and differences in the regions 
Employment 
Unemployment 
The situation and prospects of selected sectors:..-: 
Regional competitiveness : Factors underlying regional disparities 
Infrastructure and human resource endowments 
New inward investment and the regions 
The role of research and technological development in the regions 
Peripherality reconsidered 
The regional policies and problem areas of the Community 
Regions assisted by the Community 1989-1993 
Community regional policies 1994-1999 
Regional policies in Member States : recent trends 
Deepening and widening and the regions of the Community 
Current issues and problems 
Prospects for the regions under EMU 
The previous enlargement : the situation of, and prospects for, 
the new German Lander '. 
Regional structures and problems in neighbouring countries 
The EFTA countries » 
The Visegrad countries ." 
Table of contents 
Statistical annex 
List of Maps 
List of Tables 
List of Graphs 
Summary and conclusions 
Summary and conclusions 
Regional trends 
in the recession 
The economic situation confronting the regions of 
the Community in 1993/94 could scarcely be more 
different from that which prevailed when the Com­
mission produced the previous Periodic Report at the 
end of 1990. Then, economic growth was averaging 
3-4% per annum, jobs were being created at a record 
rate and unemployment was falling steadily even in 
the face of an expanding labour force. Now, the 
Community's economy is at the end of a relatively 
deep recession - output seems to have fallen slightly 
in 1993 for the first time since 1975 -and unemploy­
ment has risen to 11%, slightly above the level a 
decade earlier when it was at its highest in the 
Community's history. 
Whatever the explanation of the Community's econ­
omic difficulties, and although signs of improvement 
are visible, they have not provided the ideal circum­
stances for a reduction in interregional disparities, as 
pointed out in previous Periodic Reports. 
More detailed analysis of the trends at regional level 
reveal a mixed picture. In terms of their capacity to 
generate income (defined in terms of Gross Domestic 
Product (GDP) and expressed per head of popula­
tion), there is evidence of a general narrowing of 
disparities across the regions as a whole. Up to 1991 
- the latest year for which a complete data set exists -
statistical measures which take into consideration the situation of all regions point to a slow but steady 
reduction in disparities in output per head in general. 
Even so, the gap between the richest and poorest 
regions remains considerable. For example, in 1991, 
the top 10 regions had an average income per head 
some 3V2 times greater than the bottom 10. With the 
new German Lander included the difference is 
4V2 times. 
The figures also suggest that border regions in the 
Member States tend to be poorer than the rest of the 
country. This is not a uniform tendency, and espe­
cially in Belgium the difference in their income per 
head is small. 
With regard to unemployment rates, disparities 
which narrowed at the end of 1980s widened again 
in 1992 and 1993. Unemployment in 1993 in the 
10 worst-affected regions averaged 25.3%, some 
7 times higher than the 10 least-affected regions 
where the rate averaged 3.6%. The regions with the 
highest rates of unemployment - in Spain, Southern 
Italy, Ireland and Northern Ireland - are often those 
where working-age population and labour force are 
growing the fastest. 
While it was expected in the last Periodic Report that 
labour supply growth would slow down, this now 
seems by no means certain. In part this is because of 
the possible persistence of the higher levels of immi­
gration into some parts of the Community which 
have been a feature of recent years. More importan­
tly, it is because there are as yet no signs that the 
Summary and conclusions 
upward trend in female activity rates is slowing down 
especially in those parts of the Community where 
they are relatively low. In general, demographic fac­
tors cannot be counted on to solve the Community's 
unemployment problems, especially at regional 
level, although falling numbers of young people in 
certain areas should help to reduce levels of youth 
unemployment 
The unemployment problems also reflect the failure 
to create jobs at the rate required to offset the long-
term decline in agricultural employment - a process 
which has yet to run its full course in most regions -
and the job losses caused by the restructuring of 
industry. 
An examination of selected sectors within industry 
shows widely different experiences. In textiles and 
clothing, which is strongly represented in the weaker 
regions of the Community, both output and employ­
ment are under threat. In automobiles and aero­
nautics, rationalisation and the reorganisation of pro­
duction threaten employment although the longer 
term trend in output is upward. Both activities have 
been hard-hit by the global recession and the job 
losses have contributed to rising unemployment in 
some of the Community's central regions, although 
rates seldom approach those in the Community's 
worst-affected regions in the South and Ireland. 
Also considered in the report is the defence sector, 
an amalgam of industrial and service activities 
brought together by their shared dependence on pub­
lic defence budgets which are under threat in vir­
tually all Member States. The outcome for the re­
gions in which production is located is uncertain. 
Community producers are not entirely dependent on 
domestic markets but the restructuring of output to­
wards non-military uses seems to offer the best long-
term policy. At the same time, the run-down or 
closure of military installations - often located in 
remote and rural areas - will also affect the regions 
to varying degrees depending on the extent of local 
linkages while the effect on unemployment of a 
reduction in military personnel will tend to be more 
widely spread. Factors behind 
the disparities 
The disparities between the regions reflect their dif­
ferent underlying circumstances: a combination of 
historical patterns of development and the capacity 
to adapt to the rapidly changing world of the late 
twentieth century. 
Uneven patterns of development, historically, have 
resulted in widely different endowments in infra­
structures (transport, energy, telecommunications 
and the environment) and in human capital (the 
knowledge and skills accumulated in the workforce) 
which are basic conditions for efficient production. 
Disparities in incomes per head are strongly associ­
ated both with poor levels of infrastructure provision 
and lower levels of qualification of the labour force. 
Compared to the rest of the Community, the regions 
of Greece, Spain, Ireland and Portugal tend to have 
fewer roads, fewer motorways (and higher road-
accident rates), fewer and more outdated rail lines, 
fewer telephone lines, poorer access to the major 
energy networks and are less likely to be connected 
to waste and water supply systems. The differences 
remain stark even after standardisation for popula­
tion and land size. 
New Commission figures throw these disparities into 
sharp relief. For example, the provision of motor­
ways in Ireland and Greece is less than 10% of the 
Community average. In Portugal there is an average 
of only 27 telephone lines per 100 inhabitants - less 
than half the density in most Northern Member 
States. In Portugal and Greece, only 10% of the 
population is connected to, a waste water treatment 
facility (a particular difficulty given the importance 
of tourism in these areas) whereas the figure is over 
80% in most Northern Member States. There are 
often wide differences in the levels of qualification 
of the workforce, although the situation is changing 
rapidly. The weight of the past remains important and 
whereas in the Community as a whole, for example, 
less than one in five adults had not completed an 
education beyond primary level, in Greece the figure 
is one in two adults and, in Portugal, three in every 
four adults. This is one factor in the explanation of 
ttX&MX&ftti&v^^ 
10 
W^'K^X'-r*-' *"~' - * t c;"''Xf't ' 'V*^^ ,à 
relatively low rates of female participation in these 
areas. 
The knowledge and skills accumulated in the work­
force are critical for the competitiveness and adapta­
bility of regional economic structures, a feature 
which is closely linked to research and technological 
development activity (RTD). Adjusted for the size of 
their workforce, Greece and Portugal have only 20-
25% of employment in RTD compared with the more 
advanced Member States. This is only one aspect of 
the handicap suffered by the weaker Member States 
and regions. Others include a comparative absence 
of private sector involvement, and the absence of a 
financial environment attuned to the risks of innova­
tory activities. Nevertheless, the evidence suggests 
that a major investment programme in research fa­
cilities in the Community's weaker regions is not the 
most direct or cost-effective solution since new tech­
nology can be acquired externally. What is more 
critical is the capacity to absorb and exploit new 
technology which is often lacking and which there­
fore implies a need to establish appropriate systems 
for technological transfer. A key difficulty in the 
weaker regions, however, is a lack of receptiveness to 
RTD: a failure of businesses both to recognise the 
importance of RTD and to establish a business ethos 
based on the continuous introduction of new products 
and processes. This suggests a role for the transfer of 
appropriately qualified personnel from stronger to 
weaker regions, demonstration projects and other 
measures which will help persuade firms of the relev­
ance of RTD to their business prospects. This is espe­
cially relevant to small and medium-sized enterprises 
which are often a key source of innovations. 
Many oTthe handicaps affecting the weaker regions 
can be alleviated through new investment There is 
encouraging evidence that the weakest Member 
States - with the support of the Community's Struc­
tural Funds - are investing more heavily in infra­
structure than the rest of the Community. In the four 
poorest Member States, real investment in transport 
more than doubled between 1989 and 1993 (much 
more on roads than on rail) while in Spain and 
Portugal annual investment in telecommunications 
trebled - albeit from a very low base - in the five 
years up to 1991. Since the latter investments em­body the latest technology, it has enabled the weaker 
regions to achieve relatively high rates of access to 
the digital services which are essential for modern 
data transmission systems. 
Investment in transport, energy and telecommunica­
tions is vital to overcoming natural, geographical 
disadvantages often suffered by the Community's 
peripheral regions and islands. Geographical periph-
erality, however, is not the same as economic periph-
erality, a fact which should become even clearer with 
the enlargement of the Community to include distant 
but often relatively prosperous Nordic regions. Cur­
rently planned investment in passenger transport net­
works is an important step towards reducing the 
economic effects of geographical peripherality. Ana­
lysis of the effects of these improvements suggests 
that the main benefits are likely to accrue to many 
regions in Greece, Ireland and Southern and Western 
parts of the Iberian Peninsula, reducing the time it 
takes to travel to Europe's main economic centres. It 
is therefore of critical importance that these projects 
are carried out. 
Improvements in telecommunication networks will 
also increase the accessibility of peripheral areas 
although they are not the substitute for transport that 
is sometimes thought On the contrary, contacts es­
tablished by telephone - and along the information 
highways of the future - are likely to lead to increased 
demand for passenger and freight traffic. Transport 
and telecommunications networks are, therefore, es­
sentially complementary. 
In relation to energy infrastructures, improvements 
in terms of the inter-connection and inter-operability 
of energy networks, and regional access to these 
networks, will help to improve regional development 
prospects. 
The evidence shows that new investors are acutely 
aware of infrastructure and human resource endow­
ments when taking their decisions about where to 
locate, placing both features at the top of their list of 
requirements. Modern firms tend to seek a combina­
tion of favourable features rather than being attracted 
by any single factor - which differ from activity to 
activity - when deciding where to invest. 
11 
One important factor which has favoured 
Community regions as a whole as a location for new 
investment has been the creation of the Single 
Market This has led to a massive (gross) inflow of 
foreign direct investment (FDI) into the Community 
from third countries estimated at nearly 120 bil­
lion ECU between 1986 and 1991. When combined 
with the flows between Member States - some 
150 billion ECU between 1986 and 1991 - FDI rep­
resents a significant source of potential investment 
for the Community's weaker regions and, except in 
the case of Greece, has outstripped the transfers from 
the Structural Funds. All of the weaker Member 
States are net beneficiaries of those FDI flows as are 
Belgium/Luxembourg and the UK. In the weaker 
Member States, the flows from their Community 
partners are the most important whereas the UK is a 
major recipient of FDI from third countries. 
The Community's 
problem regions 
and regional policies 
It was against a background of wide regional dis­
parities, and the potential impact of the competitive 
forces unleashed by the Single Market, that the 
Community introduced the reform of the Structural 
Funds in 1988. Three types of problem region were 
defined in terms of the Objectives of policy action: 
Objective 1 (regions where development was lagging 
behind), Objective 2 (regions in industrial decline), 
and Objective 5b (rural problem areas). Defined in 
this way, in 1989, 140 million people in the 
Community lived in problem regions - half of them 
living in the weakest (Objective 1) regions - and in 
1990, 16 million people of the former GDR were 
added (under special provisions). 
The performance of these regions over time has been 
mixed. On the positive side, many Objective 1 re­
gions have been converging towards the more pros­
perous parts of the Community, although there are 
wide variations from region to region. The perfor­
mance of Ireland, Spain and Portugal has been most encouraging. Here, annual economic growth has 
averaged 3A% to l3/4% above the rate for the 
Community as a whole since the mid-1980s. The 
situation in Greece as well as in Southern Italy and 
Northern Ireland on the other hand, is considerably 
less encouraging and the economic performance of 
these regions seems to be deteriorating relative to the 
rest of the Community. 
^Catching up remains a long-term challenge and the 
gaps remain wide even with a growth differential on 
the scale achieved over recent years by Spain, Ireland 
and Portugal. In 1993, GDP per head was some 
22-24% below the Community average in Spain and 
Ireland and 40% below in Portugal. 
Many of the Objective 1 regions which have shown 
improvement in terms of GDP have achieved this 
primarily through increases in productivity. The ef­
fect on employment and unemployment has been less 
significant Because their labour force has grown, 
unemployment in Objective 1 regions as a whole has 
increased significantly since the mid-1980s. In 1993, 
one in six of the labour force was out of work, 50% 
above the Community average. 
Employment in the Objective 1 regions is still dis­
proportionately concentrated in traditional activities. 
Whereas these regions account for around 16% of 
total employment in the Community, they account 
for nearly 50% of employment in agriculture. In 
some regions the share of agricultural employment 
is still as high as 40% compared to a Community 
average of under 7%. The corollary is that service 
employment is often 10 percentage points or more 
below the Community average. Experience suggests 
that agricultural employment will decrease while 
many of the new jobs will be in services. The new 
opportunities may therefore tend to be of particular 
benefit to women many of whom are likely to be new 
entrants to the labour market. As a result, the effect 
on unemployment might well be small. 
The labour market situation is particularly important 
in Objective 2 regions since in these areas a reduction 
of unemployment is the principal aim of Community 
policies. Here, developments appear to have been 
favourable with unemployment falling by nearly 
12 
3 percentage points between 1986 and 1993 while in 
the rest of the Community it remained virtually un­
changed. This appears to reflect high rates of job 
creation in Objective 2 areas, up by 13% between 
1986 and 1993, nearly double the rate of increase in 
the Community as a whole. 
Employment increased in Objective 5b areas at the 
same rate as in the Community as a whole. The result 
was a fall in unemployment rates of 1 percentage 
point between 1986 and 1993, which may reflect 
some decline in the labour force in rural areas, per­
haps due partly to outward migration of population 
of working age. 
While falling short of a full evaluation of assisted 
regions, the trends in income per head, employment 
and unemployment are important points of reference 
for the Community's new structural policies begin­
ning this year (1994). This new phase of regional 
policies will need to address a number of specific 
problems, such as the poor economic performance of 
Greece, Corsica and Sardegna as well as the general 
problem of persistently high unemployment in the 
Spanish Objective 1 regions, Southern Italy, Ireland 
and Northern Ireland. The latter areas represent the 
most acute aspect of the Community ' s general failure 
to create jobs, as compared with the US and Japan, 
discussed in the Commission's White Paper Growth, 
Competitiveness and Employment. 
Hie Community's assisted regions enter the new 
programming period with considerably increased re­
sources compared to the previous phase, 1989-1993. 
These resources will be concentrated on the four 
poorest Member States which will receive 70% of the 
available funds (including the Cohesion Fund) com­
pared to 63.5% (under all three regional objectives) 
in the previous period. 
Total population coverage under the Structural 
Funds has increased from 43% to just under 52% of 
the Community total, although half of the increase is 
due to the inclusion of the new Lander. The increase 
in coverage is also a response to the regional effects 
of the general economic deterioration described 
above, as well as to a number of specific factors, such 
as the reform of the Common Agricultural Policy and increased international competition following the 
conclusion of the Uruguay Round of the GATT. 
The additional resources are accompanied by a 
strengthening of procedures designed to improve the 
efficiency of regional development programmes 
coupled with a simplification of the decision-making 
process. By the end of the decade the Community's 
regional policies are likely to finance around 5% of 
investment in Objective 1 regions which could rise 
to between 7 and 13% in the four poorest Member 
States, beneficiaries of the new Cohesion Fund. 
Used to finance new infrastructures (such as the 
trans-European networks referred to above) and ad­
ditional productive investment, these resources can 
be expected to accelerate the process of transforma­
tion and modernisation of the Community's weakest 
regions which the programmes implemented since 
1989 under the previous planning period have con­
tributed to. 
The new generation of regional development pro­
grammes will also be complemented by Community 
Initiatives which are designed to reinforce the actions 
contained in the programmes as well as to introduce 
fresh innovatory measures. The new phase will main­
tain a degree of continuity with the past with a 
combination of geographical initiatives 
(eg INTERREG for action in border areas, including 
energy networks, REGIS for areas of extreme re­
moteness, LEADER for rural development) and sec-
torally-inspired initiatives (to promote diversifica­
tion in areas dependent on older industries such as 
coal (RECHAR), steel (RESIDER), textiles 
(RETEX) as well as defence (KONVER)). New de­
partures include URBAN (actions in cities in crisis), 
PESCA (diversification in fisheries areas), ADAPT 
(to promote actions in anticipation of changing sys­
tems of production) and an initiative for small and 
medium-sized enterprise development. 
The full effects of the Community's new generation 
of policies, especially where they concern new infra­
structure and improvements in labour force skills, 
will only emerge over the longer term. However, 
Community policies in these areas are unlikely to be 
enough. Other conditions need to be satisfied before 
some regions are able to reduce the gap with the rest 
13 
Summary and conclusions I J**" V» 
Member States' own policies to promote develop­
ment in their regions have an important role to play. 
Here, the changes have been far-reaching over the 
past decade with many Northern Member States 
withdrawing from large-scale automatic support for 
new business investment in favour of selective assist­
ance to smaller enterprises. Urban problems and rural 
development problems also appear to be attracting 
greater support 
These changes to national regional policies largely 
concern incentives to business and are not, therefore, 
directly comparable with Community regional 
policies which also focus on infrastructure especially 
in Objective 1 regions. Nevertheless, the reductions 
in expenditure which have tended to accompany the 
adoption of a more selective approach in Northern 
parts of the Community will have to be compatible 
with the need to conform with the additionally con­
ditions under the revised Structural Funds, 
Deepening and widening 
in the 1990s 
Over the rest of the decade, the Community will take 
further steps towards integration. Stage 2 of the pro­
cess leading to economic and monetary union (EMU) 
has already been reached while the final stage, a 
single currency, will help regional development in­
sofar as it reduces transaction costs and eliminates 
exchange rate risk. At the same time, Member States 
will lose certain fiscal and monetary policy options 
as well as the ability to adjust the exchange rate. In a 
single currency system, Member States will have to 
adopt policies which avoid macroeconomic imbal­
ances but this will also create the conditions for faster 
growth and help the weaker Member States, in par­
ticular, in their efforts to promote real convergence. 
On economic grounds, the delayed entry of the 
weaker Member States into a single currency area 
would therefore be undesirable. 
EMU places additional importance on structural 
policies as a means of maintaining regional compe­titiveness. The need to accommodate structural 
policies to the stricter fiscal and monetary disciplines 
of EMU is being recognised in the implementation 
of the revised Structural Funds regulations by a posi­
tive response to request for higher rates of 
Community intervention within the limits laid down. 
There has also been an extension of eligible areas of 
expenditure to include education and health. This 
will ease the pressure on national budgets but it 
remains of paramount importance that any reduction-
s in public expenditure necessary to meet the macro-
economic convergence criteria agreed in the 
Maastricht Treaty be accompanied by a restructuring 
of expenditure to maintain investment and improve 
the competitiveness of the weaker regions. In this 
way, nominal and real convergence can be mutually 
compatible objectives. 
The movement towards EMU, and the increased 
importance accorded to Community structural 
policies, are manifestations of closer integration and 
greater sharing of decision-making agreed by the 
Community's governments when they signed the 
Maastricht Treaty in December 1991. These devel­
opments, towards a deepening of the Community, 
have been accompanied by a process of widening, or 
enlargement which has taken place at irregular inter­
vals since 1973. 
The regions of the ex-GDR have now been part of 
the Community for nearly 4 years. This has been a 
period of profound restructuring for the East German 
society and its regions. Output and employment have 
fallen markedly (by one-half and 40%, respectively) 
and regional unemployment rates have reached 13-
15%. At the same time, a massive, programme to 
reshape and modernise the economy has begun with 
investment rising to 50% of GDP compared to an 
average of 20% in the Community as a whole. This 
has contributed to substantial improvement in pro­
ductivity although the new Lander remain heavily 
dependent on public transfers from West Germany, 
equivalent to 4.5% of West German GDP in 1993. 
In addition, as new Objective 1 regions, the new 
Lander will receive 13.6 billion ECU (at 1994 prices, 
excluding Community Initiatives) from the Structu­
ral Funds over the period 1994-99. The challenge is 
14 
fpti\-}-îV^ Summary and conclusions 
to help produce competitive businesses and regional 
economies capable of generating the output and new 
employment which will allow standards to converge 
towards those of the rest of the Community. 
At the beginning of 1994 accession agreements were 
concluded with the governments of four countries of 
the European Free Trade Association (EFTA): 
Sweden, Norway, Finland and Austria. These coun­
tries are already well integrated into the Single Mar­
ket under the EEA agreement. Hungary with 3.5% of national population). The 
other regions of the four countries will also be con­
sidered by the Commission for assistance under Ob­
jectives 2 and 5b on a comparable basis to the exer­
cise undertaken for the present Community in 
1993/94. 
Enlargement to include the four EFTA countries will 
create an entirely new and extensive set of border 
regions with a new set of neighbours in die countries 
of Central and Eastern Europe. 
Unlike previous enlargements of the Community the 
EFTA countries will not in general contribute to a 
widening of regional disparities between Member 
States. Their average level of GDP per head is almost 
the same as that in the Community while unemploy­
ment rates have historically been much lower, though 
they have increased significantly during the present 
recession. They will, accordingly, impose relatively 
little additional burden on the budget for the Structu­
ral Funds which will rise by 5.9 billion ECU 
(1995 prices) or 4.5% as compared with an increase 
in the Community's population of 7.4% (and a rise 
in land area of 50%). Finland, however, represents 
something of an exception. Here, there has been a 
large fall in output and regional unemployment rates 
have reached 20%, largely as a result of a severe 
reduction in exports to the ex-Soviet Union, with 
which Finland had extensive trading links. It will be 
the only new Member State of the four to be a net 
recipient from the Community's budget. 
The regions of the four countries share many of the 
problems of other parts of the Community. There are 
differences in the underlying causes, however, and 
the recognition of this was instrumental in the agree­
ment to the creation of a new Objective 6 under the 
Structural Funds to accommodate the particular dif­
ficulties in the sparsely populated, climatically ex­
treme regions of Northern Scandinavia. Total popu­
lation coverage under Objective 6 will be 1.9 million 
(half of one percent of the total of the enlarged 
Community or between 5 and 17% of national popu­
lation in the three countries concerned), with a budget 
of 1.1 billion ECU for the period 1995-99. The only 
region meeting the criteria for Objective 1 is in 
Austria (Burgenland on the Eastern border with The Visegrad countries (Poland, Hungary, the Czech 
Republic and Slovakia) have undergone dramatic 
economic transformation since 1989. Poland and 
Hungary have formally applied for membership of 
the Community. Severe recession, caused partly by 
the break-up of old trading relations, and economic 
restructuring have resulted in massive falls in output 
and high unemployment in most parts (the Czech 
Republic is the main exception). The regional impact 
has been extremely uneven. In general, economic 
conditions tend to deteriorate - in terms of unem­
ployment, number of private firms, investment flows 
and quality and density of infrastructure - with dis­
tance from Western Europe, especially its capital 
cities. An East-West and urban-rural divide has been 
strengthened. Certain of the urban areas have also 
attracted most of the inward foreign investment. 
More general fears that the new opportunities created 
in Central and Eastern European countries would 
divert investment away from the Community, and 
especially its weaker Member States, appear so far 
to be unfounded. Moreover, any diversion of invest­
ment is likely to be more than offset by the increased 
trading and commercial opportunities for 
Community businesses generated by a successful 
reform in the East. Trade, however, is a two-way 
process and Central and Eastern European countries 
are already offering strong competition to 
Community producers in certain sensitive sectors 
such as steel, textiles and agricultural products 
though on a comparatively small scale so far. Over­
all, however, adjustments entailed by this competi­
tion are unlikely to rival those already demanded 
both by international trade with Japanese and Asian 
producers and by the advent of the Single Market 
15 
itself, and, from a long-term perspective, are equally 
inescapable if further economic progress is to be 
achieved. 
i^#*%WrtïïftomiWi*ïeVtttit>ï*iït 
16 
Population density in Europe, 1992 
-F HP' w inhabitants 
per square km • 
• <50 
50-100 
100-200 
200 - 500 
500-1000 
> 1000 
No data 
EUR12=151 
Summary and conclusions 
18 
A Main regional trends 
Section A Main regional trends 
Population and labour force to the end of the century 
Trends in output in the regions 
Employment and unemployment trends and differences in the regions 
Employment 
Unemployment 
The situation and prospects of selected sectors 
19 
Section A Main regional trends 
20 
Mil Chapter 1 - Population and labour force to the end of the century 
Chapter 1 Population and labour force 
to the end of the century 
Recent evidence points to the likelihood of a more 
rapid increase in the Community's population than 
expected in the Fourth Periodic Report1. Immigration 
is a significant part of the explanation although, in 
addition, people are living longer while the extremely 
low birth rates which now prevail may be starting 
gradually to rise again. Labour force in many regions 
can be expected to increase as a result of inward 
migration and if the trend towards higher female 
participation continues. a year, as a result of increasing participation 
among women and inward migration; 
• the proportion of the labour force aged 15-24 
declined from 20% to 16% as a result of failing 
birth-rates some two decades earlier and increas­
ing numbers remaining in education; 
• the proportion of total labour force aged 50-64 
declined from 21%^ to 19% because of earlier 
retirement among men. 
The last ten years 
There were a number of important demographic 
changes in the Community over the last ten years : 
• the total population (including the former East 
German Lander) increased by 0.3% a year from 
337 million to 347 million people; 
• the proportion of young people aged 0-14 in total 
population fell by 2 percentage points, from 20% 
to 18 %, while the proportion of older people aged 
65 and over increased by 2 percentage points 
from 13% to 15%; 
• the total Community labour force rose significantly 
from 143 million to 157 million people, almost 1% The extent to which such trends will persist into the 
next century in different countries and regions is 
important for economic prospects and potential la­
bour market pressures. 
Previous forecasts 
Previous studies undertaken in the 1980s suggested 
that the population of the Community would tend to 
stagnate during the 1990s. Such an outcome now 
seems to lie at the low end of expectations and the 
most recent evidence points to the possibility of 
population growth in the 1990s at a rate approaching 
that of the 1980s. There are three main reasons why 
population growth may continue. 
21 
Chapter 1 - Population and Tabour force to the end of Hie century 
Table 1 
Major demographic and labour force trends in EUR12 
Relative growth (%) 
Total 
of which 
persons aged 0-14 
persons aged 15-64 
persons aged 65+ 
Total 
of which 
men 
women 1985-1990 1990-1995 
Low High 
Average annual population growth 1995-2000 
Low High 
0.3 
-1.2 
0.5 
1.8 0.3 
-0.4 
0.2 
1.5 0.6 
0.3 
0.4 
1.7 0.1 
-0.5 
0.1 
1.1 
Average annual labour forcegrowth 
1.1 0.3 0.9 0 
0.5 
1.9 -0.1 
1.0 0.4 
1.5 -0.2 
0.4 0.5 
0.8 
0.3 
1.5 
1.1 
0.5 
2.0 2000-2020 
Low High 
-0.2 
-1.0 
-0.2 
0.9 
-0.4 
-0.5 
-0.3 0.5 
0.2 
0.2 
1.6 
1.0 
0.5 
1.6 
Table 2 
Major demographic and labour force trends in EUR12 
Absolute growth (million) 
Total 
of which 
natural increase 
net international 
migration 
Total 
of which 
due to demographic 
changes 
changes in 
male activity 
changes in 
female activity 1985-1990 1990-1995 1995-2000 
Low High Low High 
Total population growth 
5.0 > 5.1 9.5 2.1 9.7 
2.9 
2.2 2.5 
2.6 4.5 
4.9 0.9 
1.3 
Total labour force growth 
7.9 2.6 6.8 0.4 
5.2 
-1.3 
3.9 3.3 
-2.1 
1.4 4.7 
•1.2 
3.3 0.9 
1.8 
1.2 5.9 
3.8 
9.0 
2.6 
0.4 
6.0 2000-2020 
Low High 
•13.3 
-18.3 
5.0 
•12.8 
11.2 
-3.3 
1.7 33.1 
18.1 
15.0 
32.8 
3.8 
6.3 
22.8 
Source : Eurostat, NEI, Ifo 
22 
, Chapter 1 - Population and labour force to the end of the century 
First, and most importantly, there has been much 
higher inward migration than was foreseen. Over the 
period 1985 to 1992, there was a net inflow of well 
over 5 million people (around 4 million more than 
anticipated in the Fourth Periodic Report). Secondly, 
contrary to prior assumptions, life expectancy is con­
tinuing to increase. Thirdly, previous expectations 
for the birth rate in the 1990s seem to have been too 
cautious and the decline in fertility rates in the South 
of the Community now seems to be coming to an end, 
while in some Northern countries (eg in Denmark 
and the Netherlands) women aged 30 and over are 
having more children than was foreseen. 
The underestimate of population seems likely to 
apply especially to the four largest Member States 
and to Germany, in particular, which has experienced 
much higher immigration than was expected. 
For the labour force also, growth could be somewhat 
faster than previously projected, largely because of 
the potential increase in the participation of women 
and immigration. 
Projections of 
Community population ' 
to the year 2000 
In view of the high degree of uncertainty surrounding 
future population developments, the approach 
adopted-was to construct scenarios which represent 
informed hypotheses on future changes in the key 
demographic variables : fertility, mortality and mi­
gration. These scenarios set the expected upper and 
lower limits for population change over the coming 
years. 
By the year 2000, they foresee a Community popu­
lation of between 351 and 363 million people as 
against 344 million in 1990 and, therefore, average 
growth of between 0.2% and 0.5% a year- compared 
to 0.3% a year in the 1980s (Tables 1 and 2). A low scenario 
The key feature of the low scenario are : 
• the persistence of relatively low fertility rates; 
• sharply declining, but still positive, net inward 
migration to the Community from well over 
1 million in 1990 to 250,000 per year from 1994 
onwards. 
Under these conditions there would be slow growth 
of total population over the 1990s, largely concen­
trated in the first half of the decade. This would be 
accompanied by changes in the demographic struc­
ture with a sharp fall in the number of people under 
25 and significant rise in the number of people in their 
30s, 40s, early 50s and early 70s ('baby-boom' 
generations of earlier decades). Working-age popu­
lation, aged 15-64, would rise at a rate in line with 
total population. 
The effects of this would be different across the 
Community, with the highest growth rates in the 
Netherlands (0.5% a year) and Luxembourg (0.4% a 
year). In most other countries, there would be little 
change and a declinesin Germany and Italy. In 
Ireland, the last half of the decade would also see 
declining population because of a continuing fall in 
fertility rates to a level below the so-called replace­
ment rate of 2.05 children for every woman, and 
continuing high outward migration. 
At the regional level, the differences are more pro­
nounced partly because of interregional migration. 
Between 1995 and 2000 these are likely to contribute 
to a decline of population in a number of regions in 
central and Northern France, Northern Italy, 
Portugal, Northern Spain and parts of the UK, with 
the largest fall, of almost 1% a year, in Eastern 
Germany arid some' parts of Greece (Map 1). 
The highest growth would be in Flevoland in the 
Netherlands - a region which was only recently 
reclaimed from the sea - of around 3% a year. Other 
regions showing large gains tend to be along national 
borders or coasts where migration from elsewhere is 
expected, though there are also many in some of the 
23 
Map 1 Growth of population, 1995 - 2000 
Low growth scenario % share of total population, 1991 
58.4 
% change p. a. • <"a5 I I -0.5-0.0 
If! 0.0-0.5 
||j 0.5-1.0 
• 1.0-1.5 
>1.5 
No data 
EUR12-0.1 
s = 0.4 
ft £> 
Map 2 Growth of population, 1995 - 2000 
High growth scenario. % share of total population, 1991 
63.3 
^r 
Chapter 1 - Population and labour force to the end of the century 
poorer parts of the Community - in Southern and 
Eastern Spain and Southern Italy - as well as in some 
of the richer parts - in the West and South of France, 
Southern Germany and the Benelux countries. 
In terms of overall population change, there therefore 
seems to be no simple divide between North and 
South. 
On the other hand, the projected increase in the 
population in the age group 15-64 (aropnd 4 million) 
in the 1990s, would be concentrated in the South of 
the Community and Ireland (as well as in Flevoland). 
This would continue to be the case in the second half 
of the decade. By contrast, in this period, a fall is 
projected in Germany, especially on the Western 
border and in the former GDR. Other regions experi­
encing a fall in working-age-population would be 
concentrated in some of the most prosperous, ur­
banised parts of the Community - the South-East of 
England, Ile de France, Brussels and North and 
Central Italy. 
A high scenario 
Recent trends in population in the Community indi­
cate a potential for faster growth. What would happen 
if the current evidence on fertility is^indicative of a 
recovery? What if inward migration remains high? 
The effects of such trends are explored in the high 
scenario which assumes : 
• a gradual rise in fertility rates 
• high levels of inward migration into the 
Community of 750,000. a year, less than the 
1 million experienced in 1990 (but 500,000 more 
per year than in the low scenario). 
Under this scenario, Community population would 
increase by 19 million over the 1990s, giving a total 
of 363 million in the year 2000. The previously 
anticipated slowdown in population growth would 
not occur and there would be an expansion at a 
somewhat faster rate than the 1980s. Most Member States would experience some 
growth. At the regional level, however, there would 
continue to be decline in some areas (in the former 
GDR, Greece and Northern Italy - Map 2). 
While a recovery in fertility rates in the 1990s would 
not affect working-age population until 15-20 years 
later, higher inward migration could increase the 
numbers in the present decade. Nevertheless, the 
difference between the two scenarios for working-
age population is not so great as those for total 
population. Overall, working-age population would 
increase by 7.5 million, or 0.3% a year, to reach 
239 million in the year 2000, some 3 million more 
-than under the low scenario. Growth would be par­
ticularly high in Germany due to migration, though 
some regions here would still face a decline, as would 
regions in the North of Italy, Greece and South-East 
England. 
It is worth noting that the actual data for the early 
1990s have been closer to the high scenario because 
of high levels of migration. This might not persist 
throughout the decade which will depend on a num­
ber of economic and social factors both inside and 
outside the Community as well as on Member States 
policies on entry. 
Labour force 
developments 
As for population, 'high' and 'low' scenarios have 
been generated for the labour force. These are based 
on past trends in participation rates by sex and age. 
For the low labour force scenario, in addition to a low 
population projection, recent trends in activity rates 
(up in the case of women and down in the case of 
men) are projected to continue during the present 
decade gradually to come to an end at the beginning 
of the next century. Although working-age popula­
tion represents the main source of the labour force, 
the actual size of the latter depends on participation 
of those above working-age who continue to work. 
Present low rates of participation among older people 
are expected to persist and a limited degree of con-
25 
Map 3 Growth of labour force, 1995 - 2000 
Low growth scenario % share of active population, 1991 
39.1 
*e*^ 
Map 4 Growth of labour force, 1995 - 2000 
High growth scenario % share of active population, 1991 
% change p. a 
-0.5 - 0.0 
III 0.0-0.5 
|j| 0.5-1.0 
D 1.0-1.5 
>1.5 
No data 
EUR12 = 1.1 
s = 0.6 
o ^ 
ft Ù 
2<* 
Chapter 1 - Population and labour force to the end of the century 
vergence between Member States and regions is 
assumed. 
In the high scenario, average participation rates for 
women are assumed to rise continuously (to ap­
proach male rates by the year 2020) and for men to 
increase slightly overall. Activity rates for women in 
parts of the Community where they are low are also 
assumed to converge to some extent towards rates in 
areas where they are high (see Map 5 for details of 
regional differences in activity rates for women in 
1990). Further assumptions, of secondary import­
ance, are that the potential economic pressure im­
posed by an ageing population is offset by increasing 
participation among older people, effectively revers­
ing past trends, and, that young people combine work 
and training to a greater extent than at present and so 
add slightly to the labour force. These assumptions 
are applied to the high population scenario described 
above. 
By the year 2000, under the alternative assumptions, 
a Community labour force of between 160 million 
and 173 million is projected as against 157 million in 
1990, implying growth of between 0.2% and 1% a 
year, the upper figure being much the same as the rate 
of increase over the 1980s. would be more than offset by the growth in the 
numbers of people of prime working-age, 25-49. 
Such a shift in composition can be seen as a positive 
development insofar as the average worker would be 
more experienced and qualified as compared with the 
past. 
The changes described above would differ across the 
Community. Over the decade, the labour force in 
Southern countries, especially Spain and Portugal, as 
well as in Ireland, the Netherlands and France would 
grow, while in the seven other Member States, it 
would remain largely unchanged. In these seven 
countries, labour force would in fact decline from the 
• middle of the decade onwards or stagnate in the cases 
of Greece and the UK. 
Even in Greece and the UK, however, many regions 
would experience a fall in the labour force - the South 
and West of the Greek mainland, for example, and 
the South-East and North of England and 
Scodand (Map 3). Particularly large reductions are 
projected under this scenario to occur in the East 
German Lander and the North-West of Italy, while 
the main areas of growth are Southern Spain, South-
em Italy and parts of the South of France. 
A low scenario 
Although female participation rates, measured here 
in relation to population of 15 and over, are projected 
to show a modest increase (from 42.4% to 44.1%), 
male participation rates are projected to decline 
(from 68% to 66.4%). This would imply growth in 
the female labour force of some 0.5% a year over the 
decade, and 0.4% a year over the second half, as 
compared with growth of the total labour force of 
0.2% a year over the decade and virtually no change 
over the second half. As a result, the share of women 
in the labour force would rise from 40% in 1990 to 
41% in 1995 and 42% in the year 2000. 
At the same time, the average age of the labour force 
would rise slightly as the share of 15-24 year-olds fell 
from 29 million in-1990 to 24 million in 1995 and to 
21million in the year 2000.rthis decline, however, A high scenario 
Under the high scenario, by the year 2000,16 million 
people would be added to the labour force as com­
pared with 1990, only slightly less than the present 
numbers unemployed. The additional labour force 
would not be evenly distributed geographically. In 
particular, the South of the Community - the whole 
of Spain and Portugal, Southern Italy and much of 
Greece would experience significant growth in their 
workforce over the remainder of the 1990s, as would 
Ireland, much of France and the Benelux countries 
(Map 4). 
This growth largely reflects the assumption of con­
vergence in participation rates of women. Overall, 
the female labour force would increase by 18% over 
the 1990s and would account for 43% of the total in 
the year 2000 as against 40% in 1990. In the parts of 
the Community with traditionally low female partici-
27 
Map 5 Activity rates of women, 1990 
% share of active female population, 1990 
% female population 
<40 
• 40-45 
45-55 
55-65 
>65 
No data 
EUR12 = 54.6 
s = 10.4 
O ^ 
|è^qfe^^Hfe7^v *$•#*: ^é^^ir- ^v~Chafkerfe;Popùîatîdiïand labour force to the end of the century ; 
pation rates -many of the areas noted above-growth 
in the female labour force would be most spectacular, 
varying from just over 20% (Greece) to over 35% 
(Spain and Ireland) over the period. 
This increase in activity among women rates depends 
on the fulfilment of a number of conditions, in par­
ticular, changes in traditional attitude towards 
women working, development of job opportunities 
in the service sector, increased availability of part-
time employment and flexible working arrangements 
and the provision of child-care facilities. There ap­
pears to have been some moves in these directions in 
most Member States in the second half of the 1980s 
when female activity rates increased especially 
rapidly, though the 1990s may not necessarily be the 
same kind of period of high employment growth. 
While the projected growth in female activity rates 
is particularly high in the South of the Community 
and in Ireland, even in these areas the rate of increase 
is no greater than over the recent past By the year 
2000, rates of participation here would still be below 
the Community average and around 15 percentage 
points below the peak levels in Denmark. 
Effects on regional 
unemployment 
The potential effects on unemployment in different 
parts of the Community of the above labour force 
scenarios are difficult to assess. Because they are only 
concerned with labour supply, they leave out of account 
the demand for labour which is even harder to predict 
Moreover, it can have a major bearing on participation. 
If the Community continues to be affected by high and 
generally rising rates of unemployment, the activity 
rate assumptions under the low scenario are possibly 
the more plausible, since recorded rates of participation 
tend to reflect labour demand and if this remains de­
pressed, it could discourage people from entering the 
labour market. The potentially large numbers of 
women who would like to work are likely to remain 
frustrated by lack of jobs and would consequently not 
necessarily appear in the unemployment figures. On the other hand, part of the projected growth in labour 
supply under the high growth scenario reflects popu­
lation increases and the people concerned might be 
less responsive to labour market conditions (though 
the effect on inward migration of a persistent lack of 
job opportunities is highly uncertain). 
By contrast, if demand for labour grows this would tend 
to provide the conditions for rising activity rates, per­
haps especially for women if the new opportunities are 
in services, and so increase labour supply. The high 
scenario, as indicated above, suggests that there may be 
an additional 13 million people, most of them women 
- as compared with the low growth scenario - 'waiting' 
.for new opportunities to arise. This reserve of labour 
ancf its high female component are important factors to 
be borne in mind when assessing the potential effects 
on unemployment rates of new initiatives to stimulate 
Community employment 
Even under the low scenario, growth in the labour force, 
though at a more moderate pace, is projected so that 
neither scenario offers much support for predicitions 
that demographic factors would resolve the 
Community's unemployment problems, though there 
may be some alleviation of youth unemployment. 
The above analysis alsosmakes clear that the potential 
additions to the labour force under the high scenario are 
unevenly distributed across the Community. A large 
proportion are located in high unemployment regions. 
For example, of the 79 regions in the Community with 
above average rates of unemployment, 52, or 66% of 
the total, could have faster than average rates of growth 
in labour supply in the second half of the 1990s. For the 
worst affected areas, this means that there is the risk of 
high rates of unemployment on a permanent basis 
unless the rate of job creation can be pushed to histori­
cally high levels. 
The ageing 
of the population 
There are considerable uncertainties about the 
change in working- age population in the Community 
29 
Map 6 Proportion of total population aged 65 and over, 1990 % share of population aged 65 and over, 1990 
% total population 
[39 12.5-15.0 
• 15.0 -17.5 
175-20.0 
20.0 - 22.5 
No data 
OK. UK-level 1 data only 
EUR12 = 14.8 
S = 2.4 
». I £> 
Map 7 Estimated proportion of total population aged 65 and over, 2020 
Median growth scenario SQ 
4 % share or-population aged 65 and over, 1990 
i.50 
.30 
Chàptèr-ïpPopûfàtîorfSnàI iab^ur!lorc#ft) 
kÔ3^!V;-> > of the century 
over the longer-term, and a fortiori about the change 
in the size of the labour force. Over the period 2000 
to 2020, working-age population could increase by 
11 million if the assumptions underlying the high 
growth scenario are realised. Alternatively, under the 
low growth scenario, it is projected to fall by 10 mil­
lion. Under either scenario, what happens to the 
labour force will also depend on changes in partici­
pation rates, which are equally difficult to predict 
There is less doubt that the ageing of the population, 
which has been a feature of recent years, will con­
tinue. By the year 2010 or so, in almost all Member 
States, working-age population is likely to comprise 
more people over 40 than under 40, though if the 
rising participation of women continues, this does 
not necessarily mean that the labour force will also 
age in the same way. 
After 2010, the ageing effect is likely to more pro­
nounced as the so-called baby-boom generation born 
in the immediate post-war period passes the age 
of 65. By 2020, in most parts of the Community, the 
proportion of people aged 65 or over is projected to 
be around 20% or more, as compared with an average 
of 15% at present and 10% in a number of regions 
(Map 6). The ageing effect will be particularly 
marked in regions where the birth rate has slowed 
significantly over recent years. In the North of Italy 
and Spain, in Germany and large parts of France and 
the Benelux countries, the proportion of people l^ecr*' 
65 or over could be around 25% (Map 7). By contrast, 
in Northern Ireland and the South of Spain, the 
proportion could still be around 15% or less. 
Moreover the average age of those of 65 and over is 
also set jo increase as more people live to an old age. 
Whereas at present around a quarter of the those of 
65 and over are over 80, by 2020, this proportion could have increased to a third. Many regions, there­
fore, will be confronted not only with the problem of 
supporting more people over the age of retirement 
but also with that of providing health care and other 
facilities for growing numbers of very old people. 
The new scenarios on population and labour force are derived from : 
Eurostat (1991), Two Long-term Population Scenarios for the European Community 
Eurostat/NEI (1994, forthcoming), Two Long-term Regional Population Scenarios for the European Union. 
Study co-financed by DG XVI of the European Commission. 
Eurostat/Ifo (1994, forthcoming), Two Long-term Labour Force Scenarios for the European Union. 
Eurostat/NEI (1994, forthcoming), Two Long-term Regional Labour Force Scenarios for the European Union. 
Study co-financed by DG XVI of the European Commission. 
31 
aBg5ia^aa«^%flgift^ •iWWi^fclWirt^lWftSJ 
*2 
'-J ' '^4?&/ùw;4£f?èp% Chapter 2£$Trend$ in output in the regions 
Chapter 2 Trends in output in the regions 
After a prolonged period of slow growth in the first 
half of the 1980s, the Community economy picked 
up significantly in the second half of the decade. 
Growth at the Community level is an important pre­
condition for narrowing regional disparities in output 
and income (as shown in previous Periodic Reports). Over The five-year period 1985-1990, real output in 
the Community grew at an annual average rate of 
3 lU% compared to 1 lk% over the previous five years. 
This was followed, however, by a cyclical downturn 
which began in the UK in the second half of 1990 and 
gradually spread to other Member States at the same 
1 GDP growth of the four weakest Member States compared to 
the Community average, 1986-1993 
% change 
1986 1987 1988 1989 
Data for 1993: forecasts only 1990 Wm 1992 1993 
33 
WBÊÈÊM &j$ttiïittîtâ^i 
time as a more general slowdown in the world 
economy. The boost to economic activity resulting 
from German unification and the substantial expen­
diture in the former East Germany initially allowed 
the Community to escape the full effects of the global 
slowdown during 1991 and the economy continued 
to grow (1^2% a year). Since mid-1992, however, 
growth rates have declined significantly and the 
Community's economy contracted by around xli% in 
1993 although the beginnings of a recovery are evi­
dent in 1994. 
Trends and differences 
in the Member States 
and their regions1 
These general trends were accompanied by consid­
erable variations in the performance of Member 
States and regions. At Member State level, the net 
effect of the differences in performance over the past 
decade can be summarised in terms of a period of 
slight widening in disparities in GDP, in per capita 
terms, between 1980 to 1984 followed by a steady 
narrowing (real convergence). 
2 GDP per head in the weakest Community areas, 
1986 and 1993 
PPS p«rhMd (EUR12 -100} 
«0 r -Of particular interest is the performance of the four 
weakest Member States - Greece, Spain, Ireland and 
Portugal - relative to the Community average. At the 
time of the third enlargement in 1986 which brought 
Spain and Portugal into the Community, the four 
weakest Member States had an average GDP per 
head of less than two-thirds (64%) of the Community 
average. Since then average real growth in these 
countries has been half a percentage point above 
average which permitted a slow but steady process 
of convergence vis-à-vis the rest of the Community. 
By 1993, average GDP per head in the four countries 
reached some 70% of the Community average, an 
increase over 7 years of 6 percentage points (Graph 2 
and Table 3). 
Within the group of four countries, however, there 
was some variation. The strongest performance was 
recorded by the Irish economy (with an increase in 
GDP per head relative to the Community average of 
15 percentage points since 1986). A number of fac­
tors combine to explain the improving fortunes of the 
Irish economy. First, Irish macroeconomic policy 
changed after 1987 to reduce the budget deficit and 
the accumulating public sector debt and to encourage 
wage moderation. The success of these policies ap­
pears to have provided an element of stability encour­
aging a recovery in investment by the private sector. 
Secondly, the ongoing process of attracting major 
foreign companies seems to have resulted in the 
'establishment of a modern industrial D£se which 
began to export strongly at the end of the 1980s under 
relatively favourable exchange rate conditions. 
Thirdly, there was a significant loss of population 
through emigration at the end of the 1980s and this 
contributed to a raising of GDP expressed in per 
capita terms. Fourthly, throughout the 1980s and 
especially after 1988, Ireland has benefited from 
increasing transfers from the Structural Funds in 
support of extensive programmes of investment in 
physical and human capital (see Chapter 8). 
Relatively high rates of economic growth were also 
achieved by Spain and Portugal. For these countries, 
GDP per head increased by between 5 and 8 percent­
age points, respectively, in relation to the 
Community average, between 1986 and 1993. As in 
Ireland, this appears to have been based on the com-
34 
Chapter 2 - Trends in output In the regions 
Table 3 
Trends and differences in GDP and GDP per head, 1986-
Annual growth rate 
in GDP (%) 
Annual population 
growth (%) 
GDP per head (PPS) 
EUR12 = 100 1986 
1987 
1988 
1989 
1990 
1991 
1992 
1993 
1986-1993 
1986-1993 
1986 
1993 GR 
1.6 
-0.5 
4.4 
3.5 
-1.1 
3.3 
0.9 
-0.2 
1.5 
0.6 
51 
49 IRL 
3.2 
5.6 
5.2 
4.7 
3.6 
2.2 
0.8 
-1.0 
3.0 
0.2 
71 
76 -0.4 
4.5 
4.2 
6.2 
9.0 
2.6 
4.8 
2.5 
4.1 
0.1 
63 
78 4.1 
5.3 
3.9 
5.2 
4.4 
2.1 
1.1 
-1.2 
3.1 
-0.1 
52 
60 EUR4 1993 
EUR8 
2.9 
4.7 
4.9 
4.7 
3.4 
2.3 
1.1 
-0.7 
2.9 
0.2 
64 
70 2.9 
2.6 
3.3 
2.9 
1.4 
1.0 
-0.5 
-0.5 
2.2 
0.5 
109 
107 EUR12 
2.9 
2.9 
4.3 
3.5 
3.0 
1.5 
1.0 
-0.5 
2.3 
0.4 
100 
100 
Source :DG % calculations DGXVI 
3 Regional variations in GDP per head (PPS) by Member 
State, 1991 
EUR12=100 240 
200 If 
160 
-120 
80 H 
40 f 
0 Hamburg 
average m Above national average^ 
M Below national average 
*'* v-/:s: New German Lander 
Grooingen : 
Usboae Vale 
doTejo ; 
Northern 
.•: Ireland « 
Alentejo 240 
200 
160 
120 
80 
40 
0 
B DK D GR E F IRL 1 L NL P UK 
Regions stated (NUTS 2) are the ones with minimum and maximum GDP per head for each country 
35 
Map 8 GDP per head (PPS), 1991 
Index (EUR12=100) 
111 < 73.0 
73.0 - 86.5 
86.5-100.0 
100.0-113.5 
113.5-127.0 
> 127.0 
EUR12 = 100.0 
s = 27.0 4 
ft | Ù % share of total population, 1991 
jt $ 
(T 
IPI Chapter 2 - Trends in output In the regions 
pletion of macro-stabilisation programmes in the 
first half of the 1980s together with a strong contribu­
tion from exports. These countries also attracted 
substantial direct investment from outside, especially 
from other parts of the Community. 
In Greece, however, economic growth fell short of 
the rest of the Community and GDP per head is now 
less than half the Community average. It is only since 
the turn of the decade - and the slowdown in general 
economic growth - that Greece has achieved a run of 
3 consecutive years of economic growth somewhat 
above the Community average. 
Disparities between the regions of the Community 
show a more varied trend than that between Member 
States (Map 9). The overall tendency seems to have 
been one of slighdy widening disparities during the 
slow growth years over the first half of the 1980s and 
a gradual narrowing over the second half of the 
decade which levelled off in the 1990s. The change in the trend in the middle of the 1980s mirrors the 
change in the fortunes of Ireland and most Spanish 
and Portuguese regions which went from marking 
time, or even retreat, compared to the rest of the 
Community to rapid relative advance in the second 
half of the 1980s. 
This trend of regional convergence refers to all the 
Community's regions (defined at the NUTS 2 level) 
aggregated together in a single statistical measure. It 
is also instructive to examine the position of the 
regions situated at the extremes and to compare, for 
example, the 25 richest regions with the 25 poorest 
regions. Here there was no change over the 1980s, 
"with the 25 richest regions having in 1991 an average 
GDP per head some 2V2 times higher than the aver­
age for the 25 poorest regions, the same as in 1980. 
Narrowing the focus to compare the 10 regions at the 
two extremes suggests a slight deterioration in the 
situation. The top 10 regions had average GDP per 
head some 3.3 times higher than the bottom 10 re-
4 Disparities in GDP per head and productivity, 1980-1993 
30 
25 
-20 
15 
10 J y*-
Disparity in GDP per head 
(by region) Disparity in GDP per 
head (by country) 
7 n 30 
25 
20 
15 
Disparity in GDP per person 
employed (by country) 
10 
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 
Disparity is population weighted standard deviation as % of the EC average GDP per head 
37 
Map 9 Change in GDP per head, 1986 -1991 
Index (EUR12 = 100) 
IJII < 91.0 
91.0-95.5 
• 95.5-100.0 
100.0-104.5 
104.5-109.0 
> 109.0 
No data 
DK - level 1 data only. 
UK - level 1 data only for 1 
EUR12 = 100.0 
s = 8.9 985 % share of total population, 1991 
29.9 29.5 
Chapter 2 - Trends in output In the regions 
gions in 1980 but 3.6 times higher in 1991 (Annex, 
Table A.4). The widening gap between these two 
groups of regions comes both from the relatively high 
growth rate of the top 10 regions compared to the 
Community average and to the weak growth of the 
Greek economy whose regions (before German uni­
fication) accounted for most of the Community's 
bottom 10. 
Disparities between the Member States in terms of a 
basic measure of. productivity - GDP per person 
employed - followed a broadly similar path to that 
for GDP per head for most of the 1980s (Graph 5). 
After a period of little change in the early part of the 
decade there was a turning point around 1984 when 
productivity differences between Member States 
began to decline. There were, however, considerable 
variations around the trend reflecting the strong in­
fluence of the business cycle which impacted on 
Member States and regions at different times and to 
different degrees. 
An encouraging trend was the higher than average 
rise throughout the period since 1984 in some of the 
Member States characterised by below average pro­
ductivity, notably in Ireland, Portugal and the UK. 
The widening of disparities in productivity between 
1987 and 1990 seems to have been due principally to 
a slowing down in the growth of GDP per person 
employed in Spain and UK compared to the rest of the Community (Graphs 5 and 6 and Annex, 
Table A.3). These Member States experienced vi­
gorous economic growth over this period which was 
accompanied by a significant increase in employ­
ment towards the end of the business cycle upturn. 
After 1990, disparities in productivity began to nar­
row again reflecting the continuation of strong per­
formances in Ireland and Portugal, and the fact that 
the relative decline in productivity in Spain and the 
UK came to a halt as a result of substantial labour 
shedding when economic growth began to weaken. 
In Greece, the low economic growth of the 1980s was 
associated with a failure to make progress in closing 
.the productivity gap with the rest of the Community 
throughout the decade, although the most recent data 
indicate some improvement in 1992-93 (Annex, 
Table A.3). 
Disparities in 
an enlarged Community 
The historical analysis of disparities does not include 
the new German Lander. Meaningful comparisons 
for this area with the rest of the Community for the 
period before German unification would be difficult 
j 5 GDP in PPS per person employed in the Member 
! States, 1984,1987,1990 and 1993 
Index (EUR12. 100) 
! 100 O 1984 S 1987 • 1990 
GR P OK IRL UK E I L 
EUR12-100.1984,1987, 1990 and 1993 6 GDP in PPS per full-time equivalent in the Member 
States, 1984,1987 and 1990 
Index (EUR12 = 100) 
1984 • 1987 • 1990 T "••1+0 
GR P IRL E UK DK I L D B F NL 
EUR12=100:1984,1987 and 1990 
39 
Chapter2 -Trends in otfbaut in the regions 
and not very meaningful in any case. Estimates for 
1991 indicate that average GDP per head in the 
unified Germany as a whole was some 14% lower 
than that for Western Germany alone, with GDP per 
head in the 5 new Lander taken together being only 
35% of the Community average. The inclusion of the 
new Lander had the statistical effect of reducing 
average GDP per head by 3% in the Community in 
1991. 
In regional terms, average GDP per head in the new 
Lander in 1991 was some 5 percentage points below 
the average for the group of 10 weakest regions 
before German unification. In fact, when the new 
German Lander are included in the bottom 10 regions 
of the Community the difference between the top 
10 regions and the bottom 10 widens from 3.6 times 
to 4.5 times. The future incorporation of the new 
Lander into the analysis will, therefore, widen dis­
parities in statistical terms. As with the enlargement 
of the Community southwards during the 1980s, the 
extension to the East caused by the addition of the 
new Lander has added further to the heterogeneity of 
the Community in socio-economic terms. Disparities 
between East and West Germany are wider than 
those between the North and South of Italy but this 
may change if the process of catching-up in the 
former case which has now begun can be maintained 
in the coming years. With average GDP per head in the four EFTA coun­
tries relatively close to the average of the Community 
as at present constituted, there would be no signifi­
cant change to average GDP per head in the 
Community after enlargement. In addition, the clus­
tering of the GDP per head of the 4 EFTA countries 
around the average of the present Community means 
the inter-Member State disparities would be slightly 
reduced in statistical terms in a Community of 
Sixteen. This contrasts with the situation after the last 
enlargements where disparities widened because the 
countries concerned, Greece, Spain and Portugal, 
and the former GDR, had GDP per head well below 
the Community average. 
At the regional level in the four EFTA countries, the 
available data suggest that there are important dif­
ferences in economic circumstances and perform­
ance. A more complete understanding of these dif­
ferences compared to the rest of the Community will 
have to await the full inclusion of these countries in 
the Community's statistical systems of regional data 
collection and analysis (though a preliminary ana­
lysis is presented in Chapter 12 below). 
Concluding remarks 
In view of the possible enlargement of the 
Community to include four countries (Austria, 
Norway, Sweden and Finland) of the European Free 
Trade Area (EFTA) in the course of the 1990s it is 
also of interest to consider their effect on GDP. 
The historical data are particularly revealing. For the 
four EFTA countries taken together, GDP per head 
declined from a peak of 10 percentage points above 
the Community average in 1985 to a level around the 
Community average by 1992. For Austria, there was 
little change relative to the Community over this 
period, but for the Scandinavian countries, especially 
Sweden and Finland, there has been a precipitate 
decline in their relative growth performance (Annex, 
Table A.5). In summary, there is evidence of real economic con­
vergence in regional economic performance over the 
recent past Many of the weakest Member States and 
regions have been able to sustain rates of growth 
above the Community average over much of the 
period since the mid-1980s. This has been a slow and 
gradual process, however, and major reductions in 
the wide disparities between the richest and poorest 
regions remain a long-term challenge, as pointed out 
in the last Periodic Report. Within the general trend 
there have been Member States and regions showing 
significant improvement while certain others have 
experienced a relative decline. These latter regions, 
together with the regions undergoing profound struc­
tural adjustment in the former GDR, are those which 
present the biggest challenge to national and 
Community cohesion policies (see also Chapters 8 
and 9). 
40 
•** ;- suis '$?*?: Chapter 2 -.Trends in output in the regions 
In relation to productivity differences, recent trends 
have generally been encouraging and certain 
Member States with traditionally lower than average 
levels of productivity have gradually converged to­
wards those in the rest of the Community. 
Productivity gains are essential to improvements in 
underlying competitiveness and, therefore, to the 
long-term health of national and regional economies. 
The real challenge, however, is one of ensuring that 
productivity gains are accompanied by output 
growth allowing employment to increase and unem­
ployment to decrease. As the following chapter dem­
onstrates this challenge has proved to be an ex­
tremely difficult one for many of the Community's 
Member States and regions. 
1 In the analysis here disparities are measured in terms of Gross Domestic Product per head which indicates the 
income generated in Member States and regions by the resident producer units. An alternative measure is Gross 
National Product per head which measures the resources available after the transfer of factor incomes such as 
interest payments and dividends. An additional measure is the net national disposable income which includes 
'unrequited' transfers from abroad. However, at regional level, data are only available for GDP per head. Net flows 
of factor incomes out of or into a country or region lead to differences between GDP and GNP which may be 
substantial in the case of smaller countries or (notionally) for regions. All data for the regions are based on GDP 
statistics collected by Eurostat using harmonised definitions. Employment data (for productivity estimates) are 
based on harmonised regional accounts sources for place of work (an alternative source of employment data is the 
Labour Force Survey (LFS) which is based on place of residence. LFS data do not therefore indicate the 
employment generated within regions by the resident producer units). 
41 
Chapter 2 - Trends in output in the regions 
42 
'/»,- ,; V^w&> r^i||#^? Chapter 3 - Employment and unemployment trends and differences in the regions 
Chapter 3 Employment and unemployment 
trends and differences in the regions 
Employment 
The 1980s were a period of net job creation in the 
Community although this was mainly due to the 
growth experienced in most Member States and re­
gions in the second half of the decade. After the 
recession in the early years of the decade, growth in 
employment resumed in 1984 some 18 months to 
2 years after the beginning of recovery in output. By 
1991, employment had expanded by 9lh million, a 
growth of 7V2% over 8 years. 
As noted in Chapter 2, there was a marked slowdown 
in the Community's economy from 1991 which was 
reflected in a contraction in employment from 199:2 
onwards. In the two years to 1993, the Community 
lost some 3 million jobs in net terms and the prospects 
are for further contraction in 1994. 
The growth over the period 1981-1991 was most 
marked in Luxembourg (24%), the Netherlands and 
Spain (both 12%) while average or slightly above-
average growth rates were experienced in Germany 
(West) and Italy. In the UK, the growth was slightly 
below average over the period. The remaining 
Member States, with the exceptions of Ireland and 
Portugal, where employment contracted between 
1981 and 1991, experienced growth rates between a 
half and three-quarters of the Community average. 
In most Member States, experience was more favour­able in the second half of the decade compared to the 
first half and in both Ireland and Portugal growth 
rates were firmly positive in the 5 years 1986-1991. 
At the regional level, the pattern is mixed (Map 10), 
though the fastest growing regions are concentrated 
in only a small number of Member States : Spain, 
Luxembourg, UK, the Netherlands and Italy. The 
highest growth rates over the period were recorded 
in Central and Eastern regions of Spain (in the range 
2 to 272% a year) and Dutch regions on the Eastern 
border with Germany. High employment growth also 
occurred in the more rural regions of the UK (East 
Anglia and South West) as well as Central and some 
Southern regions of Italy. 
The regions where employment declined or failed to 
rise over the period were mainly old industrial and/or 
highly urbanised parts of the Community, though 
they also included some of the less developed areas. 
The low rate of increase in employment in France as 
a whole (averaging only XU% a year between 1981 
and 1991) was associated with a contraction of em­
ployment in many regions such as the rural areas of 
Limousin and Champagne-Ardenne and the tradi­
tional industrial areas of Nord-Pas-de-Calais and 
Lorraine. As indicated above, in two of the less 
developed parts of the Community, Ireland and 
Portugal, employment also declined over the 10-year 
period as a whole (although for Portugal, data from 
the Labour Force Survey indicate relatively high 
iyx-*^^**^»*'»****^^ 
43 
Map 10 Change in total employment by region, 1981 -1991 
% share of labour force, 1991 
% change 
HI < -2.5 
-2.5-1.9 
• 1.9-6.3 
6.3-10.7 
10.7-15.1 
> 15.1 
No data 
GR, P - national data only 
UK - level 1 data only 
EUR12 = 6.3 
s = 8.7 
ft £> 20.5 
*zg? 7vs ^ *'•X& -"'-; !f ttëi&i&g1* 0tëp*er-3~£mpk^^ ' " "réglons? 
growth in employment). Declining employment in 
the regions of North Western Spain reflects the dif­
ficulties of regions with older industries compared to 
the Mediterranean 'sun-belt' in the South and East of 
the country which seems to have attracted much of 
the new investment. 
The changes in total employment have been accom­
panied by changes in the sectoral composition. 
Throughout the second half of the 1980s there was a 
steady increase in service employment accompanied 
by falling employment in industry and agriculture. In 
1990, 61% of total Community employment was in 
services with 32% in industry and 6'/2% in agricul­
ture. The sectoral structure differs widely across the 
Community. Typically, Northern Member States and 
regions have the highest concentration of activity in 
the service sector while Greece and Portugal, and to 
a lesser extent, Spain and Ireland, lag substantially 
behind. Among the Northern Member States, em­
ployment in services is relatively low in Germany 
where employment in the industrial sector remains 
particularly high. 
Within Member States, in some cases differences are 
substantial. As would be expected, there are strong 
concentrations of service employment in the large 
urban centres and capital cities, including Athens and 
Madrid. At the same time, there are still many regions 
of the Community where the employment structure 
is extremely traditional, with over a quarter of totai 
employment in agriculture in parts of Greece, 
Southern Spain, Portugal and Southern Italy. Here, 
there is the prospect of considerable restructuring in 
years to come, which involves both risks and oppor­
tunities. The risks derive from further decline in 
employment in agriculture, though the emphasis on 
income rather than price support under the reform of 
the Common Agricultural Policy should help to 
maintain the small family farms typical of many of 
the less developed areas. The opportunities mainly 
concern the possibility of service sector growth as a 
greater proportion of expenditure goes on services as 
income rises. 
Much of the increase in employment in the second 
half of the 1980s, in the Northern Member States in 
particular, was part-time. Of the 9 million additional jobs created between 1986 and 1991, one-third were 
part-time of which 80% were taken by women. 
Unemployment 
Consistently, since the mid-1980s, the Community 
has not succeeded in creating sufficient jobs to pre­
vent unemployment from rising steadily. From 1973 
to 1985, unemployment in the Community increased 
inexorably year after year from an average of 2.6% 
to 10.8%. Although the economic recovery in the 
second half of the 1980s brought unemployment 
down, it still left the rate at 8.3% in 1990 when the 
momentum of recovery came to an end. The fall in 
unemployment would have been greater had there 
not been a steady increase in the labour force over 
the period. In the first 3 years of the 1990s, lower 
economic growth rates brought employment growth 
initially to a halt before causing a decline, with the 
result that by the end of 1993 the numbers in work 
had fallen by some 3 millions compared with 1991. 
With a continued growth in the labour force this 
pushed unemployment rates up to 10.9% by the end 
of 1993 (for the Comnqunity excluding the former 
East Germany and to 11% including it), back to the 
peak levels of the mid-1980s. In this sense, the pro­
gress of the second half of the 1980s was largely 
undone in the first three years of the new decade 
(Annex, Table A.6). 
Trends and differences 
In the regions 
The changes in unemployment rates over the 
Community as a whole reflect a wide variety of 
experience among the regions. The ideal circum­
stances, of course, would have been those where 
falling unemployment rates in the Community in 
general were accompanied by a more rapid fall in the 
worst-affected regions. In such circumstances, un­
employment rate disparities would have narrowed. 
In reality, disparities continued to rise in the early 
part of the post-1985 economic upswing, beginning 
to narrow only after 1988 (Graph 7). 
45 
Crfflpter3~ërnptoym 
This narrowing of disparities after 1987 ended a 
long-term trend towards widening gaps between the 
regions which started in the mid-1970s. The change 
in the trend turned out to be short-lived, however, and 
disparities have widened again since 1991. In 1993, 
unemployment rates in the 10 worst affected regions 
averaged 25.3%, 7 times higher than in the 10 least 
affected regions where rates averaged just 3.6%. The 
10 worst affected regions are located entirely in the 
Community's less developed areas : Spain and the 
South of Italy. The least .affected 10 regions are for 
the most part in Germany (West) although one is in 
Greece and another in Portugal, where unemploy­
ment rates are traditionally very low (Map 11). 
Regional variations in unemployment rates at the 
Community level are mirrored at the national level, 
though the extent of differences is, of course, less. 
Nevertheless the variation in rates in Spain and Italy 
in particular is considerable. The most affected re­
gion in Spain (Andalucia) had an unemployment rate of close to 30% and the least affected region 
(Navarra) one of around 12%. In Italy, the gap be­
tween the most and the least affected region was 
equivalent to around 20 percentage points (Graph 8). 
A narrowing of disparities normally coincides with a 
general fall in unemployment rates. That this was not 
the case in the years immediately after 1985, when 
unemployment rates in the Community had begun 
their downward trend, was due to a considerable 
degree to the fact that many high unemployment 
regions initially remained untouched by economic 
recovery. This was particularly so in Southern Italy 
where already high rates of unemployment continued 
to rise-throughout the second half of the 1980s, while 
in many French regions, recovery occurred later in 
the decade than elsewhere. 
The narrowing disparities after 1988 had much to do 
with a marked improvement in some of the 
Community's worst affected regions. This was espe-
7 Trends in unemployment rates in the Community, 
1970-1993 
°/c 
12 r 
10 -
8 -
6 -
4 -
0 Unemployment ": -' - /- •> 
rate 
Disparity in unemployment rate 
(by country) 
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 
Disparity is standard deviation weighted by labour force 
46 
Map 11 Regional unemployment, 1993 
• % labour force 
<5.2 
5.2 - 7.8 
7.8-10.4 
fej 10.4-13.0 
13.0-15.6 
>15.6 
No data • 
EUR12= 10.4 
s = 5.2 o ^ 
ft | £> % share of total unemployment, 1992 
5 
Chapter 3 - Employment and unemployment trends and differences in the regions 
daily true of the regions in the Eastern coastal area 
of Spain as well as of certain regions in the UK (in 
central and Northern parts of England and the whole 
of Wales) where high national growth rates were 
accompanied by the creation of much new employ­
ment. The Spanish regions concerned started from a 
position of having some of the highest rates of unem­
ployment in the Community - around 20% in 1985, 
twice the Community average - but recorded the 
largest reductions over the period 1985 to 1990, of 
around 9 or 10 percentage points. In the UK regions, 
unemployment rates of over 13% in 1985 had fallen 
by 5 or 6 percentage points by 1990. 
As indicated above, the narrowing of disparities le­
velled off in 1991 before a widening resumed in 1992 
and 1993 in line with rising unemployment in the 
Community as a whole. Spanish regions once again 
are a major part of the explanation of this change. 
Unemployment rates increased sharply between 
1992 and 1993, to around 25-30% in the worst af­fected regions. Regions which had been showing a 
marked improvement at the end of the 1980s were 
also affected, with unemployment rates on the East 
coast and the Balearic Islands increasing by 5 per­
centage points and more in one year. The cyclical 
downturn in Spain, which resulted in falling output 
in 1993, appears to have been particularly acutely felt 
in national and regional labour markets with wide­
spread labour shedding. Fortunately, losses on an 
equivalent scale do not appear to have accompanied 
the downturn in other Member States and regions 
(Map 12). 
The outlook for unemployment in the Community, 
and for reducing regional disparities, is linked to 
overall economic performance. The immediate pros­
pects appear to be relatively unfavourable. For the 
Community as a whole, estimates suggest that econ­
omic growth needs to exceed 2^2% a year to keep 
unemployment from rising and this it has consist­
ently failed to do in the initial years of the 1990s. 
8 Regional variations in unemployment rates by Member 
State, 1993 
oc % labour force Hi New German Landed 
35 r : 
B DK D GR E F IRL 
No regional data for Greece or Valle D'Aosta NL. UK 
48 
Difference 
(percentage points) Map 12 Change in unemployment rate, 1986 -1993 
• <-2.9 
-2.9--1.6 
-1.6--0.3 
-0.3-1.0 
1.0-2.3 
>2.3 
No data 
GR - level 1 data only, 
1992 data used. 
EURl2 = -0.3 
s = 2.5 ft I £> % share of labour force, 1991 
23.3 
Chapter 3 - Empioyinent and unemployment trends and differences in the regions 
The challenge for the rest of the decade is not only to 
raise general rates of growth to above 2V2% but to 
ensure that the regions of high unemployment per­
form better than the rest This is a task which is made 
all the more difficult for some of the regions con­
cerned by their above average growth of working-
age population and labour force (see Chapter 1) and 
by their need to ensure that productivity growth - and 
underlying competitiveness - is not reduced. 
There is, therefore, an important roje for Community 
intervention through the Structural Funds to promote 
the investment which is necessary for more rapid 
growth in productivity and competitiveness in the 
weaker regions in order to provide a sustainable basis 
for increases in output and employment. Com­
plementary measures also need to be maintained to 
provide the appropriate training and development of 
human resources to ensure that workers are equipped 
to adapt to economic change and to seize new oppor­
tunities as they arise. 
The situation 
and prospects 
of selected sectors 
\ 
There is a growing concern in many Member .States 
about the effects of structural change and decline in 
industrial sectors which are important for regional 
economic development and prospects (see dis­
cussion on Objective 2 in chapter 9). Many sectors 
are concerned by this process but this chapter con­
centrates on the structure, geographical distribution 
and outlook for three industrial sectors which are 
often discussed in this context : automobiles, aero­
space, textiles and clothing as well as the defence 
sector which combines production, and service acti­
vities. Specific actions at the Community level are 
already underway in the case of textiles and clothing 
and defence (see discussion of Community 
initiatives in chapter 9). 
Estimates suggest that in the period 1981 to 1993, 
automobiles, textiles and clothing and aerospace together lost some 1.3 million jobs, most of them in 
textiles and clothing, which is the only traditional 
sector as commonly understood. This sector, which 
has been in long-term decline in Europe in terms of 
both output and employment, and which is important 
in many of the Community's weaker regions, lost 
nearly 900,000 jobs between 1981 and 1993, largely 
as a result of the relocation of production to low-cost 
countries as well as the introduction of new techno­
logies. 
Automobiles and aerospace are growth industries in 
the Community with rising output and, until the last 
decade or so, rising employment. Unlike textiles and 
clothing, these sectors are dominated by large plants 
which, together with their local subcontractors, often 
underpin the industrial base of entire regional econ­
omies. Both sectors are subject to fierce international 
competition which, especially in the case of auto­
mobiles, has resulted in large gains in productivity in 
a short period of time with significant shedding of 
labour. The aerospace industry tends to be concen­
trated in the stronger regions of the Community while 
the automobile sector is somewhat more dispersed. 
The final sector considered here is the defence indus­
try which combines a variety of activities, in both 
industry and services united by their dependence on 
national defence policies. Employment in equipment 
manufacturers and in military installations is now 
Airider threat in view of the reduction in national 
defence expenditure. 
Although all these sectors are characterised by de­
clining employment, it is important to bear in mind 
that the employment prospects in different sectors 
and regions vary considerably at any given point in 
time and there are always some experiencing em­
ployment growth. Growth and decline are part of the 
normal development pattern of market economies. 
Much of the growth over recent years has been in the 
service sector. Even so, the Community as a whole 
still lags substantially behind the US where services 
provided an estimated 23 milhon new jobs between 
1980 and 1992, double the rise in the Community. 
Services account for 72% of total employment in the 
US compared to only 61% in the Community. 
50 
Chapter 3 - Employment and unemplpyrnent trends and differences in the regions 
In general, the Community's poorest regions have 
relatively small service sectors (see chapter 8) and 
this may indicate scope for future growth. There 
appear to be favourable prospects in the financial and 
business services sector which presently accounts for 
about 8% of the total Community employment. This 
sector could provide sources of employment growth 
in many of the weaker regions where it tends to be 
underrepresented (although there are certain excep­
tions to this rule such as Ireland). The weaker regions 
could also expect .to see an increase in employment 
in distribution especially in those areas where in­
comes per head are rising stronger (although the 
positive effects of an increase in demand might be at 
least partly offset by the effects of rationalisation and 
modernisation as a structure based on small retail 
outlets gives way to one dominated by large (often 
multinational) retail chains1. 
In non-market services such as healthcare and edu­
cation, there appears to be a lower than average level 
of employment in relation to population in the South 
of the Community. Employment in healthcare and 
education tends to be higher in areas with relatively 
high levels of GDP per head2. This suggests that there 
may be opportunities for job creation in these sectors 
in the Southern regions, a process which should be 
helped by the opening up of these sectors to assist­
ance under the Structural Funds in the new pro­
gramming period 1994 to 1999 
The automobile sector 
Industry structure 
The Community automobile industry covers the 
manufacture of private and commercial vehicles, and 
of the mechanical components, bodywork and elec­
trical equipment needed to assemble automobiles. 
There are six major manufacturers of private cars, 
representing 75% of the market, and a few spe­
cialized manufacturers. For the most part these 
manufacturers are also present on the commercial 
vehicle market, where there is a similar rate of con­
centration, although one manufacturer accounts for 
35% of the market. Although their activity is inte­
grated to varying degrees, both upstream and down­stream, all the automobile manufacturers use the 
services of a large range of specialist and non-
specialist suppliers, including SMEs. In certain cases 
the components manufactured by these suppliers ac­
count for between 60 and 70% of the final cost of a 
vehicle. 
With record sales of automobiles in 1992, in the 
region of 12.6 million units, the Community market 
is the biggest automobile market in the world. It is 
also the biggest producer, and in the same year manu­
factured some 12.7 million vehicles. Over the period 
1981-1991, employment in the automobile sector 
declined by some 9%. The losses accelerated during 
• the current recession and a further 10% of jobs in the 
sector disappeared in the period 1991-1993 (Annex, 
Table A.7). In 1993 the Community automobile in­
dustry employed some 1.71 million people, one mil­
lion of these jobs being with automobile manufac­
turers, accounting for 5% of industrial manufacturing 
jobs3. 
Rates of vehicle ownership still vary significantly 
from one country to another; in the case of private 
cars Germany, France and Italy are major markets, 
with between 400 and 450 cars per 1000 inhabitants, 
while Greece, Ireland and Portugal have between 160 
and 200 cars for the same number of people, with 
Spain coming midway between these two extremes. 
Commercial vehicle ownership in the Community 
shows similar variations. 
Spatial structure 
Germany is by far the biggest automobile producer 
in the Community. In terms of employment Germany 
(excluding the new Lander) accounted for 44% of the 
Community total in 1993, followed by France (19%), 
the UK (13%), Italy (10%) and Spain (8%). 
Major clusters of automobile plants are in Southern 
and Central Germany, the UK Midlands, and on 
either side of the border between Belgium and the 
Netherlands (Map 13). In France, the major plants 
are overwhelmingly in the northern part of the 
country often in close proximity to Paris. In Italy, the 
major employment is in the city of Turin, although 
51 
Map 13 Employment in the automobile industry, 1990 
Number of employees 
^^H Production of cars 
| | R&D 
^^fl Manufacture of other vehicles % share of employment in the automobile 
Industry, 1990 
16.4 90 
80 
• -70 
• 60 
• 50 
• 40 
30 
20 
10 
0 
i»-A^—^V^ 
>yirie afer^S^°yŒt^r>d unemployment trëndâgpdlft 
there are important installations in the South of the 
country. 
Away from these centres, there are many large instal­
lations which often form an important part of the 
industrial base of many of the weaker regions in the 
South of the Community. 
Over the last few years a number of Community 
manufacturers have increased their capacity, often by 
setting up new production or assembly units in order 
to maintain or increase their share of an expanding 
market. The main beneficiaries of these units were 
the less favoured regions of Spain, Italy and Portugal, 
and the new German Lander. 
In recent years similar motives have led certain 
Japanese manufacturers to set up new production and 
assembly plants, principally in the United Kingdom. 
The production capacity of these plants is expected 
to grow to about 1.2 million cars a year by 1999. On 
the other hand, Japanese exports to the Community 
are falling, from 9.2% of the market in 1991 to 8.3% 
in 1992. 
In this connection, the opening-up of Eastern Europe 
has been an opportunity for a number of Community 
manufacturers to extend their activity to those coun­
tries, where they are investing in new assembly plant, 
developing distribution networks ana, throughjoin^ 
ventures with local producers, modernizing existing 
plant 
Prospects 
The demand for cars in Europe is showing a strong 
tendency to increase. However, environmental pro­
tection measures, such as a carbon tax, could slow 
down or even reverse this trend. future, going by the present rates of ownership of 
both private and commercial vehicles. 
After a period of relative stagnation during the first 
half of the eighties, during the second half the 
Community automobile industry went through a 
period of intensive growth as the economy as a whole 
recovered. Although from 1990 onwards the econ­
omic slow-down caused sales to begin falling off on 
a growing number of Community markets, the very 
sharp increase in sales in Germany following reuni­
fication offset those losses until 1992. 
Since the demand created by German reunification 
"has^now fallen off, the Community automobile in­
dustry is now feeling the full impact of the stagnation 
of the economy. Since the beginning of 1993, throug­
hout the Community, with the exception of the 
United Kingdom, sales of new vehicles have fallen 
more sharply than at any time in the past ten years. 
Production fell by 15.8% in 1993 although recovery 
is expected to begin in 1994. The market for heavy 
commercial vehicles will develop in a similar 
fashion, chiefly because of an increase in transport 
services, an area in which road transport still offers 
commercial advantages. 
Growing European integration is having a beneficial 
impact on the automobile sector. The automobile 
markets are still to a certain extent nationally 
oriented, with significant price differences from one 
country to the next. As the automobile market 
becomes European in scale, growing competition 
will push up efficiency and demand. On the supply 
side, the trend towards mergers, take-overs or joint-
ventures is still in evidence in order to benefit from 
economies of scale. This goes hand in hand with an 
increasing trend towards regional division of labour, 
with a company tending to produce all its European 
engines (for example) in one or two production units. 
The demand for cars is extremely cyclical and the 
high fixed costs mean that profitability is very sensi­
tive to demand. The sector therefore felt the full force 
of the recent recession, but shows every sign of 
reaping the fulll benefits of recovery. In this respect, 
it should be noted that an increase of the market may 
still be expected for the Community as a whole in the Competition then compels automobile manufac­
turers to keep their costs down and refine their com­
pany strategy in order to remain competitive. In order 
to meet this challenge, European manufacturers are 
applying, more intensively since 1992, the principles 
of 'lean production' - integrated development and 
production methods - which also involves a redis-
53 
"Chapter 3 - Employment and unemployment trends ând différences In the regions 
tribution of responsibilities between manufacturers 
and suppliers. This rationalization and restructuring 
phase should basically be over by the end of 1994 
and could be accompanied by a significant reduction 
in jobs on the manufacturing side. In view of the great 
age of certain production units and sub-units, and 
their consequently low productivity, which may 
make it necessary to close them down, it is estimated 
that job losses will be highest in certain automobile 
producing regions of Germany, Spain and Italy. 
Given the interdependence between manufacturers 
and independent suppliers, the restructuring under­
taken by the manufacturers could lead to a significant 
loss of jobs in specialized suppliers. Because of the 
heterogenous nature and high geographical disper­
sion of this sub-sector, these job losses are likely to 
affect, to a greater or lesser degree, a large number 
of regions in the Community. The role of small and medium-sized enterprises 
(SMEs) is therefore less significant than in the other 
industries. Even in the supply of equipment to the 
major airforce or guided weapons constructors, the 
market comprises some very large firms although 
there are niches such as in the supply of cabin furni­
ture where SMEs predominate. 
In employment terms, the aerospace industry was a 
growth sector until the last decade or so. Between 
1981 and 1991, however, employment was virtually 
static in the Community as a whole. Since 1991, there 
has been a dramatic decrease in employment reflect­
ing a strong cyclical downturn in civil aerospace 
demand and the depressing effects on military pro­
duction of the reduction in national defence expen­
diture (see below). Between 1991 and 1993 employ­
ment declined by 12% to 372 000 employees (Annex, 
Table A.8). 
Aerospace 
Industry structure 
The aerospace industry can be divided into civil and 
military sectors with some 'dual-use' activities (see 
below). In 1989, the military sector accounted for the 
larger share (55%) of total aerospace turnover, al­
though this was down from around 70% a decade 
earlier. Within each sector there are a number of 
products : airframes, aero-engines, equipment (elec­
tronic guidance systems, undercarriages, etc.), 
guided weapons and space vehicles. 
Production is heavily concentrated in comparatively 
few large firms and this trend has been reinforced 
over time by rationalisation and consolidation aimed 
at achieving economies of scale to allow the industry 
to compete with US companies. There are only a few 
European companies capable of managing the design 
and production of civil and military aircraft and 
guided weapon systems. In aeroengines, there is only 
one major European producer (Rolls Royce, UK) 
although there are other significant European pro­
ducers involved in cooperative agreements with the 
major global players. Spatial structure 
Over 90% of employment in aerospace in 1993 was 
in the four largest Member States. The UK had the 
highest share of employment accounting for 37% of 
the total. The major clusters of aerospace employ­
ment4 are in England (32% of Community employ­
ment), the Paris area (12%), Hamburg and the 
Netherlands (10%) and South-West France and 
Bavaria (8%) (Map 14). In Italy, production is lo­
cated mainly in the centre and North of the country. 
The industry is virtually absent from the weakest 
regions of the Community with the notable exception 
of Spain, where there is a small but significant aero­
space industry employing up to 17,000 workers (de­
pending on data source5), concentrated in the Madrid 
region and Andalucia. There are also important in­
stallations in Naples (I) and Northern Ireland (UK). 
The enlargement of the Community in 1995 will add 
a further significant aerospace company, Saab of 
Sweden. 
Prospects 
A recent report for the European Commission con­
cludes that for the future 'the sure prediction is that 
the EC aerospace industry overall will not be much 
larger in employment terms'6. 
54 
Map 14 Employment in the aerospace industry, 1992 
50 % share ot emptoyment In the aerospace 
Industry, 1992 
47.5 
Total employment 
Engines/equipment/testing 
Aircraft/missiles/space vehicles 
Combined activities 
Unknown 50 
1 40 
30 
20 
i 10 
4.1 
^ ^ 
Chapter 3 - Emptoyment and unemployment trends and differences in the regions 
Reduced defence expenditure in the Community will 
act as a brake on the future expansion of military 
aerospace products in domestic markets, while a 
reduction in squadron size is also tending to reduce 
the significant after-sales servicing market. Produc­
tion will, however, be at least partly sustained by 
sales to third countries. Community military aero­
space producers export proportionately more than 
US firms. In the future, however, competition is 
likely to become more intense as US firms seek to 
compensate for falling domestic demand. The 
defence industry in the former Soviet Union is also 
likely to offer low-cost competition to Community 
producers in third markets. At the same time, notable 
cooperative ventures are still being undertaken in the 
Community, such as the Tornado programme (in­
volving BAe, Alenia and Dasa) and the Eurofighter 
project (the same companies plus CASA of Spain). 
Missile production is being carried out by a consor­
tium of Aérospatiale, BAe and Dasa. 
The Eurofighter 2000 programme, however, has 
been delayed (the maiden flight, originally scheduled 
for 1991, is now planned for Spring 1994) and the 
orders reduced from the planned 765 to 600. National 
shares of the workload are in principle proportional 
to orders although uncertainty persists as to what the 
relative size of these orders will finally be. Spain and 
Germany have deferred their first deliveries until 
2002, so assembly of the first units in the late 1990s 
would be only for the UK and Italy. 
Civilian demand is highly cyclical. At present, the 
financial position of many major airlines remains 
precarious and orders for European aircraft are not 
expected to pick up until 1995 or 1996 as the sales 
revenue of the major carriers begins to increase in the 
expected economic recovery. Much of the fortunes 
of the industry will depend on the Airbus Industrie 
partnership. Airbus originally intended to expand 
output to about 225 units a year by 1995, following 
the opening of a second assembly line in Hamburg. 
However, the most recent forecasts are for produc­
tion levels of only 170 units in 1995, while the outturn 
for 1994 may be only 120 units. 
Nevertheless, over the longer term, demand for civil­
ian air transport is likely to expand. Improvements in air traffic control systems will increase capacity on 
the more congested routes; Structural Funds are as­
sisting investment in airports, especially in the less 
accessible parts of the Community; and increasing 
regulations on noise and other environmental im­
pacts mean that many older models will need to be 
retired early. 
The underlying growth in demand for civilian aircraft 
is therefore strong, with some forecasts for longterm 
annual air traffic growth in the 5-10% range, causing 
the civil market to overtake the defence side in im­
portance. The pressure to reduce unit costs in order 
to improve competitiveness and match US producers 
means that increased output will be achieved through 
higher productivity or sourcing in lower cost coun­
tries. The employment effects of expanding produc­
tion are, therefore, unlikely to be positive. 
Textiles and Clothing 
Structure of the industry 
The textile industry is relatively heterogeneous. Dif­
ferentiated according to end-use, it is made up as 
follows : clothing and knitwear (45% of EC fibre 
use), home furnishings (17%), carpets (13%), tech­
nical textiles (25%) among the largest users of which 
is the automobile industry discussed above. Techni­
cal textiles (filters, webbing, etc) represent the fastest 
growing sub-sector over recent years and demand 
continues to grow rapidly7. 
Industry estimates suggest that there were nearly 
77,000 textile firms in the Community in 1990, with 
size ranging from giant, vertically integrated multi­
national companies such as Coats Viyella (UK) 
which employed about 60,000 people to thousands 
of small and medium-sized enterprises and 'micro' 
firms employing only a few workers. Most of the 
small textile enterprises in the Community sell only 
to their home market or at most, to the markets of one 
or two other Member States, while the large firms 
sell throughout the Community and export to third 
countries. The largest five European firms are 
French (2), Italian (1) and British (2) which rank 
among the largest ten textile firms in the world. 
56 
Map 15 Employment in the textiles and clothing industries, 1991 
ft I £> . 1 dot = 2000 people 
DK, UK - level 1 data only 
I - latest data available is for 1989 
Map 16 Employment in the textiles and clothing industries, 1991 
% share of employment in the textiles and 
clothing industries, 1991 
S3-
Chapter 3 - Employment and unemployment trends and differences in the regions 
The clothing and textile industries are closely linked 
- the clothing industry purchasing 50%, 70% and 
40% respectively of the outputs of the cotton, wool 
and silk industries. The two industries have common 
features and are subject to the same trends. They both 
experienced periods of expansion up to the early 
1970s followed by prolonged stagnation and by large 
and increasing loss of markets to extra-EC imports. 
The majority of firms in the clothing industry are 
small with those employing less than 20 people ac­
counting for an estimated 22% of total output in 
1990. 
Two sectors of the market need to be distinguished, 
that for mass produced, low-cost clothes and that for 
high quality products. Demand for mass produced 
clothes is relatively price elastic, while demand for 
high quality clothes is determined more by non-price 
considerations, although the evidence of recent years 
indicates that price remains an important overall 
determinant. 
More than most products, the demand for clothes is 
determined by tastes and fashion, the demand for 
which is growing. The life-cycle for a particular 
garment may be very short, in some cases as short as 
a few weeks. Manufacturers have considerable scope 
for specialisation in market niches but this often 
requires strong links between manufacturing and 
distribution to enable production systems quickly to 
accommodate changes in consumer tastes. This ex­
plains the growth of large firms integrating both 
manufacturing and distribution. 
In employment terms, the textile and clothing indus­
tries are in long-term decline in the Community. 
Between 1981 and 1991, employment declined by 
nearly one-quarter from 2 560 000 to 1 940 000 rep­
resenting a loss of over 600,000 jobs. Estimates since 
1991 suggest that decline has accelerated during the 
recession with the loss of a further 250,000 jobs or 
more in the two years 1991-1993, a fall of 13% 
(Annex, Table A.9). Spatial structure 
Reflecting the size of their economies, employment 
is highest in textiles and clothing in the four largest 
Member States which account between them for over 
70% of the total (Maps 15 and 16). Employment in 
the sector is highest in Italy and the UK which 
together account for 40% of the Community total. 
The sector is also very important for Spain, Greece 
and Portugal which account for 20% of all employ­
ment. There are important differences in the quality 
of the employment especially in regard to clothing. 
The Community is a world leader in the production 
of high-fashion garments and Paris and Milan are the 
centres of world fashion. In the Southern Member 
States such as Greece and Portugal the clothing in­
dustry while very important in terms of employment, 
produces mainly low value-added garments. 
Within Member States production tends to be con­
centrated in certain regions, with, in general, both the 
textile and the clothing industries being located in the 
same areas, the strong dependencies between the two 
resulting in structural changes affecting on both in­
dustries and so having a cumulative effect on re­
gional activity. 
There are particularly strong dependencies in many 
of the weakest parts of the Community (Map 16). The 
ten regions with the highest dependency on textiles 
and clothing (accounting for more than 1 in 20 jobs 
in the regional economy) are in Greece (4 regions), 
Central and Eastern Spain (3 regions) and Portugal 
(3 regions). At the same time, textiles and clothing 
are highly important in some of the stronger regions 
of the Community - in Vlaanderen (B), Central Italy, 
Southern and Central Germany, North-Eastern 
France, in all of which they account for at least 1 job 
in 30. Other major concentrations of textile and cloth­
ing employment (50,000 employees or more) are 
found in capital regions such as South-East of the UK 
and Ile de France as well as in Rhone-Alpes (F). 
Prospects 
The Community's regions dependent on textile and 
clothing are likely to have different prospects over 
the rest of the decade according to the segment of the 
58 
îpteTâlErnpl 
&_ i^-^ggfrjrt^ Mr.... h. ^ .^-ft -^w! t arid unérnployrnent trends 
industry in which they are specialised and their ca­
pacity to adapt and innovate. 
For textile products with high design and production 
complexity (technical textiles and high fashion fab­
rics), Member States can expect to maintain their 
competitive position. For other textile products, 
standard cotton fabrics, standard chemical spun 
yarns and so on, the shift of production to low-cost 
countries is likely to continue. 
In general, developments and prospects are driven by 
the retail sector which has been subject to increasing 
concentration. On the positive side : veloped, low-cost exporting countries and action to 
curb counterfeiting of Community brands. 
The clothing industry is one of the major employers 
in the Community. While dominated by large com­
panies in every other sense, the bulk of the industry's 
firms are small to medium sized enterprises, many 
with fewer than 20 employees supported by out­
workers who are not always captured in official 
employment statistics. This suggests that the impact 
on regional employment of the ongoing restructuring 
of the clothing industry is likely to be considerably 
higher than the official estimate. 
• more professional organisation of distribution 
has helped to emphasise the importance of time-
based, rather than cost-based, competition, thus 
conferring an advantage in the European market 
to European producers; 
• greater emphasis on quality clothing generally 
requires close communication between distribu­
tors and manufacturers; 
• increased emphasis on shorter production runs 
militates against the labour-intensive mass pro­
duction in many third countries; 
• sourcing in distant markets carnes more risk . 
On the negative side, the specialist sourcing facilities 
developed by large distributors enables them to 
undertake a more geographically wide-ranging 
search for the cheapest producers. For many clothing 
products, and in particular for large orders with long 
lead times, distributors will favour cheaper, if distant, 
suppliers. 
On the policy side, the clothing and textile industry 
will also be affected by a phasing out of the MFA 
quota arrangements over the next ten years. Major 
preconditions specified by the Community as part of 
such phasing-out are likely to include the opening of 
markets in developing countries, action to curb 
dumping of surplus products on EC markets, the 
removal of certain state subsidies (particularly export 
subsidies) to the clothing industries in the more de-Defence industry 
and military forces 
Political reforms in the former Soviet Union and in 
all of East and Central Europe, ensuing arms control 
agreements and a fundamental reappraisal of defence 
policies are leading to defence budget cuts in the 
Community Member States. 
Disarmament is perceived to offer a unique oppor­
tunity to cut budgetary deficits and to divert valuable 
resources to more 'worthwhile' objectives. In prac­
tice, however, the size of the peace dividend is 
limited in the short and medium term by the substan­
tial costs of conversion and the time needed to find 
alternative uses for the physical and human resources 
no longer absorbed by defence-related activities. 
Since 1987 annual defence expenditure in the 
Community has stabilised in real terms. In 1991, 
expenditure amounted to 148 billion ECU which 
corresponded to 2.3% of GDP and 4.7% of total 
government spending. France, Germany and the UK 
were responsible for about 70% of the EC total. The 
general expectation in 1992 was for real cuts in 
defence spending of up to 10% by 1995 and up to 
25% by the year 2000. This would lead to a reduction 
of up to one percentage point in the share of military 
expenditure in relation to Community GDP by the 
year 2000. Expenditure cuts on such a scale would 
inevitably affect all types of defence expenditure 
albeit to different degrees. 
59 
t$*&M&ij^^ 
Military personnel accounts for almost 50% of ex­
penditure. About one fifth of the defence budgets of 
the EC Member States is spent on military equip­
ment, the mainstay of the defence industrial estab­
lishment. About 5% is devoted to infrastructure 
(military base construction, etc), while the remaining 
quarter goes on operating expenses. 
Armed forces plus support staff exceed 2.3 million, 
including professionals, conscripts and civilian per­
sonnel Adding the 700,000 workers employed in the 
defence industries, more than 3 million people, or 
2.4% of the Community labour force, are direcdy 
dependent on military expenditure for their employ­
ment 
The reduction of defence expenditures in relation to 
GDP expected by the year 2000 will probably be 
accompanied by reductions on a similar scale in the 
share of defence-related employment in the labour 
force. Over one million jobs in the defence industry 
and the armed forces could be threatened. The poten­
tial impact on a number of regions is significant. 
One half of Community employment in the defence 
industry is concentrated in 19 regions (at NUTS 
level 2). These have a share of employment in 
defence of over 1%, twice the Community average 
(Annex, Table A. 10). A further one third of employ­
ment is located in other regions with an above aver­
age concentration of defence activities. 
Cuts in defence spending clearly make regions and 
localities where defence industries are concentrated 
vulnerable to job losses. This does not necessarily 
imply, however, that the difficulties encountered by 
such regions will be proportional to the numbers 
employed in these industries. Decisions taken within 
the Ministries of Defence on which pieces of military 
equipment to cut back on, have clear regional impli­
cations. 
A recent Commission study9 identified the NUTS 
level 3 regions with known concentrations of defence 
industrial activities within the 19 'defence-
dependent' regions as well as over 100 other towns 
and cities with plants producing equipment for the 
military. The study found that it was difficult to forecast short 
to medium-term factory closures, since because of 
the controversy surrounding them decisions were 
often not announced until the last moment. Respond­
ents indicated that the regional implications of 
defence cuts would be determined by commercial 
criteria and that most adjustment would take at least 
five years. 
So far, corporate responses to the forecast cuts in 
defence expenditure of up to 25% by the year 2000 
and reductions in export sales have been similar 
across Europe. While most firms are understandably 
pursuing a number of strategies, it seems that in 
general the leading firms have followed a 'dual track' 
course, streamlining their defence operations 
through concentrating on core military business 
whilst simultaneously seeking to diversify into re­
lated, usually high-technology, civil markets. 
In general French and Italian contractors are seeking 
to maintain their position in the defence market, 
while German and British firms have to some degree 
adjusted already. There is some evidence that 
German companies are following a more offensive 
strategy by moving into related civil markets. 
UK companies by contrast are pursuing a more de­
fensive strategy involving lay-offs, closures and 
sales of plant and equipment. 
So far as military bases are concerned, these are 
distributed across more regions than defence indus­
try plants. In 31 regions (at NUTS level 2) the share 
of military personnel in employment is over twice the 
Community average of almost 2%. These regions are 
located in different parts of the Community and 
house just over one third of all armed forces (exclud­
ing the new German Lander). A further 300 military 
bases are located outside these regions. 
In only a small number of Community regions is the 
share of employment in both the defence industry and 
armed forces twice the Community average. 
The impact of plant and base closures will differ 
between regions, with some isolated local areas 
being more adversely affected by defence cuts than 
those which are located in larger and less defence-
fe'ftftiM&M&i*^^ 
60 
lllChap^er^EmptoyrnentaiKlun^ 
dependent regions. Those resulting from defence Initially, there will be a need for a wide range of 
Table 4 
; Eligibility of defence-dependent regions (NUTS 3) 
for assistance under the regional objectives of the Structural Funds 
Defence-industry dependent Military-base dependent 
Number of regions % Number of regions % 
Eligible 5 9 39 34 
Unknown/possibly eligible1 23 42 17 15 
Not eligible 27 49 59 51 
Total ^ 55 _100 115 100 
1 Defence-industrial plant or military base is located in a NUTS level 3 region which is partially eligible 
Source : EAG (1992) 
industry cuts are likely to be greater and less diffuse 
than those resulting from reductions in armed forces 
and may, in exceptional cases, cause a doubling in 
the number of job losses. 
Policy responses need to be adapted to the special 
characteristics of the industry and region affected. 
Serious problems of adjustment are likely to occur 
where defence industry cutbacks are in areas where 
other industries are already in decline and where 
older workers with traditional skills are affected or 
where a high proportion of the local workforce is 
employed in defence. Much of the industrial infra­
structure in such areas is likely to be highly spe­
cialised and may pose serious environmental prob­
lems of site decontamination. There are very few 
examples in the Community of complete industrial 
conversion from defence to civil applications, al­
though many companies are pursuing strategies of 
diversification. Much of the labour force involved is 
not likely to be readily re-employed without retrain­
ing. policy measures directed to environmental improve­
ment, site decontamination and clearance, and a re-
skilling of the work-force. This, in turn, implies a 
need for local coordination, given the relative isola­
tion of many defence establishments and the need for 
any Community response to be built on local and 
regional initiatives. 
Such a response is complicated by the fact that the 
majority of areas with defence industry plants and 
military bases have until recendy not been eligible 
for Community support under the regional objectives 
of the Structural Funds (Table 4). Jobs in the defence 
sector have traditionally been secure and little af­
fected by structural change. 
The impact of military base closures, particularly if 
they occur in comparatively small communities or 
rural areas, can do great damage to the local econ­
omic fabric. Often tourism, agriculture or fishing 
provide the only alternative means of employment. 
Strategies for the diversification of the local econ­
omy should include the commercialisation of the 
land and buildings abandoned by the military. 
61 
Chapter 3-Erriploym in the regions 
European Commission (1993), Market Services and European Integration. European Economy No 3. 
European Commission (1992), Employment in Europe. 
These data relate to direct employment in the automobile industry as defined by General industrial classification of 
economic activities in the European Communities under NACE code 35. They do not include indirect jobs with non-
specialist suppliers, part of whose production goes to the automobile industry, such as rubber producers (two thirds 
of production), steel and steel-processing (one third of production), glass, textiles etc. 
These figures and the regional map are based on a survey of aerospace plants undertaken for the European 
Commission by Cambridge Econometrics in 1993/94. 
The VISA database of the European Commission estimates employment in aerospace (NACE code 364) at 5,600 in 
Spain in 1993. The survey undertaken for this report yields a figure of 17,000 in Spain of which 9,000 were in one 
company : CASA, a partner in Airbus Industrie. No such differences between sources exist for other Member States. 
Hayward K (1993), The Aerospace Industry. Future of Industry Paper Series, Volume 14. Study financed by the FAST 
programme of the European Commission. 
For a more detailed discussion of the industry structure see European Commission (1993), Panorama of EC Industry, 
and, ERECO (1993), Europe in 1997 : Economic Analysis and Forecasts. 
This is starkly illustrated by the process whereby some distributors compute an additional cost percentage to cover risks 
which vary from 9% for EC countries to 20% for South-East Asia and as high as 30% for countries such as Pakistan, 
China, India and Bangladesh. Additional costs such as transportation, which are negligible when sourcing takes place 
within the Community, were estimated to account for 7% and 11% of the cost in near non-EC and faraway suppliers 
respectively (Institut Français de la mode (IFM), quoted in European Commission (1993) ibid). 
Economists Advisory Group Ltd, Centre for Defence Economics (1992), The economic and social impact of reductions 
in defence spending and military forces on the regions of the Community, Regional Development Studies, Volume 5. 
62 
Section B Regional competitiveness 
factors underlying 
regional disparities 
Infrastructure and human resource endowments 
New inward investment and the regions 
The role of research and technological development in the regions 
Peripheraiity reconsidered 
63 
îglonal disparities 
64 
„_. ^ Jjgwments r* 
Chapter 4 Infrastructure and 
human resource endowments 
Differences in infrastructure and human capital are 
widely recognised as contributing significantly to 
variations in regional competitiveness. The economi­
cally stronger and more prosperous regions of the 
Community are generally more richly endowed with 
both, while the lagging regions typically have serious 
deficiencies. 
In a Community which is gradually moving towards 
closer union, such wide differences are less and less 
acceptable. This is recognised in the Maastricht 
Treaty, which lists among the central aims the pro­
motion of harmonious and balanced development 
and the strengthening of economic and social cohe­
sion. In achieving these aims, the Treaty specifically 
recognises the role of trans-European networks in the 
fields of transport, energy and telecommunications 
infrastructures in enabling regions to reap the full 
benefits from the Single Market and in linking island, 
landlocked and peripheral regions to the central re­
gions of the Community. The creation of greater 
equality of opportunity for all European citizens and 
firms, wherever they are located, requires progress 
towards reducing the gap in infrastructure and human 
capital endowments. 
This is why a major proportion of the Community's 
aid to lagging regions has been concentrated on 
trying to achieve this. Under the 1989-1993 
Community Support Frameworks for Objective 1 re­
gions, the Structural Funds devoted some 16 bil­lion ECU to investment in basic infrastructure and 
well over 10 billion ECU to investment in human 
capital (at 1994 prices), or some 35% and 22%, 
respectively, of total expenditure. In addition, the 
European Investment Bank provided nearly 10 bil­
lion ECU in loan finance for investment in basic 
infrastructure in these regions in the period 
1989-1991. 
This chapter examines the 'development gap' be­
tween the lagging regions and the rest of the 
Community in terms of the major disparities which 
persist in regard to endowments in basic infrastruc­
ture and human capital 
Regional differences 
in infrastructure 
Infrastructure is composed of four main elements : 
transport and energy networks, telecommunication 
links and environmental facilities (i.e. waste treat­
ment and water supply). In this chapter, new infor­
mation on transport, telecommunications and envi­
ronmental infrastructures is considered. Energy 
infrastructures are also important for regional devel­
opment. Extending and improving energy networks 
and improving access in the weaker regions are es-
65 
iman resource «ndownfwnts I 
sential to promoting productive activities. The avai­
lability of high-quality electricity or natural gas sup­
plies enables businesses in all sectors of the regional 
economy to optimise their choice of equipment. En­
ergy diversification helps to improve competitive­
ness. Such issues have been examined in a recent 
report by the Commission1 and are not therefore 
explored further in this chapter. 
To compare the regional endowments in infrastruc­
tures raises important conceptual and methodologi­
cal issues, which need to be briefly considered before 
the data can be properly interpreted. 
The role of infrastructure 
in the development process 
Despite the clear association between the level of 
infrastructure and regional development, the nature 
of the causal link is still the subject of intense debate2. 
Some of the more central regions of the Community, 
for example, despite very high levels of infrastruc­
ture provision, arguably face constraints on future 
development because of deficiencies in relation to 
needs in certain areas, such as transport where the 
existing network may be unable to cope with in­
creased volumes of traffic. 
The present interest of economists and planners in 
infrastructure concerns two main issues : 
• first, the cost which tends to fall on the public 
sector which is constrained because of financial 
difficulties; this has led to growing interest in 
ways of introducing private sector finance, 
which, inter alia, requires improved information 
on needs to facilitate investment appraisal; 
• secondly, the indirect as well as direct contribu­
tion of infrastructure to enhancing regional econ­
omic performance, which is related to its ' public 
good' aspect, in the sense that once provided it is 
available to all at zero or low cost, expenditure 
on infrastructure can therefore improve the pro­
ductivity of private businesses and increase 
profitability. The overall rate of return on such 
investment can accordingly be much higher than it appears. The historically low levels of infra­
structure investment (including replacement) 
have arguably constrained the rate of productiv­
ity and employment growth in some Member 
States. 
Defining appropriate indicators 
Making regional comparisons of infrastructure raises 
the problem, first, of identifying an appropriate - and 
concise - set of indicators reflecting the scale and, 
more especially, the quality of the endowment of 
each type of irrfrastructure. Secondly, there is a need 
for simplification and ability to aggregate indicators 
in order to produce indices of endowment Thirdly, 
infrastructure provision needs to be related to other 
factors, such as the structure of economic activity. 
Finally, there is a need to take account of links 
between infrastructure networks both within and be­
tween regions. 
The simplest measure of infrastructure is either the 
physical scale of provision - eg the length of roads 
per square kilometre or in relation to population -
which indicates the potential intensity of use. The 
proportion of population with access to particular 
facilities, such as public water supply, may also be 
relevant. For most types of infrastructure, indicators 
reflecting quality should also be included. For the rail 
network, for example, the extent of electrification 
and the number of separate tracks, which affect both. 
the speed of service and the capacity of the network, 
can be taken as indicators of quality. 
To facilitate interregional comparisons of total en­
dowments, there is an obvious attraction in attempt­
ing to combine individual measures to produce a 
single composite indicator. While several aggrega­
tion methods are possible, none is wholly satisfac­
tory. Subjective judgement about the choice of 
measures to be included and the relative weights to 
be attached to each are inevitably invoked. More­
over, changes in composite indicators tend to be 
difficult to interpret, while they provide little or no 
indication about whether provision responds to the 
specific needs of a region. 
66 
The type of infrastructure provision in a given region 
will have typically developed to suit existing needs, 
but may constrain new kinds of development. Re­
gions with poor endowments of particular facilities, 
however, may have other advantages which more 
than outweigh the deficiency. Regions with poor 
road or rail networks may have a superior environ­
ment, lower labour costs, and so on. While improved 
infrastructure may be a desirable part of regional 
development, .it may be neither necessary nor suffi­
cient per se to generate that development. 
One of the basic factors in a region's economic 
development lies in trade with other regions. Con­
nections to markets and sources of supply (not just 
the movement of goods but also the transfer of infor­
mation) may be of critical importance. This is true 
both at the interregional level, where deficiencies are 
not revealed by a region by region assessment in 
cases where the completion of trans-European net­
works is vital to the competitiveness of regions taken 
as a whole and at the intra-regional level, where the 
links to any trans-European network are important 
For many peripheral and lagging regions, a key prob­
lem is the deficiency of the internal network rather 
than the inter-regional links, which is not always 
revealed by any regional indicator, since this will not 
take account of how well different parts of the net­
work are connected - eg whether branch lines are 
well connected to trunk routes. 
In summary, while the measurement of infrastructure 
endowment is important to understanding regional 
differences, any indicator must be interpreted with 
caution. substitute, though substitution is possible between 
different modes of transport. 
Transport systems particularly have a major role in 
promoting the integration and cohesion, in improv­
ing the accessibility of peripheral regions and in 
relieving the pressure of transit traffic in the more 
central areas3. 
As noted above, transport systems have to be con­
sidered in relation to regional needs. The aim is not 
simply to equalise endowments. More geographi­
cally remote and less densely populated regions are 
likely to need greater provision in terms of road or 
rail track length per head of population than less 
remote regions. Regions on the extreme periphery, 
especially islands, will tend to require relatively more 
port and airport facilities and typically will not be 
able to use inter-regional infrastructure for intra-
regional needs4. In the most congested central re­
gions of Europe, the combination of transit and re­
gional traffic may also necessitate a higher than 
average level of provision relative to both area and 
population. The difficulty is to determine the degree 
of under-provision of infrastructure in the light of 
these sources of variation. 
Transport systems are different from other types of 
infrastructure in that significant benefits are also 
likely to accrue to those not resident in the region 
where they are located5. The costs, especially the 
environmental costs, however, tend to fall on local 
residents. This makes for difficulty in assessing the 
implications of any variations in endowment which 
are identified. 
Regional infrastructural 
endowments in transport 
A good transport system is generally recognised as a 
prerequisite for national or regional economic devel­
opment. Transport systems have all of the inherent 
features of infrastructure. They are large, indivisible, 
immobile and are used by a wide variety of producers 
and consumers. In modem economies, based on 
trade, they are also a necessity without a viable Roads 
Roads account for the largest share of both passenger 
and freight traffic within the Community. More than 
70% of freight movements (measured in kilometre 
tons) and more than 90% of passenger movements 
(measured in passenger kilometres) are made by 
road. The use of other forms of transport depend on 
good local road communications for access. A good 
road networks is, therefore, vital to a region for both 
inter- and intra-regional traffic. 
67 
Chapter 4 - Infrastructure and human resource endowments 
9 Composite road surface indicator, 1986 
Index (EUR12=100) 
250 r 
H 150 
o 
B OK OF I L NL UK GR E IRL P 10 Length of motorways: composite indicator, 1991 
Index (EUR12=100) 
300 
\--i:\25Q. 
| : 200 
8 DK D F J L NL UK GR E RL P 
11 Number of people killed in road accidents, 1990 
per 100,000 motor-vehicles 
B" OK OF I L NL UK GR E «L P 112 Gross investment in roads, 1975-1989 
%GOP 
I 1,2 
0,6 
0,4 
! 0,2 X. 'EUR8 
EUR4 I**: 
H 0.8 i 
0.4 
0.2 ! 
75 76 77 78 79 80 81 82 83 84 85 86 87 68 89 
EUR& B. OK. D, F, 1,1. NL, UK; €UR4: GR, C, fflL, P 
68 
Chapter 4- Infrastructure and human resource endowments 
In terms of basic indicators, the weakest regions tend 
to lag behind the EC average. The total road surface 
per square kilometre in Greece and Spain is only 23% 
of the Community average and in Portugal only 42%, 
as against over 300% of the average in Belgium and 
over 200% in the Netherlands and Luxembourg. 
Location is clearly a factor here, since peripheral 
regions have less need of roads for transit traffic, as 
is density of population. In relation to population, 
there is a little less variation, road surface per inhabi­
tant being around 50% of the Community average in 
Spain, Greece and Portugal and around 150% in 
Belgium. Ireland illustrates the difference between 
the two measures, with twice the road surface in 
relation to population than the Community average 
but only 75% if related to land area. 
At the regional level, the lowest level of road provi­
sion per square kilometre is found in the remote 
regions of Greece (Anatoliki Makedonia, Thraki and 
Kentriki Makedonia), Spain (Extremadura and 
Castilla-La Mancha) and Portugal (Alentejo). In the 
latter two countries, this principally reflects sparse 
population, since all these regions have above aver­
age provision in per capita terms. The Greek regions, 
however, come out low on this measure as well 
(Annex, Table All). 
There is some tendency for the metropolitan regions 
to have the lowest provision per head. In Lisboa, in 
Portugal, the road network is less than a third of the 
national average per head and in the Athens region 
of Greece (Attiki) less than half the national average 
per head. 
To facilitate comparison, a composite indicator giv­
ing equal weighting to land area and population has 
been constructed. This confirms the poor endowment 
of Greece, Spain and Portugal (Graph 9). the peripheral countries - only 5% of the average for 
Ireland and 9% for Greece (Graph 10). 
At Community level, there is no harmonised measure 
of the quality of service provided by road networks 
(eg in terms of the average travel speed) or the scale 
of congestion at peak times (eg in terms of the 
variability of travel time). The only data from which 
quality differences may be inferred relate to road 
safety, as measured by the number of people killed 
in road accidents. Although this indicator needs to be 
interpreted with extreme caution, the figures seem to 
suggest very poor roads in Portugal and Greece, with 
69 people killed per 100,000 vehicles as against a 
Community average of 30 (Graph 11). 
The extent and quality of road infrastructure at any 
point in time is the result of a cumulative investment 
effort over a long period. The figures for investment 
in roads help to explain the gap between the four 
weakest Member States and the rest of the 
Community : For most of the period 1975 to 1989, 
the road investment relative to GDP in Greece, Spain, 
Ireland and Portugal was significantly below the 
level in the rest of the Community. Only in the last 
two years of the period was the figure for these 
countries above the average elsewhere (Graph 12 and 
Annex, Table A. 12). (More recent information sug­
gests that investment remained above 1% of GDP 
during the early 1990s). 
Rail 
The variation in provision of railways is less than for 
roads, although the differences between Member 
States and regions remain significant and the spatial 
pattern of variation is similar to that for roads. 
As the road surface reflects not only the length of 
roads, but also their width (number of lanes), it 
already involves some allowance for road quality. 
Motorways are a further indicator of quality. The 
index combining the per square kilometre and per 
head figures is highest for the Benelux countries 
(more than double the Community average) and 
Germany and generally well below the average for In most of the more developed Member States the 
density of rail lines per square kilometre is above the 
Community average, whereas the four poorest coun­
tries have a relatively low density. As for roads, the 
per capita figures are somewhat different. Ireland is 
again well provided, Belgium, the Netherlands and 
the UK less well so, reflecting the greater prevalence 
of double-track lines (Annex, Table A. 13). 
69 
Chapter 4- Infrastructure and human resource endowments 
In terms of the composite index, Germany, France 
and Belgium have the most developed rail networks, 
Greece the least (Graph 13). 
At the regional level, in Spain regions with poor 
roads (notably Andalucia and Murcia), also have 
poor rail networks, which is also true of the metro­
politan areas of Greece and Portugal. On the other 
hand, a number of Spanish regions have very high 
levels of rail provision, especially relative to roads, 
as is the case in many Southern Italian regions. This 
suggests that although national levels of provision do 
not vary gready, there is more substantial variation 
between regions within the peripheral Member 
States. 
Three indicators of rail quality are available - the 
proportion of lines which is electrified, the propor­
tion which is double track and the proportion 
equipped with automatic block signals. 
The degree of electrification depends not only on the 
finance available for modernisation, but also on such 
factors as the availability of electricity at competitive 
prices and the nature and density of traffic carried. 
There are substantial variations in this indicator be­
tween both developed and less developed countries. 
In the UK and Denmark, a below average proportion 
of lines are electrified (29% and 11% as against a 
Community average of 41%) while Belgium, the 
7"."::::":":™::":"::::::::::::^r^ 
13 Composite rail indicator, 1990 
Index (EURt2=100) Netherlands and Italy all have figures well above the 
average. For Spain, the figures is also above average, 
though the extent of electrification in the weaker 
Spanish regions is below average as it is in Portugal, 
Ireland and Greece - in the latter two substan­
tially so (Graph 14). 
The proportion of lines which are double track is also 
much lower in the less developed Member States 
than in the rest of the Community (though this may 
reflect differences in the level of demand and density 
of service) (Graph 15). 
The proportion of tracks equipped with automatic 
block signalling, which increases speed and capacity, 
is similarly high in more developed countries - in 
Belgium, Luxembourg and the UK, it is well over 
50% - and low in the less developed - in Spain and 
Portugal, it is only around 10%, in the new German 
Lander and East Berlin less than 5% and in Ireland, 
zero (Graph 16). 
During the second half of the 1970s and in the 1980s, 
investment in rail infrastructure in the Community 
remained stable at around 0.2% of GDP (Graph 17 
and Annex, Table A. 14). Of the four poorest Member 
States, only Spain had a higher figure (an average of 
0.25% of GDP a year). Investment levels in Greece 
and in Ireland remained very low throughout the 
period at, respectively, 0.08% and 0.04% of GDP. 
These three indicators suggest that rail infrastructure 
in the four poorest Member States is not only less 
extensive, but also of poorer quality than in the more 
developed parts of the Community. At the same time, 
traffic is also lower. Train-kilometres per kilometre 
of rail line are only half as high as in the rest of the 
Community, passenger-kilometres per kilometre of 
rail line are less than 60% as high and the volume of 
freight per kilometre of line is less than 40% as high 
(Table 5). This low level of use may be one of the 
reasons why these countries have given lower 
priority to the modernisation of their rail networks 
than to investment in roads during the 1980s, though 
equally lack of investment may also be a reason why 
traffic is low and declining. In the four countries 
taken together, rail passenger traffic declined by 1% 
between 1986 and 1991 as compared with an increase 
70 
71 Chapter 4- Infrastructure and human resource endowments 
-Infrastriictur©* rce endowments 
Table 5 
Intensity of use of rail infrastructure 
Train-km 
per km of rail line 
million 
1990 Passeng.-km 
per km of rail line 
million 
1991 
EUR12 
EUR8 
EUR4 
EUR8 : B, DK. D, F,IL,NU VK 
Source : Eurostat ËUR4 ; EL ESP, IRL, P Tonne-km 
per km of rail line 
million 
1991 
of 7% in the rest of the Community and freight traffic 
fell by over 5% as against a rise of 3% elsewhere. 
As noted above, the lower level of infrastructure 
provision may in some cases reflect the lower level 
of transport demand in the lagging regions. However, 
there are clear indications that the demand for trans­
port services is rising far more rapidly in many of the 
lagging regions than in the rest of the Community. 
Between 1987 and 1992, freight traffic increased by 
25% on the Iberian peninsula - more than twice the 
average increase in the Northern Member States6. 
Such a rapid expansion of traffic is likely to result in 
increasing congestion, particularly in the more ur­
banised regions. 
To prevent deficiencies in transport infrastructure 
imposing serious constraints on economic develop­
ment, the least prosperous Member States and re­
gions will need to increase investment to a level 
significantly above that in the more developed areas. 
This seems to have been happening in recent years. 
Between 1984 and 1988, the four poorest Member 
States devoted around 1 % of their GDP to investment 
in transport, slightly more than the more prosperous 
Member States. Between 1989 and 1993, investment 
seems to have more than doubled in each country, 
except Ireland, where there is little sign of any in­
crease. Further increases in investment appear to be 
planned. Between 1994 and 1999, the four countries 
together are projected to undertake expenditure of 
around 2% of GDP, at least twice as high as the Community average, which should enable them to 
make some progress towards reducing disparities in 
transport relative to the rest of the Community. 
Telecommunications7 
Telecommunications are important, both in provid­
ing key support to regional economic development 
and as a complement to other infrastructure. Tele­
communications are often seen as a modern sub­
stitute for transport links, since they obviate the need 
for face-to-face contacts, enable large volumes of 
information to be sent more rapidly and cheaply. 
However, telecommunications can also create an 
increased demand for transport, establishing contacts 
which tend to lead to a greater need to travel and 
convey freight. Telecommunications and transport 
systems can therefore be expected to develop in 
parallel rather than as alternative. 
Telecommunications can also be seen as a prereq­
uisite for the growth of modern industries and ser­
vices, which require efficient telephone, fax and data 
transmission systems. The precise relationship be­
tween investment in telecommunications and re­
gional development is, however, like that of most 
infrastructure, not easy to establish. Improved tele­
communications can have both centralising and 
decentralising effects. On the one hand, they make it 
easier for firms to service branches and clients out­
side a region from central points and hence can serve 
to inhibit development. On the other hand, they make 
72 
Chapter4- Infrastructure and human resource endowments 
^ .->«-•<. 
; 18 Number of main telephone lines, 1992 
i pot 100 inhabitants EUR12 average 
! 60 
I 
! 
! 30 
B ' DK D ••:'. £:::%' im':t:..^HLr:;,iK GR E IRL P 19 Average annual investment in telecommunications 
per inhabitant, 1991-1992 
Index (EUR12>100) 
T 160 
EUR4 EUR3 
EUR4: B. DK, F. I; EUR3: GR. E. IRL 
120 Number of faults per main telephone line, 1992 
Number per year 21 investment in telecommunication system, 1987-1992 
%GDP EUR8 GR E IRL 
1,6 
1.4 
1.2 
0.» 
0,4 
0.2 
1987 1988 198$ 
EUR8. B, DK. D, F. I, L, NL, UK 
73 
Chapter 4 - Infrastructure and human resource endowments 
it possible for firms to take advantage of lower costs 
and other benefits in peripheral regions whilst main­
taining good links with core regions. 
The quality of the telecommunications system de­
pends both on the infrastructure itself and on the 
services provided. For basic telephone services, the 
number of lines per head is a reasonable indicator, 
while the quality of service can be measured by 
connection to a digital exchange, which provide ac­
cess to networks which are an essential part of mod­
ern data transmission systems. 
Despite rapid growth in telephone networks, major 
variations between Member States and regions re­
main. Although the number of main telephone tines 
in Portugal, for example, increased by over 75% 
between 1987 and 1992, it still had the lowest density 
of any Member State at 27 lines per 100 inhabitants, 
much less than in Denmark (58), France (51) and 
Luxembourg (50). In Ireland (30), Spain (34) and 
Greece (40) network density was also below the 
Community average of 44 lines per 100 inhabitants 
(Graph 18 and Annex, Table A. 15). 
Greater variation exists in some countries at the 
regional level. Germany is the most notable example, 
the new German Lander have the lowest density of 
lines in the Community at 13 per 100 inhabitants in 
1992 (see Chapter 11). In Portugal there is consider­
able variation between Acores (18) and Alentejo (19) 
and Algarve (34) and Lisboa e vale do Tejo (35), 
while in the Mezzogiorno, the density (32) is less 
than 75% of that for Italy as a whole and in Greece, 
substantial differences exist between Attiki (51) and 
more peripheral regions like Anatoliki Makedonia 
and Traki (28) or Ipeiros (29). 
Connection to digital networks reflects recent levels 
of investment. High connection levels are found in 
France (79% of subscribers connected to digital ex­
changes), where investment has been considerable 
compared to Denmark, Luxembourg and the 
Netherlands which have around the same number of 
lines per 100 inhabitants. In Ireland and Portugal, the 
rapid growth of the telephone system in recent years 
has enabled new technology to be introduced earlier 
than in many much more developed countries (in Portugal, for example, the digitalisation rate in­
creased from zero in 1988 to 50% in 1992), while in 
the UK, a major investment programme led to an 
equally dramatic growth in digital connections (from 
under 2% in 1987 to 55% in 1992). 
To be effective, a telephone network needs to be 
reliable. The number of faults per line each year is, 
therefore, an important measure of the quality of 
service (Graph 20). In the more developed Member 
States fault rates are generally below 20% 
(0.20 faults per line annually) while in the four wea­
kest Member States, rates vary from 30% in Spain to 
50% or more in Greece and Portugal. This is despite 
intensive modernisation, which halved fault rates 
over the period 1987 to 1992. 
From the available regional data, there appear to be 
no great difference between North and South in Italy, 
but substantial differences in Greece, with the hig­
hest fault rate being in the Attiki region (0.71), be­
cause of the old and congested network in Athens. 
During the period 1987 to 1991, investment in tele­
communications in the Community averaged be­
tween 0.5% and 0.6% of GDP, though in the four 
poorest Member States taken together it was signifi­
cantly higher at just over 1% of GDP (Graph 21 and 
Annex, Table A. 16). In per capita terms, investment 
in these four countries was some 30% grater than in 
the rest of the Community (excluding Germany), 
though there was considerable variation between the 
four (Graph 19). The high expenditure in these coun­
tries was due almost entirely to a trebling of invest­
ment in Spain and Portugal, which reached a peak 
level of around 1.4% of GDP and which, in per capita 
terms, far exceeded levels in the more prosperous 
parts of the Community. In Greece also, investment 
increased significantly between 1987 and 1991, al­
beit from a very low base (from 0.4% of GDP to 
0.8%), though investment per head remained very 
low (just over 50% of the Community average in 
1991-1992). In Ireland, investment was also rela­
tively low in relation to population and, relative to 
GDP, was just above that in the more developed 
Member States between 1987 and 1991, which may 
be due to the fact that the Irish network was already 
74 
>•'-/"' ^"Tflrfyr* ^ j*»«l- •«" -Chapter 4- Infrastructure and human resource endowments 
Table 6 
Main telecommunication indicators (1987-1992) 
GR 
E 
IRL 
P 
GR, E, IRL, P 
B, F, UK Number of lines 
per 100 inhabitants 
1987 1992 
33 
25 
21 
16 
25 
40 40 
34 
30 
27 
34 
48 % of subscribers connected 
to digital exchanges 
1987 1992 
0 
4 
49 
0 
5 
26 8 
33 
63 
50 
32 
66 
Source : Ewbank Prëea indicatonijojtelecommunicationsin the less favouredregions,1994; 
significantly digitised by the mid-1980s (with a rate 
of46%inl988). 
The exceptionally high levels of investment in recent 
years enabled Spain and Portugal to bring the stand­
ard of their telecommunications networks more in 
line with that in the more developed Member States, 
despite the latter stepping up efforts to expand and 
modernise their systems too (Table 6). Between 1987 
and 1992, the number of main lines in Spain in­
creased from 62% of the average for Belgium, France 
and the UK (the only ones of the more developed 
countries for which data are available) to 71%, and 
in Portugal, where the number of lines nearly 
doubled over this period from 40% to 60%. In both 
countries there was also a considerable increase in 
the percentage of subscribers connected to local ex-
changes^while fault rate and average waiting time 
for new connections declined significantly. 
Environmental facilities 
and water supply 
Environmental infrastructure - considered here in 
terms of the capacity to supply adequate amounts of 
clean water and to dispose of solid and liquid wastes generated - is both an important contribution to 
economic activity and a source of protection against 
ecological damage as development takes place. It, 
therefore, helps to ensure that regional growth can be 
sustained. For example, inadequate facilities for the 
treatment of urban waste water can significantly 
reduce income and jobs. 
The main environmental problems which have im­
plications for infrastructure investment in weaker 
regions concern the management of urban waste 
water and the disposal of domestic, industrial and 
22 Proportion of subscribers connected to digital 
local exchanges, 1992 
% total 
B DK F I 
1.1_ NL: 1991 data NL UK GR E IRL P 
75 
•^••:5ft*$rf. H;**-- %ré * i<^%-^>#i X^WXK* SttfH 
toxic waste. Problems of environmental damage, 
however, are widespread throughout the 
Community. In certain cases, for example, contami­
nated land or urban dereliction, the problems tend to 
be greater in developed areas now in industrial de­
cline than in less developed regions. 
In considering regional endowments of environmen­
tal infrastructure, the approach adopted is not one of 
examining the extent to which the weaker regions are 
less developed than the stronger, but one of compar­
ing the current situation with the standards identified 
in the various Community Directives relating to the 
environment. This, in effect, combines quality and 
quantity indicators. 
Community Directives set environmental standards 
and the dates by which these must be met The supply 
of water, the quality of which is governed by Direc­
tives, requires major investment to ensure adequate 
provision for households and businesses without 
undue impact on the natural environment. Air quality 
and control of emissions are also governed by Direc­
tives but are not considered here because they do not 
involve major public infrastructure investment and 
because the costs of meeting standards fall largely on 
the private sector. 
The physical requirement for new environmental 
infrastructure is difficult to estimate. Continuing 
changes in environmental policy and standards, un­
certainty over future economic growth and changes 
in technology complicate the picture, while there is 
a lack of comprehensive data on existing facilities -
a problem not confined to Europe. Here the aim is to 
indicate the broad scale of Community differences in 
endowment between regions. 
Waste water 
The capability of regions to treat their waste water 
varies widely. In West Germany, in 1988, the ratio 
of waste water treatment capacity to waste water 
production was 105%, while in Ireland the figure was 
one-third and in Greece only 11%. The Ministry of 
the Environment in Italy recently reported that a 
number of the treatment plants in the Mezzogiorno were not in operation, often because they were not 
connected to the sewer or power system8. 
To be treated, waste water has to be collected, which 
requires in turn a major investment in infrastructure. 
In 1991, only 53% of the population in Spain was 
connected to waste water treatment facilities, while 
in Ireland the figure was 44% and 31% in Portugal. 
These proportions compare with 68% (France) and 
98% (Denmark). 
Untreated waste water is generally discharged into 
rivers and eventually the sea. The quality of bathing 
waters therefore give an indication of the effective­
ness of waste water treatment system. In Denmark, 
where 92% of the population is connected to waste 
water treatment facilities, 96% of beaches met the 
standard set in the Bathing Water Directive. In Spain, 
90% of beaches reached the standard, but in 
Andalucia this figure fell to 81%, while in Sicily the 
figure was only 78% and in East Germany as low 
as 68%9. The UK figure is also comparatively low 
at 76%. 
Solid waste 
Municipal solid waste can be disposed of by incin­
erating, composting, recycling or landfill. Landfill is 
the most common and least expensive method, but in 
order to ensure that landfill sites meet environmental 
standards - so that, for example, contaminated water 
does not leach into the water table - they need to be 
controlled. In Portugal, 62% of municipal solid waste 
was disposed of in uncontrolled sites in 1989 and this 
rises to 93% in the Algarve10. In the poorest regions 
of Spain 38% of waste was disposed of in such sites 
in 1990 and 71% in Castilla La Mancha11, in Italy an 
estimated 70% of the waste generated in the 
Mezzogiorno is disposed of in unauthorised sites12. 
The disposal of industrial and toxic waste is a major 
problem in all Member States and there is a lack of 
agreement on the methods to be used. Even in the less 
developed regions, the amounts of toxic and hazard­
ous waste being produced have reached significant 
levels. Greece, for example, generated approxi­
mately 450,000 tonnes a year13 but has no treatment 
or disposal facilities, and it is estimated that Portugal 
76 
V '&•"***$? f^^K^ï^ts vfr-.i^yty^offlM^-iy-a-^»^*^ yri3*&J-J9&fe-j Chapter 4-Infrastructure and human resource endowments' 
Table 7 
Average annual investment required 
for environmental infrastructure 
Urban Municipal Industrial/ Water supply 
wastewater solid waste hazardous waste 
MECU MECU MECU MECU Total 
MECU 
Greece 
Ireland 
Italy 
Portugal 
Spain 
Total 
Greece : The Cost of Compliance with Environmental Directives in Greece, BCS1992; 
Ireland : The Environment and Regional Development in Ireland, Jonathan Blackwell and Associates, 1992; 
Italy : Environmental Investment Needs in the Lagging Regions, ERL Espana Industrial Hazardous Waste based on Valutazione delle iniziative 
intraprese nel campo delle risorse idriche e dell'ambiente neWambito del QCS1989-J993per I'Italia, ERL London; 
Portugal : Regional Environmental Development Study in Portugal, SEIA (Industrial Hazardous waste data from ERLEspana); 
Spain : Environmental Investment Needs in the Lagging Regions, ERL Espana; Figures for water supply from Water Supply Infrastructure needs 
in the Lagging Regions, Ecotec Research and Consulting Ltd 
produced over 1 million tonnes of hazardous waste 
in 1987, 82% of which was disposed of to uncon­
trolled landfill14-system can be high - as much as 34% in Spain and 
30% in the Mezzogiorno in 198715. 
Water supply 
Proper management of the environment requires that 
the process of supplying water does not interfere with 
the ecosystem. Water is needed for both industry and 
households. The poorer regions, where agriculture is 
a major water user, face problems of shortages, sea­
sonal fluctuations in both supply and demand and 
potentialcontamination. There are permanent supply 
problems - 'water stress' - in the South and South­
west of Spain, Attiki (GR) and Abruzzi and 
Sardegna (I). Shortages are particularly acute in 
Communidad Valenciana and Murcia (E). In Ireland, 
only 80% of the population was connected to the 
public distribution network in 1990 and 65% in the 
Norte region of Portugal in 1990 as against 99% in 
France and the UK in 1989 (Graph 23). 
Even where the public distribution system is rela­
tively extensive, the amount of water lost from the \ 23 Public water supply and disposal in the Member 
States, 1989/1991 
% population 
I Waste water disposal, 
1990/1991 I Water distribution. 
1989/1990 1 j 
100 I 
; 
90 j 
80 I 
70 I 
i 
«o ! 
50 
40 
30 
20 
10 
0 OnrSKE I FDUKLM.DK rM.OA10KCSDFt.UKM. 
Water distribution: GR 1980; Waste water disposal: B, GR 1988 
77 
resource endowment? 
Investment requirements 
If measuring the scale of the initial problem is diffi- :J 
cult, assessing the costs of meeting environmental 
standards is even more so. 
It is estimated that investment of over 900 mil­
lion ECU a year will be needed in waste water man­
agement in the four poorest countries of the 
Community plus Italy over the next ten years to 
comply with the drinking water Directive (80/778) 
and to achieve a 95% connection rate (Table 7). 
These figures, however, do not include the renewal 
of existing but inadequate facilities nor operating 
costs, which together could double the required ex­
penditure. 
In the case of urban waste water, investment is re­
quired for the provision and renewal of sewers and 
treatment facilities. The Urban Waste Water Direc­
tive (91/271) sets out precise standards to be achieved by all waste water discharges and a time 
schedule with final completion by 31 Decem­
ber 2005, by which date all treatment facilities re­
quired by the Directive must be installed. Investment 
alone, however, is not enough to ensure that stand­
ards are met There are many examples of new plants 
lying idle or functioning inadequately because of the 
costs of maintenance, a lack of trained employees or 
organisational problems. 
As GDP grows, so does the quantity of waste gener­
ated. The composition of the waste also changes, 
with the proportion of organic matter decreasing. The 
provision of recycling and incineration facilities 
(which must themselves respect air pollution stand­
ards) is costly. Landfill is likely to continue to be the 
most important form of disposal for the foreseeable 
future, but as well as investment in the provision of 
sites, there must also be effective monitoring of these 
and a charging system which reflects the true costs, 
24 Estimated average annual investment required for 
environmental infrastructure projects in Objective 1 regions, 
1993-2003 
r ECU (millions per year) 
Ireland Portugal Greece Italy Spain 
Investment p.a. for Greece in industrial/hazardous waste projects is 2 million ECU 
78 
&£c-"ys '.' s*'*£ ^ 
Chapter 4 - Infrastructure and human resource endowments, 
provides an incentive for waste minimisation and/or 
recycling and deters illegal disposal. 
The generation of toxic and hazardous wastes per 
head is lower in the less developed than in the more 
industrialised regions, but is increasing as industry 
develops. Lack of law enforcement, local opposition 
to the location of facilities and other political prob­
lems are important in restricting investment 
Investment in water supply tends to be directed to­
wards three aims : collection, purification and dis­
tribution. Important problems to be addressed in­
clude the possible deterioration of ground water 
quality from pollution and guaranteeing a continuous 
supply of water, particularly to Southern parts of Italy 
and Spain and to Attiki in Greece. Regional differences 
in human capital 
endowments 
The competitiveness of the Community and regions 
depends not only on physical infrastructures endow­
ments but, to an increasing extent, on those of human 
resources. Effective educational and training systems 
can therefore be important in strengthening com­
parative advantage. Despite the efforts made over 
recent years, however, disparities are still very wide. 
Adjusting educational and training systems to pro­
found structural changes is a priority for the whole 
Community. The need is to respond to technological 
advances which make existing skills redundant and 
to demographic trends which are reducing the num­
ber of people entering the labour market. 
Planned investment will make considerable progress 
towards improving waste water and solid waste treat­
ment and water supply in the weaker regions in the 
coming years (Graph 24). Total expenditure in these 
areas will double between 1989-93 and 1994-99. 
The expected changes will be dramatic as illustrated 
in the case of Portugal. Secondary level treatment of 
waste water should rise from 20% to 90% over the 
next 6 years while the proportion of municipal waste 
disposed of under controlled conditions is expected 
to rise from 40% in 1990 to 98% in 1999. 
Investment in infrastructure can have a significant 
effect on the economy of a region, both directly and 
indirectly. The installation of new facilities generates 
employment both during the construction period and 
when in operation. One estimate is that 26,000 job 
years in construction, contracting and the supply of 
equipment were created as a consequence of projects 
financed by the Structural Funds and by Member 
States on environmental projects in 199316. Disparities in educational levels 
The educational level (or attainment) of the working-
age population is a fundamental indicator of the 
availability of human capital. 
In the four poorest Member States, a large proportion 
of the adult population (aged between 25 to 64 years) 
25 Educational attainment of population (25-64) in the Member 
States, 1991 
% population (25-64) 
80 
70 
I University level 
60 I- M Post-compulsory 
79 
has not undertaken a secondary education - 77% in 
Portugal, 64% in Spain, 53% in Greece and 33% in 
Ireland as against a Community average of 17%!7. In 
most of the more developed countries, the figure is 
virtually zero (Graph 25). 
Furthermore, there are wide regional disparities in 
the least favoured Member States. For example, in 
Portugal, the proportion of the population of working 
age without secondary education varies from 69% 
(Lisbon and the Tejo valley) to 85% (Madeira) and 
in Greece from 38% (Attiki) to 71% (Eastern 
Macedonia). Those living in towns or cities are 
generally better educated than those living in rural 
areas reflecting the relative ineffectiveness of exist­
ing educational systems. 
Patterns are more varied in regard to post-compul­
sory secondary education (Graph 26). While it is the 
case that the poorer regions of the Community have 
a lower proportion of population who have attained this level compared to the Community average, this 
also applies to certain more prosperous Member 
States, notably the UK and Luxembourg. 
Disparities in participation rates 
Basic education and initial training is essential to 
improving the quality of the future workforce in 
Member States. It gives young people a better chance 
of finding their first job and is essential preparation 
for further education and training. 
In all Member States, virtually the whole of the 
population aged up to 15 years is now undergoing 
(compulsory) education. Over time, this will pro­
gressively erode the wide disparities in educational 
attainment described in the previous section. 
The number of young people taking post compulsory 
educational/training courses has increased consider-
26 Educational attainment of population (25-64) for Objective 1 
and non-Objective 1 regions, 1991 
% population (25-64) 
H Objective 1 average 
Post-compulsory 
education non-Objective 1 
average 
University level 
P UK Ê £11 GR IRL I P UK E E11 GR IRL 1 
GR, IRL, P: whole country has Objective 1 status: No reliable data for France 40 
35 
H 30 
25 
20 
15 
10 
5 
0 
80 
Itl^P^T* A'-l>J'lâ/^^X^1V*''*'&,'rt ' '2 *4^^* •^•^^««ft^''^ '?/*?% 
ably throughout the Community in recent years. 
There has been substantial progress in the least de­
veloped regions of the Community. Nevertheless, 
marked differences still exist in the proportion of 
young people of 15 to 19 remaining in education, 
particularly between the less developed countries 
and the rest of the Community. In the more developed 
countries, over 75% of 15 to 19 year olds were in 
secondary or higher education in 1989-90, except in 
Luxembourg (72%) and the UK (59%)). In the 
poorest Member States, the figure was around 60% 
or less except in Ireland (69%). 
There are also important differences in the case of 
the 20 to 24 age group. In the Netherlands, 29% of 
this group and in Denmark and Germany (excluding 
the new Lander) 27% were still in education, while 
the figure for Greece and Portugal was 17% and for 
Ireland only 15%. There were, however, notable 
exceptions. Among the more developed countries, 
the UK had a figure of 15% and among the less 
developed countries Spain one of 25%. Disparities in continuous 
education and training 
Data on continuous education and training are diffi­
cult to collect and interpret. Existing sources such as 
surveys of the Labour Force Survey indicate the 
broad scale of disparities within the Community, the 
proportion of 15 to 24-year-olds in employment and 
receiving training, for example, varying from 33% in 
Germany to less than 2% in Greece and Portugal 
in 1991. 
In general, the most highly educated and those work­
ing in large companies seem to have more chance of 
receiving further training, which implies problems 
for the least favoured regions with their more poorly 
educated workforces employed mainly in small and 
medium-sized enterprises. The fact that training is 
most needed in those regions where there is least 
provision calls for measures to increase the oppor­
tunities available, through, for example, better links 
between initial and continuous education and train­
ing systems. 
Closer examination of the data for young people in 
the 15 to 19 age group shows that the high figures in 
the most developed regions are the result of high 
levels of technical and vocational training. On the 
other hand, in the least developed regions, in general, 
academic forms of education predominate. These 
same regions are often those most affected by unem­
ployment among the under 25s. 
To reduce present disparities, it is not sufficient 
simply to increase the capacity of education and 
training-systems in the less developed areas. Al­
though important, enrolment rates give no indication 
of the quality of the content of courses or the educa­
tional methods used. The repeat and drop-out rates 
provide some insight in to these aspects. Countries 
with low enrolment rates also have high repeat and 
drop-out rates. In Spain, for example, the repeat and 
drop-out rates in secondary education increased from 
12% in 1988 to 22% in 1992 and rates are also high 
in Italy (19%) and Greece (9.5% in general second­
ary education and 24.5% in technical and vocational 
training)18. 
81 
European Commission (1994), Energy and Economic and Social Cohesion. Com (93) 645 final. See also the detailed 
analysis of regional trends in the energy sector in University of Barcelona (1993), Energy and socioeconomic 
indicators in the European Community. Study financed by the European Commission. 
Vickerman W, Analysing the regional impacts of new transport infrastructure : a framework, in Cuadrado Rouro J, 
Nijkamp J and Salva P (eds) Regional Development, Economic Restructuring and Emerging Networks, forthcoming. 
Biehl D and others (1986), The Contribution of Infrastructure to Regional Development, 2 Volumes, 
Office for Official Publications of the European Communities, Luxembourg. Biehl D (1991), The role of 
infrastructure in regional development, in Vickerman W(ed), Infrastructure and Regional Development, European 
Research in Regional Science vol 1, Pion Ltd, London. 
European Commission (1990), The European High-Speed Train Network and European Commission (1993) 
Trans-European Networks : Towards a Master Plan for the Road Network and Road Traffic, 1993. The ERDF has 
contributed nearly 7.5 billion ECU in the weakest regions over the period 1989-93, with some 3.5 billion ECU for 
sections of Community interest. However, this is small in comparison to the estimated 1000 to 1500 billion ECU 
needed to complete the trans-European transport networks over the period 1990-2010 (COM(92) 231 final, 
11 June 1992). 
Doganis R, Dennis Net al (July 1991), Air Transport Infrastructure Needs in the Lagging Regions, 1994-2000, Report 
to DGXVI, European Commission. 
For evidence on this see ACT Consultants (1992), IRPUD and ME&.P, The Regional Impact of the Channel Tunnel 
throughout the Community, DGXVI, European Commission. 
European Conference of Ministers of Transport (1994), Trends in the transport sector 1970-1992. 
All data in this section are drawn from a study carried out for the Commission by Ewbank Preece Ltd (1994), Analysis 
of statistical indicators of telecommunications in the less favoured regions. 
Valutazione delle iniziative intraprese nel campo delle risorse idriche e dell'ambiente nell'ambito del Quadro 
Comunitariodel Sostegno 1989-1993perl'Italia. ERL, London 1993. 
Indicators Ecotec, Beaches meeting the Bathing Water Directive (76/160). 
Direcçao Geral da Qualidad do Ambiente DGQA (1989). 
Ministerio de Obras Publicas y Transportes MOPT (1990), Medio Ambiente en Espana. 
Ministry of the Environment (1989), State of the Environment Report. 
Environmental Investment Needs in the Lagging Regions, ERL Spain. 
Direcçao Geral da Qualidade do Ambiente/TECNINVEST, (1988) Estudo de Produçao, Tratamento e Eliminaçao de 
Residuos Toxicos e Perigosos. 
Ecotec Indicators for Spain and calculations by the Ministero dell'Ambiente for Italy 
Ecotec (1993), Sustainability, Employment and Growth : the Employment Impact of Environmental Policies. 
The data on educational attainment are drawn from the Labour Force Survey which classifies different levels 
according to the International Standard Classification of Education (ISCED). For definitions, see European 
Commission (1993), Employment in Europe, p. 102. 
Ecotec (1993), Evaluation of Structural Funds Interventions in the Field of Human Resources in Objective 1 Regions. 
Study financed by DG V of the European Commission. 9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
82 
./^^Çhapter 5 - New inward investment and the regions 
Chapter 5 New inward investment 
and the regions 
Mobile investment 
in the Community : 
where are the most 
attractive locations? 
The prosperity of regions is dependent on their ability 
to attract and retain productive activity. The features 
of a region which attract economic activity tend to 
change over time as do the conditions required by the 
activities themselves. Historically, the structure of 
economic activity has undergone massive changes as 
agriculture gave way to urban manufacturing which, 
at least in terms of employment, has in turn dim­
inished in importance as services have expanded. 
Within manufacturing and services, there have also 
been major structural changes as the scale of activity 
has expanded both in terms of the range of products 
produced and geographically. tional decisions only some of which can be ascribed 
to the behaviour of large firms. 
The factors which determine the locational beha­
viour of companies have been the subject of many 
studies. This chapter does not attempt to review the 
findings, but instead focuses on the evidence of a 
survey of firms which were asked how different parts 
of the Community measured up to their locational 
requirements . It then goes on to consider the magni­
tude and direction of foreign direct investment flows 
over the period 1986-1991. 
Factors affecting 
location decisions a brief review 
The survey covered 87 firms including 17 multina­
tionals which had recently taken decisions on the 
location of their activities in the Community. The 
findings confirmed the importance of the classic 
determinants of location : 
The multinational firm has become the symbol of 
modern economic activity at the end of the twentieth 
century. These firms have a much greater influence 
on activity than their size would suggest because of 
the ancillary manufacturing and services which they 
generate as they locate in different places. Neverthe­
less, outside the multinational sector, small and 
medium-sized companies continuously make loca-• proximity to the market 
• the quality and availability of labour 
• suitable infrastructure (transport, telecommuni­
cations, etc) 
the quality of life and personal factors 
83 
Chapter 5 ~ New Inward investment and the regions 
• cultural affinity 
• promotional policies 
• the existence of other firms in similar areas of 
activity, or the clustering effect. 
None of these are surprising, though the identifica­
tion of the clustering effect has potentially important 
consequences for regions. The decision of where to 
locate of around half the companies interviewed was 
affected by the desire to be close to companies 
carrying out similar activities. This was particularly 
true of manufacturing companies which believed 
they would have more choice as regards component 
suppliers and specialised maintenance services in an 
area where similar products were being manufac­
tured. Component suppliers also preferred to be lo­
cated close to similar companies, both for supply of 
intermediate goods and for access to major cus­
tomers. 
The findings of the survey at a more general level are 
also revealing. First, the survey indicated that the 
motive underlying the decision to locate, or re-locate, 
is a desire to gain or retain market share. The Single 
Market appears to be particularly important in this 
respect. On the one hand, firms from outside the 
Community viewed investment in Europe as a means 
of protecting their market share. On the other, many 
firms inside the Community have responded to the 
Single Market by reorganising their activities geo­
graphically. The data reviewed below confirm the 
substantial growth of investment flows into the 
Community, as well as between Member States, in 
the second half of the 1980s. 
Second, in 75% of cases, the firms surveyed selected 
the country in which to locate first and only then the 
region. In 25% of cases, the final choice was between 
regions in different countries. This means, therefore, 
that in most cases the attractiveness of a region was 
closely linked to the attractiveness of the Member 
State concerned, though in a significant minority of 
cases, the region seemed to be selected on its own 
merits. Thirdly, a single factor stood out as the key influence 
on the decision in only a few cases. In most cases, the 
region selected had a particular combination of char­
acteristics which best satisfied the criteria specified 
by the decision-maker. 
Fourthly, direct cost factors were not always the most 
decisive. Firms were prepared to forego the lowest 
cost location in favour of other benefits, though these 
often had an implicit cost dimension - good quality 
labour, for example, affects costs as does the 
proximity of markets. 
Perceptions on different 
Member States and regions 
The firms surveyed were asked to explain why some 
countries were included in their short-lists of possible 
locations and others excluded. In general, the 
Member States most frequently included were 
Germany, France and the UK because of the import­
ance of their large market. In the case of Germany 
and France, physical location on the European main­
land was important especially when combined with 
the good level of inf rastructural provision which was 
perceived. These countries were also reckoned to 
offer a high quality labour force, though concern was 
sometimes expressed about cost. For the UK, the 
language and culture were seen as particular advan­
tages, especially by outside investors from the US 
and Japan. 
The other large Member State, Italy, was short-listed 
much less frequently than Germany, France and the 
UK, largely, it would appear, because investment 
there was thought to involve more risk than in the 
other three countries. Language difficulties were also 
frequently cited against short-listing Italy, while 
some respondents viewed peripherality, the political 
system and low labour force quality as problems. 
For the smaller Northern Member States - Denmark, 
Belgium, the Netherlands and Luxembourg - the 
absence of a large national market seems to be a 
major factor militating against their inclusion on 
company short-lists. Companies, at the time of the 
survey, were just beginning to view the Community 
as a single market. This is probably therefore a tran-
84 
^ '\^^^ê^^^^^^^^^^^^^¥^^^^ - Chapter,5|~ New Inward Investment and the regions 
sitory matter which is likely to change as companies 
adapt their production and marketing to the reality of 
a fully operational Single Market. On the positive 
side, Belgium was often perceived by investors as 
being at the heart of the Community, due to the 
presence of the European Commission and the head­
quarters of a number of major multinationals. The 
Netherlands was often included for distribution sites 
due to its excellent port facilities and road network 
as well as its accessibility to industrial areas else­
where. 
Perceptions on Greece, 
Spain, Ireland and Portugal 
The attractiveness of locations in the weakest 
Member States - Spain, Greece, Ireland, Portugal -
is of particular importance for cohesion. Their per­
ception by the firms surveyed can be summarised as 
follows : 
Spain 
Spain was increasingly being included on short-lists 
in cases where proximity to a large population was 
important. A number of firms surveyed mentioned 
that for many products the Spanish market was ex­
panding as the economy grew and was therefore a 
good sales opportunity for them. 
As well as an expanding market, the main reasons 
given for short-listing Spain were low production 
costs and the generous incentives on offer. 
The main reasons for not short-listing it were its 
distance~~from the core Community market which 
caused logistic problems and hindered close relation­
ships with customers, language difficulties and, in 
the case of US and Japanese firms, the lack of cultural 
affinity. A few companies also referred to problems 
of labour quality. 
Ireland 
Ireland was considered more attractive than Greece 
or Portugal. Its key attraction was that costs were low 
because of low wages, low corporate taxation and generous incentives. This, together with the lan­
guage, was frequently cited as the reason for locating 
in Ireland. From the replies, Ireland was beginning 
to be recognised as a centre of excellence for elec­
tronics and software and had a ready supply of skilled 
labour. 
The main reasons for not short-listing Ireland were 
its peripherality and the difficulties of transporting 
goods to the European mainland. 
Greece and Portugal 
Greece and Portugal were short-listed in very few 
cases. Where they were, the main reasons were low 
production costs and the generous level of incentives 
offered. 
The chief reasons given for not short-listing the two 
countries were their peripherality and the associated 
transport difficulties and high costs, inadequate in­
frastructure, low quality of labour and the lack of 
particular skills. Some companies expressed difficul­
ties of 'doing business' in countries with a small 
industrial base and a lack of industrial tradition com­
pared with countries such as Germany. 
In some cases, specific business-related reasons, 
such as a lack of service facilities for machine main­
tenance, were also cited. 
Concluding remarks 
It emerged from the survey that for many companies, 
deciding on their location, a key issue was how to 
balance the advantages of being close to their main 
markets against the lower costs and other benefits 
often associated with a more distant location. 
The survey implies that regions nearest to the econ­
omic centres of the Community will continue to 
benefit from this. Other regions might be able to 
counteract such an advantage through lower conges­
tion, better quality of life, lower costs, financial 
incentives, and so on. This applies especially to re­
gions which are not too distant from these centres. It 
seems likely, however, that headquarters of multina-
83 
^Chapter 5 ~Newlnward investment and the regions 
tionals and specialised financial services will con­
tinue to be located in central regions. 
Through lower costs and financial incentives, the 
most peripheral regions have also been able to attract 
a substantial amount of investment in the recent past, 
especially in manufacturing (see below). Notable 
examples include parts of Scotland and Ireland 
(Midwest), the Lisboa and Porto regions in Portugal, 
several areas on the Spanish Mediterranean coast 
(Barcelona, Valencia, Malaga), Puglia (Ban) in Italy 
and the Thessaloniki region in Greece, which are all 
areas with fairly well developed socio-economic in­
frastructure. 
In the future, the cost advantage of 'peripheral' re­
gions may become smaller as further economic inte­
gration leads to the harmonisation of macro-econ­
omic conditions and upward pressures on wage 
levels (see chapter 11). There is, therefore, greater 
onus on these regions to maintain or increase their 
attractiveness for mobile investment through im­
proving their accessibility and the conditions they 
offer for knowledge-based activities. 
The survey also has important implications for re­
gional development agencies trying to attract invest­
ment It suggests, first, that a combination of factors 
tends to determine a firm's decision; secondly, that 
the key determinants differ from case to case; thirdly, 
that companies tend to choose regions where acti­
vities similar to their own already exist. Finally, firms 
indicated that local promotional policies and support 
were very important in their final choice of location. 
Trends in 
Foreign Direct 
Investment2 
A lagging region derives two kinds of benefit from 
foreign direct investment (FDI - the capital with 
which an enterprise finances the purchase, creation 
or development of subsidiaries abroad or acquire 
share in foreign companies) : • an injection of capital, which increases invest­
ment in its productive capacity and hence its 
growth rate; 
• access to advantages which multinationals can 
bring; examples often cited are technical know-
how, the opportunity for the local workforce to 
learn new skills and management techniques. 
These benefits will be greater where there is a spin­
off to local industry as the multinational interacts 
with indigenous firms. 
There are, however, at least two reasons why this 
favourable outcome may not occur. The first is that 
FDI in a productive activity may, because of the 
competitive edge of the multinational concerned, 
inhibit the development of local firms in that sector. 
Secondly, foreign firms do not always develop links 
with the local economy. 
It is nevertheless generally accepted that a balanced 
development strategy which succeeds in attracting 
and integrating inward investment can significantly 
assist the convergence of lagging regions. As shown 
below, FDI flows are a major source of capital for 
these regions often outstripping receipts from the 
Structural Funds. 
Difficulties in measurement 
FDI statistics are well known for measurement diffi­
culties. Data are usually collected ?l a national level 
only, so precluding any regional analysis. They are 
also often incomplete. What is defined as FDI varies 
from one country to another as do the systems of data 
collection. Figures on the outflows from one country 
to another, therefore, often show major differences 
from the figures on inflows estimated by the latter 
(the so-called asymmetry problem). 
In consequence, the data should be treated with a 
great deal of caution. In particular, little can be con­
cluded from small inter-country differences. The 
analysis below begins by reviewing the major global 
trends in FDI flows. While the main interest is in 
inflows into the Community it is also necessary to 
consider outflows since the two are often related. 
ftvw«fWivi«wgifttfB 
86 
g^^^|g|Sfe^^|è?K^ Chapter 5|- New in ward Investment and the régions 
FDI : The major global players 
There are three major sources of foreign investment : 
the US, Japan and the European Community. Ac­
cording to European Commission statistics, in the 
period 1986 to 1991 inclusive, FDI undertaken by the 
Community, US and Japan totalled nearly 
370,000 million ECU. The Community and Japan 
each accounted for nearly 163,000 million ECU of 
this. US FDI abroad therefore totalled some 
48,000 million ECU over this period, less than one 
third the level of either the Community or Japan. The 
figures also indicate that outflows of investment from 
the Community and Japan exceeded inflows (espe­
cially in the case of the latter) while the US was a 
major net recipient of foreign direct investment 
(Graph 27). 
The data, however, do not include reinvested profits, 
which according to the estimates could account for 
as much as 80% of total US FDI abroad. The 
Community has been a major beneficiary of US 
investment and by 1988 the accumulated stock was 
estimated at some 107,000 million ECU. Indeed, 
many US companies have been in Europe for so long 
that they are no longer considered foreign investors. 
In the late 1980s, Japanese FDI abroad increased 
significantly, peaking at 40 billion ECU in 1989 as 
against 15 billion in 1986 and an average of 8 billion 
in 1984/85. Although Japan is a major investor in 
neighbouring Asian countries, the evidence also sug­
gests that Japanese investors are increasingly target­
ing the Community reflecting in large measure their 
desire to benefit from the opportunities created by the 
Single Market, now effectively expanded to include 
six countries of the European Free Trade Associ­
ation (EFTA). Japanese investment in the 
Community tends to be dispersed across a wide range 
of economic activities taking in not only manufactur­
ing but also commercial activities such as property 
and financial services where joint-ventures and part­
nerships are common. 
The increasing interest in the Community by foreign 
investors is reflected in the scale of flows over time 
though there are significant year to year fluctuations. 
The flow of FDI into the Community was only 7 bil­lion ECU in 1986 but reached a peak of 33 billion in 
1990 before falling back to 21 billion ECU in 1991. 
On the other hand, the outflow of FDI from the 
Community was not much different in 1990 and 1991 
(19 billion and 27 billion ECU, respectively) than in 
1986 (22 billion ECU). In analysing trends in FDI, 
flows between the Community and the rest of the 
world need to be distinguished from flows between 
Member States. 
Flows between the Community 
and the rest of the world 
Of the FDI undertaken abroad by Community coun­
tries, the major recipient is the US, accounting for 
63% of the total in the period 1986-91. This largely 
comes from four Member States. Over this period, 
the UK was by far the largest investor outside the 
Community accounting over a third (36%) of the 
Community total. The three other major investors 
were Germany (19% of the total), France (also 19%) 
and the Netherlands (12%), with the remaining 
MemberStates having combined shares of only 14%. 
The FDI flows into the Community from outside 
- some 120,000 million ECU - are of relatively 
diverse origin and flows from the Community to the 
US are not reciprocated to the same degree. The US 
accounted for an average of 25% of the total foreign 
investment into the Community between 1986 and 
27 FDI flows in and out of the Community, US and 
Japan, 1986-1991 
3°0 r ThousandmWonECUS •Grossinflow n ^ 
B Grass outflow 
Community ••''••;';• US 
Current prices and exchange rates Japan 
87 
pCr^Jter-S ><aew: JnuwdSmteftiHt^^ 
Table 8 ^ 
Foreign Direct Investment and GDP by Member State, 1986-1991 
(current prices and exchange rates) 
B/L 
DK 
D 
GR 
E 
F 
IRL 
I 
NL 
P 
UK 
TOTAL % total 
external 
FDI % total 
Internal 
FDI % total 
GDP 
Table 9 
Foreign Direct Investment, 1986-1991 
(thousand million ECU) 
INTRA-Communtty 
IN OUT 
+ EXTERNAL 
IN OUT NET 
NET 
20216 
1197 
7093 
1121 
26991 
22777 
7897 
9434 
13303 
4835 
28018 
142882 17024 
4442 
36011 
22 
5188 
45943 
1735 
13372 
22558 
522 
12657 
159474 7123 
2586 
3805 
652 
10364 
14905 
3565 
8951 
10989 
1828 
53017 
117785 5679 
2553 
31151 
81 
3155 
31823 
2059 
7656 
20346 
113 
58818 
163434 4636 
-3212 
-56164 
1670 
29012 
-40054 
7669 
-2643 
-18613 
6028 
9560 NET 
per head of 
population 
440 
160 
740 
2190 
610 
170 
Source : Eurostat 
88 
' I'KXL** W-New Inward investment and the regions 
1991, the major source of FDI being the EFTA 
countries which provided 35% of the total, nearly 
three times the share of Japan (13%). FDI from the 
EFTA countries grew steadily up to 1990, reflecting 
increasing integration with the Community in the 
years before the formation of the EEA and the ac­
cession negotiations of Norway, Sweden, Finland 
and Austria. 
Just as it is the major investor outside the 
Community, the UK is the major destination for FDI 
flows into the Community, accounting between 1986 
and 1991 for around 45% of the total. Of the other 
Member States, major shares over the period went to 
France (13%), Spain (9%), the Netherlands (9%), 
Italy (8%) and Belgium/Luxembourg (6%). Abso­
lute shares are liable, however, to be misleading and 
it is revealing to relate the FDI inflows from third 
countries into each Member State to the size of its 
economy (measured by GDP - Table 8). In this 
regard, the large economies of the Community - France, Italy and Germany (in particular) -
received shares significantly smaller than the relative 
size of their economies. The exception was the UK 
which received a share of FDI which was greater than 
its share of Community GDP (Graph 28). Ireland and 
the Benelux also attracted disproportionately large 
shares of FDI from outside the Community while for 
other countries the shares were broadly in line with 
those in regard to GDP. 
Intra-Community Investment 
Flows of investment between Member States are also 
significant at an estimated 150,000 million ECU 
between 1986 and 1991. France was the major inves­
tor accounting for some 30% of the total, with 
Germany close behind with 23%, only slightly more 
than the Benelux countries with 22%. The UK was 
responsible for progressively less FDI in the rest of 
the Community as recession set in at the end of the 
1980s, its share averaging 8% over the period as a 
28 Foreign Direct Investment in the Member States, 1986-1991 
%GDP w \ / 
• Gross inflow 
I Gross outflow 
— EUR12 average 
Intra-Community External 1 5 
- 4 
- 3 
H 2 
-3 
B/L DK D F I NL UK GR Ê IRL P 
Current prices and exchange rates B/L DK O F I NL UK GR E IRL P 
89 
Chapter 5 wNew inwerd kivestment end Hie regions "toft ^t^'4^^^^^ 
whole. On the other hand, the UK's share of FDI 
receipts from other Member States was maintained 
over the period at 20% of the total. France, the major 
investor, was also a major recipient of FDI with 16% 
of the total while Spain and Belgium/Luxembourg 
were also important destinations with 19% and 14%, 
respectively. 
Again, however, it is of interest to compare the 
inward investment of Member States from other 
parts of the Community with the size of their econ­
omies. Those with disproportionately largest shares 
of inward investment in relation to their GDP were 
Ireland, Belgium/Luxembourg, Portugal and Spain 
over the period (Graph 28). 
A final approach to the analysis of the trends is to take 
the net flows between Member States and their 
Community and non-Community partners which can 
be standardised for comparative purposes using popu­
lation. The evidence suggests that FDI is contributing to cohesion and that the four poorest Member States 
are all net recipients. Net receipts expressed per head 
of population are highest in Ireland followed by 
Spain which is by far the largest net recipient in 
absolute terms. The UK, the fifth poorest Member 
State, is also a net recipient All the other Member 
States are net contributors except Belgium/ 
Luxembourg (Table 9). 
FDI and the Structural Funds 
compared 
Comparisons between transfers received from the 
Community Structural Funds and FDI flows are 
fraught with statistical difficulties and can only be 
regarded as broadly indicative of the relative magni­
tudes involved. For three of the four main recipients 
of Structural Funds assistance - Spain, Portugal and 
Ireland - inward foreign direct investment, as 
measured, has tended to be larger in value than 
Community regional aid. This is especially true of 
29 The relative Importance of foreign direct investment and '* 
Structural Funds for the weaker Member States, 1986-1991 
% GDP 
7 r 
6 I-
5 
4 
3 ERDF receipts 
Structural Funds 
receipts 
FDI, gross inflow 
EUR12 Spain Greece 
Current prices and exchange rates Ireland Portiigitl 
90 
; Chapter 5 ;-New inward —^T^t end the regions 
Spain, where the former averaged around four times 
larger than the latter in the six years 1986 to 1991 
(Graph 29). In Portugal and Ireland, the two magni­
tudes were more similar over the period, especially 
during the earlier years, though both experienced a 
substantial increase in inward FDI in the later years 
which pushes up the average for the period. 
In Greece, on the other hand, transfers from the 
Structural Funds averaged around twice the value of 
inward investment over this six-year period. 
The tentative conclusion which can be drawn from 
these comparisons is that in most cases - Spain in 
particular - foreign direct investment is at least as 
important as Community regional support as a source 
of capital formation in the less developed areas. The 
relatively strong growth experienced in the second 
half of the 1980s in Spain, Portugal and Ireland 
almost certainly owes something to such investment, 
though equally the fact that growth was strong is 
likely to have been a factor attracting foreign com­
panies to invest in these countries. 
Ireland is the major destination for both external and 
intra-Community foreign investment in relation to its 
size. This comes mainly from the US, though the UK 
is also important while the Community's share of 
total FDI received by Ireland tended to decline be­
tween 1986 and 1991. FDI has led to the estab­
lishment of a modern productive base in industries 
such as electronics and pharmaceutics. The capital-
intensive nature of much of this investment, how­
ever, and the comparative absence of local linkages 
have contributed to a relatively low employment 
content in economic growth (see Chapter 2). 
Greece has attracted relatively low levels of inward 
investment and what there is tends to be linked to 
tourism in such areas as hotels and catering, which 
does not create the opportunities for learning the 
skills relevant to high value-added industry. 
Almost half of Portuguese inward investment comes 
from the UK. FDI increased considerably (virtually 
tripling in nominal terms in the second half of the 
1980s). Textiles, banking and wholesaling feature 
prominently among the sectors concerned and in­vestment has undoubtedly been attracted by cost 
considerations with Portugal exploiting its low wage 
advantage. One concern is that FDI may not have 
contributed sufficiently to industrial diversification 
and that necessary skills are not being taught The 
lack of infrastructure is a hindrance, especially given 
the peripheral location, though the position is chang­
ing rapidly. 
There have been massive increases in FDI going to 
Spain over the 1980s, more so than to any other 
Community country according to the evidence. This 
has mainly come from other Community countries 
and has principally gone into transport machinery, 
textiles, chemicals and metal products. There has 
also been substantial FDI in banking and wholesal­
ing. The broad base of FDI in Spain has probably 
contributed to general efforts to raise skills, espe­
cially of management 
As already noted, the UK is the major recipient of 
outside investment and, as indicated in the survey on 
location factors above, this seems to be associated 
with cultural affinities and the language. The UK is, 
however, the major destination of FDI from non-
English-speaking countries such as those in EFTA. 
While English is often the preferred second lan­
guage, this finding may have to be treated with 
caution. The UK appears to have been the only large 
country which has succeeded in attracting significant 
amounts of inward investment to its peripheral, lagg­
ing regions, rather than the core, successful regions. 
The UK's approach may therefore be of interest to 
others (see chapter 10). 
Foreign direct investment : 
manufacturing 
It is of interest to consider the results of an enquiry 
into the nature of US and Japanese investment in new 
manufacturing plants in the Community's regions. 
As mentioned above, the advent of the single 
European market, provided a new impetus for firms 
from outside, not only to sell to, but to produce in the 
Community in the second half of the 1980s. US and 
particularly Japanese firms have expanded their 
operations in the EC, through portfolio as well as 
greenfield investments (Tables 10 and 11). 
91 
—•—^~—i^—y^<mM^—»——M——— «—q———i«= j, n j in i ; i ^ m j , ••.••...••.-.,... =— -— - _....•,...,. 
W*'W.!;/V' •:• - < ••> . .;:,, •. .fableM)V-> .rv 
*«*!*.-*, *: » US investment in greenfield manufacturing 
"««« sites In Europe, 1986-1989 
Number Number _, ., . .. . . . 
of plants of Jobs Most lmP°rtant Investment regions 
UK 68 7100 Scotiand, Wales, Midlands 
France ^ ^®® Ile-de-France, Bassin Parisien, Méditerranée, 
Centre Est, Côte d'Azur 
Ireland 28 2700 Dublin, Cork 
Netherlands 15 1000 Brabant, Limburg, Randstad 
FR of Germany 12 1400 Baden-Wùrtlemberger, Bayern, NRW 
Spain 6 800 Cataluna, Valencia 
Belgium 5 750 Vlaanderen 
Italy 5 500 Nord Ovest, Lombardia, Nord Est 
Luxembourg 5 300 
Total 174 17450 ^^ 
Hill 
lllpivi $i0MÊÊÊÈÎ^]Ê$ÊÊM r:SB :^^-!ft:-ï^5^^S?:?^:?i^S^^^'^^y:^^:^'S? 
Japanese investment in greentleld manufacturing 
sites in Europe, 1986-1989 
Number Number 
of plants of jobs Most Important investment regions 
UK 
FR of Germany 
France 
Spain 
Netherlands 
Italy 
Ireland 
Belgium 
Luxembourg 
Total 59 
24 
23 
11 
9 
8 
7 
5 
1 11400 Wales, Midlands, North, South 
3400 Nordrhein-Westfalen 
3600 Bassin Parisien, Elzas, Lorraine, He-de-France, 
Centre Est 
1400 Cataluna, Valencia 
450 Brabant, Limburg 
1600 Nord Ovest, Lombardia, Nord Est 
600 Dublin, Cork 
450 Vlaanderen 
100 
147 23000 
Source : BCL 
92 
m^Sy ^DrWtirSpNéwJnwâfdl &nd thejegîôtfe '• 
US Companies 
FDI in manufacturing by US concerns was highly 
concentrated in two countries, the UK and Germany. 
France, Italy and the Netherlands followed some way 
behind. Compared with the 1960s and 1970s, the 
regional distribution of direct investments remained 
much the same in the 1980s. 
Of particular importance is new, or greenfield, in­
vestment in the regions which is the kind highly 
prized by Member States because it tends to bring 
with it new activities, technologies, managerial skills 
and so on. In the period 1986 to 1989, almost two-
fifths of all new US greenfield plants were located in 
the UK. Active regional policies (development 
grants and agencies) diverted much of these to devel­
opment areas, particularly Scodand and Wales. 
The second- and third-ranked destination countries 
for these investments were France (30 plants) and 
Ireland (28 plants). In France, there is a clear concen­
tration in the metropolitan area and surroundings 
(Ile-de-France and Bassin Parisien) and in the inter­
mediate regions in the South (Méditerranée, Rhône-
Alpes, Auvergne and Côte d'Azur). International 
transport and telecommunication links and numerous 
technical and scientific centres of excellence appear 
to have created an attractive investment climate in 
these regions for US firms. 
Despite Ireland being one of the smallest Community 
markets, its language, cultural ties, young qualified 
workforce, tax concessions and other incentives and 
the marketing efforts of the IDA (Industrial Devel­
opment Authority of Ireland), have attracted many 
US investors. European consumers. For all of these reasons, the 
participation of Japanese manufacturers in European 
business began to accelerate in the latter half of the 
1980s and there were 529 companies in operation or 
planning to operate in Europe in 1990. 
The UK (133 firms), France (95 firms) and Germany 
(89 firms) are the three main European countries 
where Japanese manufacturers tend to locate. Up to 
the mid-1960s, there were only 28 Japanese manu­
facturing companies in the UK, less than in France 
(35 firms) and Germany (36 firms). After 1985, 
Japanese manufacturing investment in the UK in­
creased rapidly in a wide range of sectors, the number 
of firms exceeding the number in Germany in 1986 
and the number in France in 1988. The Japanese are 
also very active in investing in Southern Europe, with 
Spain (55 companies) being by far the most import­
ant destination and the largest investment being in 
chemicals, engineering, electronics and vehicles. 
Over the period 1986 to 1989, 147 Japanese firms 
located in Europe, 59 in the UK. As well as going to 
the South East of England, Japanese firms like US 
companies have located in large numbers in periph­
eral regions in Wales and the North. In France also, 
Japanese firms show a similar locational pattern to 
their US counterparts, except more have gone to the 
North-East (Alsace and Lorraine) than to the 
Southern sunbelt 
In Germany, Nordrhein-Westfalen is the most im­
portant location for Japanese companies, their 
presence there dating back to the immediate post-war 
period. In the 1960s and 1970s a Japanese centre was 
created in Diisseldorf which acted as a magnet at­
tracting further Japanese investment 
Japanese companies 
As indicated above, Japanese foreign direct invest­
ment increased considerably in the 1980s. According 
to a recent questionnaire, nearly a quarter of the 
270 Japanese responding companies were motivated 
to invest in Europe (Jetro 1990) as a step towards a 
globalized business strategy. The second reason was 
to satisfy expanding demand by local production 
instead of exports and the third to meet the needs of Concluding remarks 
The Member States of the Community have been 
heavily involved in foreign direct investment, both 
as investors inside Europe and in the rest of the world 
and as recipients of inflows from Japan, the US and 
the EFTA countries. This has almost certainly 
brought major benefits to national and regional econ­
omies, though the scale and nature of the effect 
differs from case to case, according to the quality of 
93 
the employment created and the extent of local link­
ages established3. 
One Member State, the UK, has attracted a dispro­
portionately large share of inward investment into the 
Community from outside. Cultural factors in general, 
and the English language in particular, appear to have 
been important underlying reasons, though, as noted, 
the UK is also the major destination for investment 
from non-English speaking countries alike. 
The evidence also suggests that originators of FDI 
are also recipients, large-scale outflows from 
Member States such as France and the Benelux coun­
tries being matched to a major extent by inflows. 
Countries such as Spain, Ireland and Portugal, how­
ever, receive much more FDI than they invest abroad. 
The large amount of FDI going to Spain from both 
the Community and outside confirms that it is in­
creasingly seen as a favourable location for new 
activity. There are encouraging signs for the weaker 
Member States that efforts to attract FDI to their 
regions can pay off (see Chapter 10). 
Finally, any residual fears about the implications of 
foreign companies investing in the Community, which 
at present seem to be focused on Japanese firms, need 
to be tempered by the thought that there used to be 
similar concern about US multinationals in earlier 
periods. With the passage of time, these in many cases 
have ceased to be regarded as foreign producers and are 
seen as integral, and essential, to the national and 
regional economies in which they are located. 
Netherlands Economic Institute and Ernst and Young (1993), New location factors for mobile investment in Europe. 
Regional Development Studies No. 6. Study financed by DG XVI of the European Commission. 
The data for the analysis of FDI flows are taken from 
(i) European Commission (1994), Direct Investment in the Community, 1984-91 Eurostat Theme 6, Series D. 
(ii) European Commission (1991), Foreign Direct Investment in the Peripheral Member States. 
See Greenaway, D. (1993) Trade and Foreign Direct Investment in The European Community as a World Trade 
Partner, European Economy N° 52, DG II of the European Commission. 
94 
^•P^tâ^fy§^<^âf mtBwmm 
Chapter 6 
Chapter 6 The role of 
research and technological 
development in the regions 
Many of the causes of disparities in economic devel­
opment can be traced to disparities in productivity 
and competitiveness. Although not the only factors, 
Research and Technological Development (RTD) 
and, more generally, the capacity to innovate and 
upgrade, particularly in products and processes, are 
vital components of regional competitiveness. This 
might lead, in turn, to a raising of regional output 
through increased interregional and international 
trade. New or improved products and processes, 
lower costs, greater flexibility of production, higher 
quality and quicker market response, are all ways in 
which RTD can confer a comparative advantage on 
particular regions. 
The fact that most factors which favour RTD and 
innovation (defined here as the necessary steps - or­
ganisational, managerial, commercial and financial 
as well as technical - required to introduce a new or 
improved product or process onto the market) are 
virtually defining characteristics of the Community's 
core regions serves to underline their importance in 
the Community's effort to increase social and econ­
omic cohesion. These factors include : 
• well developed communications networks; 
• good scientific infrastructure; • easier access to skills and know-how; 
• advanced markets for business services; 
• information services. 
From a regional development perspective, RTD and 
innovation are important insofar as they increase the 
capacity of producers to consolidate and diversify 
and thereby guide them to maintain or increase their 
competitiveness in a continually changing interna­
tional market Since innovation has become a con­
tinuous process requiring the rapid introduction of 
each new advance, the economic success of a region 
depends to a large extent on the possibilities available 
for securing access to innovation and technological 
developments on an ongoing basis. Success depends 
also on how much of indigenous effort can be turned 
into new products and processes. 
The problem for weaker regions is therefore twofold: 
to generate and develop their own indigenous RTD 
activities and to adapt technological developments 
which take place elsewhere to a specific regional 
context. The traditional approach of many regions 
has been to seek to attract outside leading technology 
enterprises with well-established links in the RTD 
area. Recent studies have shown that, on average, 
foreign-owned companies in Spain1 and Ireland2 
95 
mm 
i •; 
30 Expenditure on research an<J development in the Member 
States, 1990 ; ^v 
%GDP 
2,5 
1*5 
Q|6 h T 3 
Private H Public 
2,5 
1*5 
0,5 
GR P E IRL J OK B 
P 1981 data; DK, GR 1989 data; E, F 1991 data EUR12 NL UK 
have a higher propensity to conduct research acti­
vities than native firms. 
Such a strategy is unlikely to be sufficient, however, 
for the wider incorporation of new technologies into 
the productive base. For the weaker regions, the 
productive base often consists largely of small and 
medium-sized firms, usually working in traditional 
sectors and lacking an outward-looking perspective. 
In many cases, highly qualified people are in short 
supply and ancillary services are inadequate - such 
as traditional banking practices which inhibit inno­
vation. In such regions, therefore, further investment 
in RTD, or its extended application, is a wider issue 
than it might initially appear. ronment, including entrepreneurial culture and de­
gree of cooperation among regional socio-economic 
actors - that is, on the existence of an environment 
which fosters the rapid diffusion of innovations 
throughout the local economy. 
Differences in RTD : 
an overview 
Measures of the 'technology gap' between Member 
States suggest that it is considerably wider than the 
gap in income per head discussed in Chapter 1. 
In less favoured regions, the wider incorporation of 
new technologies into the productive base depends 
not only on the availability, quality and degree of 
integration of technology supply with local demand, 
but also, and most importantly, on the business envi-A standard measure of the level of RTD activity is 
gross expenditure on R&D (GERD) expressed in 
relation to GDP (Table 12). The Community's four 
weakest Member States in this respect - Greece, 
Ireland, Spain and Portugal - have levels which are 
96 
r Table 12 
RTD indicators for the European Community 
m Q û o m "• £ CM 
cc 
UJ 
GDP per head 
1990 
Index 
Gross expenditure 
on R and D 
(GERD)1 
% GDP 1990 
Business 
expenditure 
on R and D 
(BERD)1 
% GDP 1990 index 
index 
Share of BERD in GERD 
(% GERD)11990 
Govn.RTD 
financing 
(% total budget) 
1988 
Total RTD 
scientists and 
engineers per 1000 
labour force 19892 
Private RTD 
scientists and 
engineers per 1000 
labour force 19892 105 139 128 35 69 115 66 103 102 35 93 
1.69 1.54 2.81 0.47 0.87 2.42 0.91 1.38 2.06 0.50 2.21 
85 77 141 24 44 121 46 69 103 25 111 
1.23 0.85 2.02 0.10 0.52 1.48 0.55 0.77 1.11 0.12 1.47 
95 65 155 8 40 114 42 59 85 9 113 
73 57 72 22 60 61 61 56 56 25 67 
1.40 2.28 4.11 0.60 2.19 6.91 0.98 1.85 2.50 0.98 2.83 100 
2.00 
100 
1.30 
100 
65 
13.24 
4.4 3.8 5.9 1.4 2.2 5.1 5.0 3.2 4.0 1.1 4.6 4.2 
2.4 1.5 3.8 0.2 0.6 2.3 1.3 1.3 1.6 0.1 2.8 2.2 
1 , P1988; DK, GR 1989; E,F,11991 
2 P. UK 1988; B, F, IRL, 11990 
Source : Eurostat CEC (1992), OECD 1992, DGXI1 (derivation from OECD data 1992) 
97 
m^Mi^'îSSS^~~~Z^~^ 
31 Scientists and engineers in the Member States, 1989 
€ r 
5 r 
4 h 
3 h 
2 f per 1000 labour force 
n 6 
P GR E I DK NL EUR12 B 
P, UK : 1988 data; B, F, IRL, 1:1990 data UK IRL 
less than half the Community average - at just over 
2% of GDP (Graph 30). Despite doubling their RTD 
expenditure relative to GDP during the 1980s, 
Greece and Portugal have levels which are still a third 
of the Community average. 
In Portugal and Greece, more than two-thirds of 
GERD is carried out by the public sector - much the 
same proportion of expenditure which is undertaken 
by the private sector in more advanced countries. 
Indeed, in these two countries, the public sector 
proportion tended to increase during the 1980s. On 
the other hand, in both Spain and Ireland the share of 
GERD in the private sector increased steadily during 
the last decade, and by 1992 the public-private split 
had almost reached the Community average. From a 
regional development perspective, this deeper invol­
vement of private firms in RTD in the weaker regions 
is a promising sign of modernisation. So far as RTD manpower is concerned, Greece and 
Portugal have only between a fifth and a quarter of 
RTD personnel per 1000 employed (on a full-time 
equivalent basis) than the more advanced Member 
States (Graph 31). For example, Denmark with a 
labour force of nearly 3 million has more RTD per­
sonnel than Portugal and Greece together with a 
combined labour force of nearly 9 million. In Spain, 
moreover, the proportion of scientists and engineers 
in the labour force was only around 50% of the 
Community average (Map 17). 
While the gap between countries remains large, it has 
tended to narrow over time. RTD employment in 
Ireland rose steadily during the 1980s, particularly in 
the business sector. In Spain, the rate of increase was 
one of the highest in the Community over this period, 
at some 9% a year, with the average rise in the 
business sector approaching 16%3. 
98 
Map 17 R&D personnel, 1989 
% share of total R&D personnel, 1989 
• % labour force 
0.00 - 0.25 
0.25 - 0.50 
0.50 - 0.75 
0.75- 1.00 
> 1.00 
No data 
DK, IRL, NL, UK -
national data only. 
D - data at level 1 only. 
Q ^ 
Chapter 6 - The role of research and technological development in the regions 
Since RTD activities can be characterised as intan­
gible long-term investment carrying a high risk, there 
is more difficulty in finding sources of finance out­
side the more developed regions. In 1989, for 
example, the total risk capital available in Portugal 
and Ireland was less than a quarter of that available 
in the Netherlands. In Spain, there were less funds 
than in Belgium which has under a quarter the num­
ber of people4. 
The net result is one of substantial trade deficits in 
technology and a high degree of dependence of the 
weaker countries on the stronger. Spain is a classic 
example with exports less than 20% of imports and 
a technology deficit which doubled between its ac­
cession into the Community in 1986 and 1990, when 
it reached a peak of nearly 1,400 Million ECU, three 
times that of France, Italy or Belgium, the biggest 
component being technical assistance. In Greece and 
Portugal, foreign patent applications were nearly 
38 times domestic applications, as compared with, for example, Italy, France or Germany, where the 
figure was under 5 times5. 
In strictly economic terms, the lack of basic scientific 
research in the weaker regions is less worrying than 
the deficiency in applied research, or innovation, 
directed at the effective incorporation of technology 
into the production process. 
In these regions, there is also a problem of lack of 
finance for innovation, which is associated with a 
financial environment offering little access to ven­
ture capital and other forms of finance for innovation. 
Islands of innovation 
Recent Studies6 have examined the geographical pat­
terns of RTD activity in the Community. The most 
striking finding is that laboratories and enterprises 
Map 18 Major 'islands' of science-based innovation, 1991 
Innovation area 
100 
$£ - " * I ^ ';, ,-^7>"'" ^4Ï1E'—- >--???- ~v?< — °* research and technological deyeîppment in thé réglcals\ 
which are involved in RTD projects are highly con­
centrated in comparatively few 'Islands of Innova­
tion' . These islands are relatively small, mostly urban 
areas, with a dense network of enterprises and re­
search laboratories interacting in the development of 
new products and processes of production (Map 18). 
A limited number of such islands in the Community 
stand out from the rest : Greater London, 
Rotterdam/Amsterdam, De de France, the Ruhr area, 
Frankfurt, Stuttgart, Munich, Lyon/Grenoble, Turin 
and Milan. taken by the private sector takes place in the South7 
and, in 1989, barely 9% of public sector research. 
Even though this concentration is, to a large extent, 
a result of a natural process of scarce RTD resources 
tending to become located in a few places to gain the 
benefit of economies of scale and externalities and 
even though it is closely in line with the territorial 
distribution of industries and the stronger univer­
sities, it is still necessary to ensure that results and 
know-how are transferred to enterprises in weaker 
regions. 
Up to three quarters of all public research contracts, 
including those funded by the Community, are esti­
mated to be concentrated in these few places. They 
also tend to work closely together as part of a highly 
exclusive network. The large majority of science-
based innovative activities in the Community, there­
fore, involves laboratories and enterprises located in 
this innovative core. By contrast, laboratories and 
enterprises located in peripheral regions of the 
Community only participate in 5-8% of networks. 
An additional aspect of geographical diversity con­
cerns the type of agency engaged in these networks 
of cooperation. The further the distance from the 
central Islands of Innovation, the more partners tend 
to be laboratories rather than enterprises and the 
smaller and more specialised the projects become. 
Finally, RTD activities in the Community's weakest 
Member States are often concentrated in a few re­
gions, normally around capital cities. In Spain, only 
around a quarter of the national RTD effort, 
measured in terms of both GERD and RTD person­
nel, takes place in the weakest regions which account 
for 60% of the population. In Greece, Athens domi­
nates RTD, accounting for nearly 60% of govern­
ment expenditure and possibly for as much as 70% 
of private expenditure. In Portugal, nearly 90% of 
public sector RTD is carried out in Lisbon and the 
Tagus Valley, which also accounts for nearly 50% of 
business RTD. In Ireland, at the end of the 1980s, 
nearly two-thirds of national GERD and almost half 
of industrial RTD was concentrated in the Eastern 
region. In Italy, only 3% of industrial research under-Structural factors 
underlying disparities 
Small firms are often regarded as a major source of 
innovation. At the same time, their capacity to inno­
vate has limits and they tend not to possess the 
resources required to respond to rapid technological 
change in increasingly global markets and the devel­
opment of new products of ever higher quality which 
it invokes. The problems are more serious for firms 
in the weaker regions. According to some, the main 
difficulty facing small businesses here is not so much 
their size but their isolation . 
Small businesses in the less developed regions are 
also having to contend with increasing competition. 
In part, this originates from producers in less de­
veloped countries which are gradually gaining mar­
kets which were formerly the preserve (sometimes 
because of protection) of firms in the more developed 
countries. Equally, there are competitive pressures 
from front-line countries such as Japan, which set the 
standards in terms of rapidly changing patterns of 
innovation and short life spans of products. 
Small businesses in the weaker regions have diffi­
culty in competing with producers in developing 
countries in terms of wage costs. On the other hand, 
in attempting to move into higher technology areas 
they must match the demanding pace of product and 
process innovation set by firms in the more pros-
101 
Chapter 6 -The role of research and technological developmerrt in the regions 
RTD and the Structural Funds 
The main objective of the Community regional 
policies is to reduce regional disparities in the 
Community through the creation of the necessary 
conditions for sustained economic development in 
weaker regions. Given that this is dependent, to a 
large extent, on the ability of regional economies to 
apply technology, foster innovation and convert re­
search efforts into something of value in the market, 
support for RTD is an area of strategic importance for 
the Structural Funds. 
The Structural Funds have so far tried to promote 
regional capabilities in the field of science and 
technology, normally through the strengthening of 
RTD infrastructures (for example, in Portugal, 
CSF funding has contributed to the creation of over 
50 new RTD facilities and to the improvement and 
strengthening of nearly 100 existing facilities) and 
measures aimed at making use of untapped talent 
and increasing the rate of innovation and technol­
ogy take-up by firms. The design and management 
of these RTD-related actions is assigned princi­
pally to national and regional authorities, with the 
role of the Commission limited to establishing 
broad guidelines, advice and technical assistance 
as appropriate. 
Nonetheless, the Structural Funds contribution to 
RTD in weaker regions has been substantial, quali­
tatively as well as quantitatively, especially since 
the 1988 reform. In qualitative terms, structural 
action has helped raise awareness among public 
administrations of the strategic importance of tech­
nological development for regional productivity, 
facilitated participation in the RTD Framework 
Programme through strengthening infrastructure 
and promoted university-industry links and greater 
private involvement in RTD activities. 
In quantitative terms, the Structural Funds con­
tributed over 3.5 billion ECU to RTD-related ac­tions, including support for telecommunications, 
during the period 1989-1993 (Table 13) through 
programmes such as Ciencia in Portugal, the 
Science and Technology Plan for Greece, the 
Scientific Infrastructure Programme for Spain, the 
Science and Technology sub-programme within 
the Irish Industrial Development Operational 
Programme and the RTD National Programme for 
Italy (Ricerca e Sviluppo Tecnologico). Moreover 
a number of RTD-related Community Initiatives 
were launched during mis period - in particular, 
STRIDE (400 MECU), aimed at strengthening the 
research, technological and innovatory capacity of 
assisted regions, while PRISMA, ENVIREG, 
EUROFORM, VALOREN and TELEMATIQUE 
all had a strong regional innovatory component. 
On average, Objective 2 regions have used structural 
assistance for RTD about three times as much as 
Objective 1 regions (9% of the total support in the 
first case, 3% in the second) largely because of their 
more developed industrial structure and the greater 
availability of RTD facilities. In absolute terms, ex­
penditure is highest in Objective 1 regions in view of 
the way that assistance is concentrated on these areas. 
The Community contribution, including the Frame­
work Programme, to GERD is now around a fifth in 
die case of Ireland and a third in the case of Portugal. 
Development programmes include a major effort 
to tackle the skills problem through training. The 
Ciencia Programme in Portugal has, for example, 
established 2,212 scholarships for researcher train­
ing at Masters and Ph.D levels, while the PEDIP 
Programme, focused on industry needs, has sup­
ported 754 training projects. It is estimated that 
these two initiatives in total will raise the number 
of trained scientists and engineers by over 60% 
from the 1988 level. 
102 
Tiie role of research and technological development in the regions 
Table 13 
Estimates of Structural Funds assistance for RTD1 in the CSFs (%) 
Objective 1 Objective 2 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
UK 
These measures cover a wide spearum of RTD and innovation related actions such as information. Science Parks, infrastructure. 
Universities, training programmes, construction of new RTD centres, laboratory equipment, technology transfer centres, 
research/industry links, demonstration projects. 
Source : European Commission 
perous regions of the Community as well as in the 
US and Japan. 
In adopting a modernisation strategy in weaker re­
gions based on innovation and the incorporation of 
new technology, as opposed to a strategy of com­
parative advantage based on specialising in low wage 
production, regional planners have to address not 
only a supply problem (the lack of RTD capacity and 
mechanisms for diffusing technology) but also - and 
probably most importantly in the first place - a 
problem of demand. 
This problem is one of receptivity .The lack of recep­
tivity is reflected in the fact that SMEs in weaker 
regions fail to generate a demand for the output of 
RTD in the form of new products and processes. In 
many cases, there is an absence of the most basic 
information to indicate the need to innovate in order 
to compete in the global market in both dynamic and 
traditional sectors, so that such firms are not able successfully to identify and express their demand for 
RTD and innovation services. In some cases, there is 
insufficient recognition of the need to strengthen 
specialised business services to be able to compete 
in new markets. In effect, the demand-side problem 
is an additional challenge for the weaker regions. 
Improving the demand side is an area where public 
policy has not always been as helpful as it might have 
been. Those responsible often tend to impose stand­
ard policy prescriptions on innovative problems in­
stead of adopting an approach based on partnership 
between the private and public sectors and on estab­
lishing administrative structures flexible enough to 
respond to a region's true economic problems. 
Regional innovation strategy needs to involve the 
various local actors, especially in the private sector, 
in the definition of policy priorities and the im­
plementation of measures for promoting innovation. 
103 
"Chapter 6 - The role of research and technological development in tile regions 
It is also important to note, however, that a narrowly 
defined local approach is to be avoided since it may 
undermine the possibility of weaker regions benefit­
ing from synergies with other policies and actors at 
the national and European level. This is particularly 
true of technology, which is, by definition, an inter­
national process not constrained by national borders 
and one of the driving forces behind the ever increas­
ing internationalisation of the economy. 
Molas J (February-March 1992), La empresa espanola ante la investigaciôn y la politico tecnôlogica, Arbor CXLI, 
554-555,185-208 pp. 
Circa Group Europe (1993), Thematic evaluation of the impact of CSFs for Research and Technology in Greece, 
Ireland and Portugal, CEC Draft report, Brussels. 
Quintanilla MA (February-March 1992), Recursos del sistema de Ciencia y Tecnologia en Espana, Arbor CXLI, 
554-555, 31-76 pp. 
Muldur U (1991), Le financement de R&D au croisement des logiques industrielle, financière et politique, 
Fast-Monitor Programme, Brussels. 
OECD (1992), Main Science and Technology Indicators, MSTI1992-1, Paris. 
FAST (May 1992), Archipelago Europe - Islands of innovation, Ulrich Hilpert; Prospective Dossier N°l : Science, 
Technology and Social and Economie Cohesion in the Community. 
OECD (1991) Reviews of National Science and Technology Policies : Italy. 
Morgan K and Cooke P (1991), The intelligent region : industrial and institutional innovation in Emilia Romagna, 
Regional Industrial Research Report No 7, University of Cardiff. 
104 
Chapter 7 - Peripherality reconsidered 
Chapter 7 Peripherality reconsidered 
The notion of peripherality is often used to explain 
why certain regions consistently fail to catch up with 
developments in other more centrally located re­
gions. It seems that natural resilience, which allows 
regions to deal with adverse developments, is much 
greater in central regions. There, both private busi­
ness and public authorities appear to have more 
connections and contacts with counterparts else­
where, and this appears to facilitate adaptation to 
structural change. This chapter examines the notion 
of peripherality, first, from the perspective of the 
nation-state, and secondly, from that of the 
Community in the light of the extensions in transport 
and communication networks in prospect. While border regions are often some distance from 
national centres of political and economic power, a 
number of them are centrally located from a 
Community standpoint. The Community's central, 
as opposed to peripheral, regions are identified below 
in terms of the accessibility of major European 
centres of economic activity to business travellers 
based there. The potential effect of planned improve­
ments in the Community road, rail and air networks 
in reducing the time required to reach these economic 
centres is then examined. 
From the point of view of the Member State, border 
and coastal areas can be considered peripheral. Bor­
der areas suffer from peripherality because the neigh­
bouring country has different social, economic, legal 
and political systems. This tends to limit the econ­
omic ana^administrative linkages which are normally 
established between adjacent areas. This is the case 
both for the internal border regions of the 
Community and to an even greater extent for its 
external border regions. Moreover national borders 
often follow the course of rivers, mountain ranges or 
other geographical barriers, which further restrict 
cross-border interaction and co-operation. Coastal 
regions can be considered as border regions separ­
ated from their neighbours by the sea. The 
Community's border and coastal regions are de­
scribed below, focusing on what they have in com­
mon as well as their great diversity. Coastal and border areas 
The Community's coastline stretches for more than 
60,000 km. Areas around the coast gain some import­
ant benefits from their location, being generally re­
garded as pleasant places to live, which can attract 
firms to locate there. Tourism, for instance, tends to 
be especially well-developed in coastal regions. The 
fishing industry also plays an important role in most 
coastal regions, even after the anticipated reduction 
of overcapacity. Businesses in other areas of activity 
can be attracted by seaports and the access to world 
markets which they afford, as well as by transport 
links to inland areas which are normally very good 
in respect of the larger ports. These benefits, how­
ever, do not accrue equally to all regions. The time it 
takes to travel by road to the nearest major seaport 
differs considerably between regions. Coastal areas 
105 
Chapter 7 - Peripherality reconsidered ^:^m9i^^^^^^^c^^h^^r^&^'<^'Kmp 
which are some way from large ports can in many 
cases be counted among the Community's most pe­
ripheral regions. In general, however, coastal regions 
are favoured by their location and reasonably well 
integrated into the European transport network. 
The land borders of the Community Member States 
stretch for almost 10,000 kilometres in total. About 
a half of these are between Member States, the other 
half with third countries (Table 14). 16% of the 
Community population lives in what can be defined 
as border areas, which account for 22% of the 
Community's land mass. Of the 184 Community 
border regions (excluding those in the new German 
Lander now undergoing administrative reforms) 
defined at the NUTS 3 level, 122 have borders with 
other Member States, 58 with neighbouring countries 
in Central and Eastern Europe. 
From a historical perspective, the geographical fea­
tures defining natural borders tend to be important 
determinants of the economic performance of border regions. While rivers facilitate access to cities and 
towns located on their banks, mountain ranges make 
international trade and cooperation difficult and may 
retard development on both sides of the border. Simi­
larly, political borders are artificial barriers in some 
ways closing off regions from their natural hinterland 
and obstructing social and economic development 
(Graph 32 which indicates that average GDP per 
head tends to be less in border regions than in other 
parts of the country concerned). 
There is a marked difference between Spanish, 
Portuguese, Irish, Greek and Danish border regions 
and those elsewhere. They are very sparsely popu­
lated (with population densities in the range 30-60 in­
habitants per square kilometre compared to a 
Community average of 153), accounting for 47% of 
the land mass of Community border regions but only 
20% of their population. The Danish border regions, 
for example, have a maximum population density of 
64 inhabitants per square kilometre (Table 15) as 
opposed to an average of 105 inhabitants per square 
32 Average GDP per head in border regions compared to the 
rest of the country, for the Member States, 1991 
Index (EUR12 = 100) 
140 r 
120 H 
100 
80 
60 
40 
20 Border regions 
Rest of country i 140 
120 
100 
GR E UK NL B DK F D 
NUTS 3 regions; no data for IRL, I, P, East Germany, Corsica, French overseas departments 
106 
fcSWChapter 7^PefJDhejraHty"reconsidered 
Table 14 
The Community's borders 1992 
-1 I 
CO Q C O - © "O (0 O £ o C 
C O CO C 03 
o o w i £ S E «> 
— o J= 
x "S 
_i z (Q 
? * •C D 
O 
Q. (0 
CO 
(0 co (0 
_ © 
E A 
o CM 
o "g E "J 
3 
Coast lines 
I Total 
Land i 
borders ! ,nternal 
j External 
Coast lines 
| Total 
Land I 
borders 1 Internal 
i External CO 
O 
LU 
Border j 
regions ! 
NUTS1 I No. of 
regions 
Area 
km2 
Population 
1000s 120 6442 3109 11449 5758 S262 6054 6482 0 1062 1459 16816 
1199 64 3357 1073 1731 2534 427 1713 298 946 1094 427 
1199 64 1257 0 1670 1999 427 433 298 946 1094 427 
0 0 2100 1073 60 535 0 1280 0 0 0 0 
0 10 S 18 9 8 9 10 0 2 2 26 
8 0 23 7 12 17 3 12 2 6 7 3 
12 1 13 0 17 20 4 4 3 10 11 4 
0 0 42 21 1 11 0 25 0 0 0 0 
24 1 68 14 12 22 14 1 14 10 
19019 3930 57554 37498 132282 115511 12156 47872 2586 14408 50300 14120 
5031 251 9878 2359 5738 12637 407 7390 381 5136 2068 1589 64013 
14863 9955 
9814 4907 
5048 5048 
100 
100 
100 
100 
184 
507236 
52865 
All regions of level NUTS 3 directly at a land border and seven regions (Delfiijl, Emden, Aurich, Karlsruhe-Stadtkreis, 
Karlsruhe-Landkreis,Thessaloniki, Kavala) in a comparable situation near a land border (Official Journal of the EC No 215/10). 
Data only for West Germany. 
Automatic measures made on a 1:1,000,000 scale 
Double counting of borders between Member States has been eliminated 
Source : Eurostat, calculations DG XVI 
kilometre for all border regions. Not by chance, the 
densely populated border regions are located in the 
centre of the Community, while those which are 
sparsely populated are at the periphery. 
Differences in economic prosperity between neigh­
bouring Member States are not always reflected in 
the relative levels of GDP per head in regions on 
either side of the border.-Dutch and Belgian border regions have higher levels of GDP per head than 
neighbouring regions in Germany, in contrast to the 
situation at the national level (Graph 33). Along the 
French-Spanish border, the Spanish regions have 
much the same level of p>er capita income as their 
counterparts, despite average GDP per head in Spain 
being only two-thirds that in France. 
107 
sr.m» M&s&P»a •& 4«i. *'^Zgrf%L&r 
Table 15 
Key indicators of land border regions 
^ 0) c' 
E*^£^o)^«j><\, 2 
scoDî-'ocS'p^p 
s I > Ê 8 isin 
fi I s I S M £ « " s 
E v. 3 CO 
•a — 
c co 
CO CD 
f £ 
z 
Area 
1990 % country 
area 
I % all border 
regions 
! %EUR12 
| % country 
i I Vea Population ' } 
1990 • %aM°order 
I regions 
| %EUR12 
Population density1 
1990 
(hab/km2) 
GDP per head 
Av. 89/90/91 
(EUR12 = 100) 
Unemployment rate 
Av. 91/92/93 
(% labour force) 
Border region pop. eligible 
under Objectives of 
Structural Funds (%) 613 9.1 22.7 23.1 28.4 26.2 21.2 17.6 15.9 100.0 35.1 54.7 5.8 
3.6 0.7 15.3 10.8 7.1 24.9 21.8 2.3 9.0 0.5 2.7 9.5 2.7 
0.8 0.2 3.4 2.4 1.6 5.6 4.9 0.5 2.0 0.1 0.6 2.1 0.6 
50.5 4.9 16.3 15.6 23.1 14.7 22.3 11.6 12.8 100.0 34.4 21.0 2.8 
9.0 0.4 23.1 17.7 4.2 10.3 22.6 0.7 13.2 0.7 9.2 3.7 2.8 
1.5 0.1 3.7 2.9 0.7 1.7 3.7 0.1 2.1 0.1 1.5 0.6 0.5 
265 64 159 172 63 43 109 33 154 147 356 41 113 
110 100 — 106 47 74 106 — 137 132 97 52 78; 
7.5 8.4 — 3.9 — 16.8 8.9 17.4 6.4 1.6 7.2 3.4 16.3; 
41 23 40 35 100 90 53 100 43 43 43 100 lOoi CO c o 
CO 
0) 
a n 
o y— 
LU 
100.0 — 
22.4 100.0 
100.0 
16.3 100.0 
105 153 
99.8 100 
8.1 9.4 
58 — CD CD 
CD 
•a 
v. 
o 
n 
15 c i-0) +•* 
c CD 
"O 
o 
75 
c 
CD 
LU 
74.8 
16.8 
74.5 
12.1 25.2 
5.7 
25.5 
4.1 
105 107 
99.9 99.7 
8.9 4.5 
Including an estimated border area of the new German Lander 
i Population 1989 
Source : Eurostat, calculations DG XVI 
The sometimes important differences in GDP per 
head and other socio-economic characteristics be­
tween regions on either side of a border largely 
reflect variations in the development potential of the 
regions concerned. However, in many cases they also 
reflect decades of artificial separation and the diffi­
culties which such regions encounter if the people 
living there wish to cooperate. Regions with different economic characteristics would normally seek to 
identify cooperative measures which are com­
plementary : eg a rural area might be developed for 
weekend recreation increasing the attractiveness of a 
metropolitan area across the border as a location for 
industrial investment. Regions with similar econ­
omic characteristics, on the other hand, would 
usually tend to develop their common strengths. 
108 
Chapter 7? Peripherality reconsidered 
Border regions 
and the Structural Funds 
Differences in economic performance of border re­
gions explain the varying degree to which they are 
eligible for support from the Community Structural 
Funds. Under the new programme established for the 
period 1994 to 1999, out of the 184 NUTS level HI 
border regions, 40 are eligible for support under 
Objective 1 criteria, 27 under Objective 2, 60 under 
Objective 5b, 13 under two Objectives (2 and 5b or 
2 and 1) while 45 are not entitled to any regional 
support at all (map 19). In comparison with the period 
1989-1993, the number of eligible regions has in­
creased from 109 to 140, mostly under Objective 5b. 
Total population coverage has risen by over one-
sixth (16%) in border areas, slightly more than in the 
rest of the Community. The share of border regions 
in total eligible population in the Community under 
the three regional Objectives of the Structural Funds has increased from 17.8% to 18.1% (which compares 
with the 16% of Community population for which 
they account). All the regions on the Northern 
Ireland-Irish and Spanish-Portuguese borders are 
classified as Objective 1 as well as regions along the 
Community's external border in Northern Greece 
and Eastern Germany. In other parts of the 
Community, the population covered by either Objec­
tive 2 or 5b or both is around 40% (Table 15). 
Overall, 55% of the population living in border areas 
are eligible for regional support from the Structural 
Funds (58% if the new German Lander are included), 
as compared with 52% in the Community as a whole. 
On German unification, borders between East and 
West Germany ceased to exist while the Community 
acquired a new set of border regions. East German 
regions of approximately 24,000 km2 with 3 million 
inhabitants now need to explore how to re-establish 
and extend relations with neighbouring areas in 
Poland and the Czech Republic under market condi-
33 GDP per head in border regions in neighbouring Member 
States, 1991 H Nationa, GDP 
Index (EUR12 = 100) 
140 
120 
100 
80: 
60 
40 
20 Bordering regions GDP -j 140 
120 
100 
80 
60 
40 
20 
BF BL DB DDKDL DNLEF FD FL NLB 
NUTS 3 regions; L is a single region 
109 
tions. Efforts in this direction are currendy being 
hindered by differences in the rate of progress to­
wards the establishment of a market economy and in 
the cost of production (creating additional pressures 
for structural adjustment) and wage levels (attracting 
workers to the new Lander, tending to exacerbate the 
already serious problem of unemployment and con­
tributing to the growth of the black economy), as well 
as by the inadequate cross-border transport and other 
links. Similar problems are also evident along the 
Northern borders of Greece and the Italian border 
with Slovenia. 
Further enlargement of the Community to include 
Austria, Finland, Norway and Sweden would make 
the Community a direct neighbour of Russia, 
Hungary and the Slovak Republic and lengthen the 
Community land borders by 81% and its coast lines 
by 68% (Annex, Table A. 17). The land area of 
Community border regions would increase by 130% 
- as against an overall increase of 48% in total Community land-space - though the population liv­
ing in these would expand by only 16% as compared 
with a 7% increase in total Community population. 
Large parts of these four countries can be classified 
as coastal and/or border areas, most of them rela­
tively prosperous and located on the periphery of the 
Community - a combination which is not very com­
mon in the Community as it is at present 
Passenger transport 
networks and regional 
accessibility 
In the Third Periodic Report (1987), regions were 
classified as central, intermediate or peripheral ac­
cording to an average of their physical distance to all 
Map 19 Interreg 11 - eligibility of border regions 
110 
Map 20 Average travel time to 194 economic centres, 1991 
% share of total population. 1990 
• Mean time (hours) 
<4.0 
4.0 - 4.5 
4.5 - 5.0 
5.0 - 5.5 
5.5 - 6.0 
>6.0 
No data 
• Economic centre 
Chapter 7 - Peripherality reconsidered 
other regions, weighted by GDP. This was a first 
attempt to give operational content to the notion of 
peripherality. This section aims to refine and extend 
this analysis by measuring the accessibility of 
194 major economic centres in the Community, the 
EFTA countries and Central Europe for business 
travellers from over a thousand Community NUTS 3 
regions. The indicator of peripherality estimated is 
the average time required to travel to each of these 
major centres by road, rail or air1. 
The simple distinction between central (Western 
Germany, the Netherlands, Belgium and 
Luxembourg) and peripheral (Ireland, Greece, Spain 
and Portugal) Member States and regions is much 
less evident if NUTS level 3 regions are examined 
and if air travel is taken into account. 
Business travellers from the large agglomerations in 
the heart of Europe, like Brussels, Paris, London, the 
Rhine-Ruhr and Rhine-Main areas, Stuttgart, 
Munich and Milan, can on average travel in the least 
time to business destinations across Europe 
(Map 20). More peripherally located larger centres 
with international airports, like Glasgow, 
Copenhagen, Berlin, Athens, Rome and Madrid, 
however, are also relatively well-connected when air 
travel is taken into account The integration of such 
cities into the European air transport network is cru­
cial for their further development, facilitating long­
distance travel and networking and providing world 
market access to local producers of high value/low 
weight goods, though for other products, transport 
costs will continue to distance them from central 
Community markets. However, such costs also offer 
some protection to local firms against competition 
from producers located in other regions. 
Apart from the major capitals, all of the 
Community's Southern and Western fringes as well 
as nearly all of its islands are still disadvantaged in 
terms of access to the 194 economic centres identi­
fied. In these often sparsely populated regions the 
economic returns on major investment in transport 
infrastructure are often insufficient to justify the ex­
penditure required, whether private or public. Never­
theless, a minimum degree of access is required in order to sustain economic activity in such peripheral 
areas. 
The average time required to travel to the 194 econ­
omic centres is also relatively high, however, for a 
small number of regions which are geographically 
close to the Community's centre. These areas, such 
as Mecklenburg-Vorpommern in Germany and the 
Southern interior of France, are economically weak 
and often sparsely populated with under-developed 
transport links. 
With the further extension of international transport 
networks being a priority of Community policy and 
being supported by both the European Regional De­
velopment Fund and the Cohesion Fund, an evalu­
ation of the joint effect of current plans on travel 
times and regional accessibility is of interest2. In 
general, the estimated reduction in average travel 
time to the 194 centres from the implementation of 
the expansion plans for road, rail and air transport 
networks is greater for peripheral regions than central 
ones (Map 21). There are likely to be significant 
gains in Greece, Ireland, the Southern and Western 
regions of the Iberian peninsula, Mecklenburg-
Vorpommern and Nord Pas-de-Calais. There are also 
likely to be widespread gains in other parts of France, 
Belgium and Luxembourg, but much fewer in the 
other central countries. Overall, the plans appear to 
reduce the degree of peripherality of outlying regions 
and therefore open up new markets to producers 
located there. 
Ease of access to nearby markets is also important, 
as indicated by the total population of the NUTS 
level 3 regions which can be visited on a single-day 
business trip (implying a three-hour limit on one-way 
travel time Map 22). Contrary to the previous indi­
cator, on this measure of market access the largest 
gains from the present plans are likely to accrue to 
the densely populated, central regions and their sur­
rounding areas, primarily from the extension of the 
high-speed rail network - as well as the Channel 
Tunnel - to connect the major metropolitan areas in 
the South-East of England, Northern France, 
Belgium, the Netherlands, the Franco-German bor­
der region, the Southern Rhône valley and Piemonte 
in Italy. 
112 
Map 21 Estimated improvement in average travel time to 
194 economic centres by the year 2010 % share of total population, 1990 
Reduction in average 
journey time (minutes) 
• <2.0 
2.0-4.0 
4.0 - 6.0 
6.0-10.0 
10.0-20.0 
>20.0 
No data 
Economic centre 
Chapter? - Peripherality reconsidered 
There are, however, some exceptions. A number of 
regions in the Spanish North-East and South-West, 
in Central Italy and in Northern Greece, as well as 
Mecklenburg-Vorpommern, which are among the 
most sparsely populated and peripheral regions in the 
Community, are expected to enjoy a considerable 
increase in accessible population, the proposed ex­
tensions of the road network and new air links bring­
ing major population centres (in the above cases, 
Madrid, Athens and Berlin) within reach. 
On the other hand, it remains the case that the cen-
trality or peripherality of a region's location can be 
improved but not fundamentally changed through 
investment in transport. In the less densely populated 
parts of Europe, the increases in easily accessible 
population from such investment will always tend to 
be relatively small as compared with the more popu­
lous central regions. 
An alternative option for peripheral areas is to accel­
erate the rate of adoption by local enterprises of new 
techniques of information processing and telecom­
munications. In many cases, such techniques (in the 
form of telefax, teleconferencing, telematics, cellular 
mobile radio and telephone networks) may serve as 
a partial substitute for personal contact As compared 
with investment in traditional transport infrastruc­
ture, therefore, the further extension and moderni­
sation of the Community telecommunication net­
work might be a more cost-efficient way of linking 
peripheral areas with the Community's centres of 
economic activity (see chapter 4 on telecommunica­
tions infrastructure endowments in the regions). 
Market access is dependent not only on the quality 
of the transport infrastructure linking supply and 
demand, but equally on the institutional structures 
which guide international trade relations. The com­
pletion of the Single Market, by abolishing border 
formalities, has in a practical sense increased the 
accessibility of border regions for trading partners 
from abroad. The foundation of the European 
Economic area has tended to reduce the peripherality of, for instance, the Danish regions and the Alpine 
areas of Germany and Italy by facilitating trade with 
the EFTA countries. Reforms in Central and Eastern 
Europe are generating trade between East and West, 
potentially benefiting the regions on the 
Community's Eastern borders. 
Improvements in the international transport and tele­
communication networks, institutional reforms lead­
ing towards European integration and industrial 
change in general open up growth opportunities for 
enterprises, no matter where they are located in the 
Community territory. In the competitive struggle to 
take advantage of these opportunities, the likely win­
ners will be those firms which are best able to expand 
their customer base across Europe while maintaining 
a flexible and cost-efficient production structure. The 
latter often implies a regional division of labour and 
a decentralisation of business locations. All of these 
developments lead to increased requirements for di­
rect personal contacts between business operators at 
the various locations, which can only be achieved 
through their full integration into the international 
passenger transport and telecommunication net­
works. Consequently, the attractiveness of a region 
as a business location is increasingly determined by 
1 the connections provided by these networks to main 
centres of economic activity in Europe and beyond. 
1 BfLR (1992), Accessibility and Peripherality of Community Regions : The Role of Highways, Long Distance Railway 
and Airport Networks. Study financed by the European Commission. 
The plans concerned are those which were under consideration by the Commission services in 1992. 
114 
Map 22 Estimated improvement in readily accessible 
population by the year 2010 
Millions of population 
reachable within 3 hours 
travel time (increase) 
• <o. 
• 0.5- 1.0 
1.0-2.0 
2.0 - 5.0 
5.0-10.0 
> 10.0 
No data 
• Economic centre 
Based on 1989 population % share of total population, 1990 
30 r 28.1 
Chapter 7 - Peripherality reconsidered 
116 
" *ff^~ •" "r" - . , Section C The regional policies and problem areas of theCommunity 
Section C The regional policies and 
problem areas of the Community 
Regions assisted by the Community 1989-1993 
Community regional policies 1994-1999 
Regional policies in Member States : recent trends 
.*W*i*»**^«i>#***i^.>%:^>^tfMW^^ 
117 
Section C The regional policies arid problem areas of the Community 
118 
Chapter 8,-Regions assisted by the Commun ity 1989-1993 
Chapter 8 Regions assisted by 
the Community 1989-1993 
The reform of the Structural Funds, which was 
agreed in 1988 and implemented from 19891, was an 
important watershed for regional policies at the 
Community level. It introduced a genuine 
Community vision of regional problems, whereas 
previously policy had essentially taken the form of 
intervention in support of the regional policies pur­
sued by each Member State individually. The aim of 
this chapter is to examine the economic performance 
of these regions. 
In order to have a fuller appreciation of the main 
developments in them, the analysis begins-in the 
mid-1980s, somewhat before the reforms were im­
plemented. The chapter is not therefore an evaluation 
of the effects of the reforms (see Annual Reports on 
the Implementation of the Reform of the Structural 
Funds for this) although it provides some indications 
of what has happened since 1988. 
The definition of problem regions under the reform 
was based on a typological approach. Three types of 
problem region were defined which the Community 
adopted as 'objectives' of policy under the Structural 
Funds. The first of these objectives, Objective 1, 
aimed to promote development and structural adjust­
ment in regions which were lagging behind, defined 
as those with GDP per head below 75% of the 
Community average. Changes in GDP per head in 
this group of regions compared to the rest of the 
Community is, therefore, a key indicator of progress. To obtain a more complete picture, developments in 
these regions in respect of other related aspects is also 
examined below : 
• the record on unemployment and job creation 
which is essential to alleviate the serious excess 
supplies of labour and lack of employment op­
portunities often associated with low GDP per 
head; 
• trends in productivity which are important in 
relation to improving competitiveness and, there­
fore, the potential for growth. 
The second objective, Objective 2, aimed to promote 
the conversion of areas affected by industrial decline. 
The key defining characteristic of these areas is their 
relatively high unemployment rate which is used in 
the present analysis as the main indicator of develop­
ments. The third objective, Objective 5b, is aimed at 
rural areas affected by problems of structural adjust­
ment linked to the decline of agriculture. All of the 
main indicators are relevant for assessing progress in 
these regions. 
119 
Chapter 8 - Regions assisted by the Community 1989-1993 
Developments in the 
Community's weaker 
regions 1986-1993 : 
Objectives 2 and 5b 
The performance of the Objective 2 and 5b regions 
in respect of the indicators discussed above is con­
sidered below in comparison with the rest of the 
Community. Developments in the Community's 
weakest regions (Objective 1) are then examined in 
more detail to assess the main differences emerging 
between them (Table 16). 
Analysis of Objective 2 and 5b regions is hampered 
by data problems. Statistics for small eligible areas 
(often below NUTS level 3) are not available on a 
harmonised basis. The analysis, therefore, has to rely 
on estimates which are more valid for certain series, 
such as unemployment rates, than others, such as 
GDP and employment. 
The data indicate that experience as regards unem­
ployment in the Community's weaker regions has 
varied significantly in the period since 1986 
(Table 16). As indicated in chapter 3, the latter half 
of the 1980s was a period of economic recovery. 
Unemployment in the Community as a whole fell by 
2 percentage points from 10.7% in 1986 to 8.5% in 
1991 before increasing to 10.4% in 1993. 
In respect of unemployment, Objective 2 regions as 
a whole outperformed other parts of the Community 
assisted and unassisted areas alike. Unemployment 
rates in the Objective 2 regions were 4 percentage 
points lower in 1991 (10.8%) than in 1986 (14.7%). 
This fall was partly reversed over the following two 
years although the rise in unemployment was not as 
great as for the Community as a whole. As a result 
the difference between the average unemployment 
rate in Objective 2 regions and that in the Community 
as a whole narrowed from 4.6 percentage points in 
1986 to only 1.7 percentage points in 1993. 
This is a particularly encouraging outcome given that 
a reduction in unemployment disparities is the prin­
cipal aim of Objective 2 assistance. Part of the explanation for this is probably related to 
labour supply developments. Most Objective 2 re­
gions are highly urbanised and therefore often among 
those where demographic changes and population 
ageing have reduced the number of new entrants to 
the labour market. At the same time, job losses in 
traditional industries - coal, steel, engineering - have 
tended to affect men in middle and older age groups, 
a significant proportion of whom have withdrawn 
completely from the labour market. 
The impact of falling labour supply should probably 
not be exaggerated, however. Tentative estimates of 
employment change suggest that the Objective 2 
regions had a faster rate of net job creation than the 
rest of the Community. Over the period 1986 to 1993 
the average rate of increase was approximately 
double the Community average (Table 16). 
The Objective 5b regions generally have relatively 
lower rates of unemployment, a traditional feature of 
rural areas outside the Community's least-developed 
regions. From an average rate of 8.3% in 1986, 
unemployment in the Objective 5b regions fell to 
only 6.1% in 1991 increasing again to 7.3% in 1993. 
Although reducing unemployment is not an explicit 
aim under Objective 5b, the apparent relative im­
provement is encouraging. This is underlined by the 
tentative evidence on employment change - which is 
likely to be more directly related to the process of 
structural diversification in rural areas - where the 
figures suggest gradual net job creation at a rate 
equivalent to the Community average (Table 16). 
This evidence also suggests that the falling unem­
ployment in rural areas cannot be attributed to on­
going rural depopulation. 
In the Objective 2 regions, trends in GDP per head 
over the five-year period were generally slightly 
downward. This might suggest that economic re­
structuring led to an increase in the share of total 
employment in sectors with relatively low productiv­
ity in Community terms - such as certain services. In 
Objective 5b regions, there was litde change over the 
period, GDP per head remaining at around 80% of 
the Community average. 
120 
Chapter^- Regions assisted by the Community 1989-1993 
VJ& 
Regions 
Objective 1 
Objective 21 
Objective 5b 
Other regions 
EUR123 Table 16 
Demographic and economic indicators in regions 
assisted by the Community, 1989-1993 T7H 
Employment 
(1986=100) 
1993 I Unemployment rate 
1986 1991 1993 GDP per head (PPS) 
(EUR12=100) 
1986 1989 1990 1991 
Figures for Objective 2 and 5b regions cover all NUTS 3 regions where at least 50% of population is eligible for Community assistance. 
EUR12 excludes East German Lander. 
3 The figure is for 1987. 
Source : Eurostat, calculations DG XVI 
Developments 
in Objective 1 regions 
In the Objective 1 regions the indicators present a 
mixed picture. These regions include virtually all the 
areas of highest unemployment in the Community. 
In 1986, the average unemployment rate in the for­
mer was 15.4%, half as high again as the Community 
average and double the rate in Objective 5b areas. 
Since then, there has been little improvement, the rate 
declining to 13.9% in 1990, before increasing to 
16.7% in 1993, above the level in 1986. Although the 
evidence^ on changes in employment in the Objec­
tive 1 regions is more encouraging, rates of increase 
do not seem to have reached those of the Objective 2 
areas. Part of the high and persistent unemployment 
is due to labour supply growth, as noted in Chapter 1, 
and for the medium-term at least, reducing unem­
ployment is likely to represent something of a mov­
ing target as new entrants, especially women, come 
into the labour market in significant numbers. 
Although the structure of employment in Objective 1 
regions is changing, there are still significant num­
bers employed in agriculture. In 1990, the average share of agricultural employment in the Community 
was 6.6% whereas in the Objective 1 regions it was 
nearly 3 times higher at 17.7%. This means that while 
the Objective 1 regions as a whole accounted in 1990 
for 1 job in 6 in the Community, in agriculture they 
accounted for nearly 1 in 2 (Annex, Table A. 18). 
Labour market developments reflect a combination 
of cyclical and structural changes affecting the 
Community's regions in general. These changes tend 
to be accompanied by changes in regional productiv­
ity and hence in levels of economic output, or GDP. 
As noted above, it is the change in GDP, measured 
in per capita terms, which is the central indicator of 
progress in the Community's Objective 1 regions. On 
average, these regions taken as a group marginally 
increased their GDP per head from 61% of the EC 
average in 1986 to 64% in 1991. This small increase 
is illustrative of the challenge involved in bringing 
about real convergence in the Community. A sub­
stantial narrowing of disparities can be expected only 
over the long term. 
121 
Chapter 8 - Regions assisted by the Community 1989-1993 
The main trends and differences emerging within the 
group of Objective 1 regions are the subject of the 
following sections. 
Employment creation 
and unemployment 
More detailed analysis of the labour market develop­
ments for individual Objective 1 regions since 1986 
suggests that they can be divided into three main 
sub-groups. The first consists of Ceuta Y Melilla, 
Canarias, Murcia, Comunicad Valenciana and 
Andalucia which experienced a rapid rise in employ­
ment levels. These coastal regions in Southern and 
Eastern Spain, had employment in 1991 some 15% 
and more above that in 1986. They, therefore, appear 
to have benefited more than other Spanish Objec­
tive 1 regions in the Iberian interior and on the 
Atlantic coast in the North-West from joining the 
Community in 1986. In effect, they seem to be part 
of a larger group of Spanish regions including 
Cataluna and Madrid which represent nodal points 
on the road and rail networks linking the peninsula 
with France and the rest of the Community. Cataluna, 
which is largely covered by Objective 2 of the Struc­
tural Funds, for example, experienced a rise in em­
ployment of over 20% between 1986 and 1991, the 
highest amongst the Spanish provinces. 
The second sub-group is more geographically 
diverse and comprises regions where employment 
increased by more than the Community average but 
by less than in the first group of regions. The regions 
in this second group are located in the Spanish inte­
rior (Extremadura, Castilla - Leon and Castilla - La 
Mancha) and also include the Western Mediter­
ranean islands of Sardegna and Corse. Rates of net 
job creation in these areas varied from over 7% in 
Corse and Castilla-La Mancha to 12-13% in the other 
regions in the Spanish interior. 
The third sub-group is the largest and most geo­
graphically diverse taking in, on the one hand, the 
Mediterranean regions of southern Italy and Greece 
and, on the other, the Atlantic coastal regions from 
Portugal and Spain (Galicia and Asturias) in the 
South to Ireland and Northern Ireland in the North. 
Typical rates of net job creation in these regions were around 5% over the five-year period, although em­
ployment remained virtually unchanged in Greece. 
Calabria in Italy was the only region to record a fall 
in employment 
The structure of employment is relatively similar 
across the Objective 1 regions. The share of employ­
ment in agriculture in many cases is over 20% and is 
around 40% in parts of Portugal. In only a few 
regions - parts of Spain and Northern Portugal - is 
the share of employment in industry above the 
Community average. In all but a few regions the 
share of employment in services is below the 
Community average of 61% and is as low as 50% or 
less in many parts of Greece, certain Spanish regions 
and Portugal. Tourism sustains high shares of service 
employment in some regions such as Canarias and 
Andalucia in Spain, or, a combination of tourism and 
the public sector. 
The performance of Objective 1 regions in terms of 
unemployment over the same period 1986-91, gener­
ally mirrors that of employment described above 
(Annex, Table A. 19). As indicated in chapter 3, 
however, the relationship between the change in 
employment in a given region and changes in unem­
ployment rates is often a complex one. For example, 
when new jobs are created some of the new employ­
ment may be taken up by commuters - often the case 
in city regions - or by new entrants to the labour 
market. As noted above, many Objective 1 regions 
had faster than average rates of increase in labour 
supply, as a result of higher birth rates in the past, 
coupled with the increasing participation of women. 
For the regions where employment grew by most the 
effect on unemployment was as expected. In the 
regions of Southern and Eastern Spain, the ccrollary 
of rapidly rising employment between 1986 and 1991 
was a substantial fall - of five percentage points or 
more - in unemployment rates. 
In the Spanish interior, the fall in unemployment 
rates were almost as great. In the Western Mediter­
ranean islands, however, with lower rates of employ­
ment growth than the regions in the South of Spain 
but still slightly above the Community average, the 
122 
Chapter 8-Regions assisted by the Community 1989-1993 
fall in unemployment was correspondingly more 
modest at around 2 to 2.5 percentage points. 
For the remaining regions the picture is more mixed. 
On the one hand, there were regions where the fall in 
unemployment was relatively high, such as in 
Portugal and Ireland (5 and 4 percentage points re­
spectively). On the other, many regions in the Italian 
Adriatic and Southern Italy experienced significant 
rises in unemployment which- suggests relatively 
high growth in the labour supply. Greece also saw a 
slight increase in unemployment between 1986 and 
1991. In the Spanish Atlantic regions, modest rates 
of employment increase were reflected in a compara­
tively-small fall in the unemployment rate, of 1 to 
2 percentage points, over the period. 
The preceding analysis focused on the period 1986-
1991 for which regional employment data are avail­
able. In 1991, the Community entered a period of 
recession with the first firm signs of recovery emerg­
ing in 1994. The most recent data, for unemployment 
rates only, suggest that the depth of the recession has 
differed substantially from Member State to Member 
State and region to region. The figures up to 1993 
show a fairly general increase in unemployment 
across the Objective 1 regions. The rise has been 
particularly marked in Spain, with regions in the 
South and East of the country which had previously 
shown the largest reduction in rates being among the 
worst affected. In the Italian regions, unemployment, 
which at most had fallen only slightly during the 
economic recovery, began once again to rise at a 
faster rate than the national average, while in Ireland, 
rates of unemployment by the end of 1993 were 
heading back towards 20%. Elsewhere, increases in 
unemployment have been the general rule, though 
the extent has been more modest. 
The French overseas departments (Guadeloupe, 
Guyane, Martinique and Réunion) are not included 
in the above analysis because of data problems. The 
available evidence suggests that in these areas of 
extreme geographical peripherality in relation to the 
rest of the Community, job creation was relatively 
rapid but insufficient to offset the even more rapid 
rises in working-age population. In fact, rates of 
population growth in the French overseas depart­ments were well above those in other Objective 1 
regions. With labour demand failing to keep pace, 
unemployment rates reached higher levels than in 
most of continental France. 
Productivity and GDP growth 
Other things being equal, rising employment accom­
panies growing GDP. Job creation is both a reflection 
of and a contributory factor to growth in output The 
extent to which the two go together depends on 
developments in output per worker or productivity. 
Growth in productivity is important for regions since 
it tends to mean that efficiency in production is 
improving which helps to control unit costs and to 
maintain or improve competitiveness. The challenge 
is to achieve increases in all three variables simulta­
neously : output, productivity and employment. It is 
essentially this challenge which is addressed in the 
Commission White Paper Growth, competitiveness 
and employment. 
In terms of GDP per head, there were marked vari­
ations in experience among Objective 1 regions in 
the period 1986 to 1991 (Annex, Table A.20). The 
regions in the South and East of Spain grew fastest 
together with Castilla-La Mancha in the Spanish 
interior, Ireland and Portugal. All of these regions 
converged strongly towards the Community average, 
by between 6 and 9 percentage points. Of particular 
encouragement is the fact that they were among the 
poorest parts of the Community at the start of the 
period with GDP per head equal to or less than 60% 
of the Community average. 
The Spanish Atlantic regions, Castilla Léon and the 
Italian Adriatic regions converged more gradually 
towards the Community average GDP per head, by 
1 to 3 percentage points over the period. 
The remaining regions all showed a divergence away 
from the Community average. This was particularly 
true of Northern Ireland, where GDP per head fell by 
7 percentage points over the period to 72% of the 
Community average. In other regions, the decline 
was more modest, at around 1-3 percentage points. 
»-K^W^S«<^fe%*W»Wfc*C* 
123 
These changes in GDP per head were associated with 
markedly different variations in productivity growth 
(Annex, Table A.21 j. Ireland and Portugal experienced 
a rapid convergence of GDP per head mainly as a result 
of dramatically rising productivity over the period 
relative to the Community average. As discussed in 
Chapter 1, productivity growth was particularly pro­
nounced in the large foreign-owned industrial sector in 
Ireland. The national accounts data also suggest that 
productivity rose at a similar rate in Portugal, though 
the rate of increase falls significandy if the LFS em­
ployment data are used instead In some Southern 
Spanish regions there were significant improvements 
in productivity notably in Castilla-La Mancha and 
Extremadura. In other regions, however, productivity 
declined (eg Murcia, Ceuta Y Melilla) or increased 
more slowly (eg Canarias) which would be consistent 
with rising employment in services linked to the growth 
of tourism. 
In Northern Ireland, Corse and Sardegna, productiv­
ity fell substantially relative to the Community aver­
age with no change in Greece. This is a worrying 
development when combined with the fact that in all 
of these regions, GDP per head has been falling 
further behind the Community average. It may reflect 
the emergence of a vicious circle of declining pro­
ductivity and declining competitiveness resulting in 
declining GDP and further decrease in productivity. 
In Greece, economic progress seems to have been 
held back by macroeconomic problems including 
difficulties in regard to inflation and public sector 
deficits which have acted as a brake on new private 
investment. 
Northern Ireland, the region with the biggest fall in 
relative productivity, is not typical of Objective 1 
regions and shares many of the characteristics of 
industrial areas in severe decline. The region was 
once a world centre in shipbuilding and linen textiles. 
Today the economy is highly dependent on public 
sector employment, though the industrial sector has 
undergone extensive modernisation with the devel­
opment of many highly productive enterprises. Studies suggest that the problems often lie in the 
small business sector with many parts having low 
productivity. 
Concluding remarks 
In summary, it is possible to conclude that the weaker 
regions have made some progress towards converg­
ing in real terms with the rest of the Community. 
There are encouraging signs that this may have ac­
celerated after the reform of the Structural Funds in 
1989. But the process has generally been slow and 
regions have been affected to differing extents. 
The evidence strengthens the impression that struc­
tural change is a slow process, especially perhaps 
with regard to the Community's most backward re­
gions. For individual Objective 1 regions, however, 
the evidence also suggests that substantial progress 
is possible even over a period as short as five years. 
The experience of Objective 1 regions has been 
mixed in the period since 1986. Some undoubtedly 
have made progress including many which were 
among the weakest at the start of the period. Others 
have managed only to maintain their relative econ­
omic position. Of particular concern are the minority 
of Objective 1 regions which seem to have fallen 
back in key respects compared to the rest of the 
Community in spite of the efforts of recent years. For 
such regions economic development policies may 
not be sufficient and there are undoubtedly other 
constraints of a social, political or institutional nature 
holding back the growth of their prosperity. In other 
words, national and Community regional policies 
may need to be complemented by reforms which are 
more broadly based in order to hasten the process of 
regional economic convergence and cohesion. 
The Community's policies for the coming period are 
the subject of the next chapter. 
1 In 1993/94, new lists of assisted regions were designated. The problem regions discussed in this chapter are those of 
the period 1989-93. In view of their long-term restructuring problems the vast majority of these regions were 
re-proposed by their national authorities and are retained on the new lists. 
124 
^^**ÎE%'*!ï*(*'.s'"'*,<*,*'v ¥' 
i8BlillllB^ilteil:;Pommt,nfty regional policies 1994-1999 
Chapter 9 Community regional policies 
1994-1999 
Financial resources 
The Community's regional (and other) policies over 
the rest of the decade are being formulated and 
implemented in the context of moves towards greater 
integration. In December 1991, the Community's 
governments signed the Maastricht Treaty, which 
sought to broaden and deepen the range of issues 
subject to shared decision-making. Of particular sig­
nificance for regional policy, the new Treaty recog­
nised the need for increased solidarity and cohesion 
within the Community as a basic condition for further 
economic and social progress. Cohesion Fund created to provide additional aid to 
the poorest Member States Spain, Greece, Ireland 
and Portugal with a GDP per head of less than 90% 
of the Community average. Structural Funds in 1999 
will, therefore, be three times their real value in 1989. 
The increasing importance attached to structural 
policies in the Community is reflected in their in­
creased share of the Budget. In 1993, the last year of 
the old programming period, expenditure in structu­
ral measures accounted for 31 % of the total as against 
51% for agriculture. By 1999, the figure will have 
risen to 36%, while the share of spending on agricul­
ture will have declined to 46% (Table 17). 
It is the role of the Commission to translate the 
ambitions of the Maastricht Treaty into concrete 
proposals for action over the 1990s. Faced with the 
ongoing challenges of the Single Market and the new 
challenges posed by economic and monetary unifi­
cation, including the adoption of a single currency by 
the end of the decade, the Commission's medium-
term budgetary proposals covering the period 1993 
to 19991 - the Delors II package2 - called for another 
significant increase in structural expenditure to pro­
mote economic and social cohesion. This was gen­
erally accepted by Member States, even though the 
Maastricht Treaty had not yet been ratified. In con­
sequence, the funds devoted to structural policies 
will increase by 41% from over 21 billion ECU in 
1993 to 30 billion ECU in 1999, including the new Of the 141.471 billion ECU (at 1992 prices) available 
for the period 1994 to 1999, 96.346 billion ECU 
- 74% of the total - was allocated by the Council to 
Objective 1 regions (those where development is 
lagging behind). 11% went to Objectives 3 and 4, 
while the rest was divided fairly evenly between the 
other Objectives3 (Table 18). 
The original recommendations in the Delors II pack­
age were based on four key principles underlying the 
1988 reform -concentration, programming, partner­
ship and additionality. These principles were dis­
cussed in the previous Periodic Report and in the 
Commission's mid-term review of the Structural 
Funds4.The principle of concentration of assistance 
on the worst-affected areas is key to the analysis of 
125 
**?T *"*$%£, 'CÊ^-V Chapter 9 «CommunttyregKwial policies 1994-1999 
Table 17 
Community resources, 1993:1999 (bn ECU, 1992 prices) 
Agriculture 
Structural Actions 
* Cohesion Fund 
* Structural Funds 
Internal Policies 
External Action 
Other 
Total commitments 
Total payment appropriations 
Total payment appropriations 
as % Community GNP 
Total commitments relate to the legal obligation undertaken by the Community even if the total payment appropriations are not undertaken 
in the period indicated 
Source : European Commission 
Table 18 
The Structural Funds, 1994-96/99 
financial allocations by Objective (% of total by Member State) 
Resources available 
for the CSFs 
Objective 1 1994-1999 
Objective 2 1994-1996 
Objective 3 and 41994-1999 
Objective 5a 1994-1999 
Objective 5b 1994-1999 
Total 
Total Member State 
as%ofEUR12 B DK GR IRL I NL UK EUR12 
45 
10 
29 
12 
5 9 
45 
39 73 100 
4 
10 
6 
7 87 
4 
6 
1 
2 19 100 
16 
28 
17 
20 78 
4 
9 
4 
5 9 
31 
52 8 100 
16 
59 
9 
8 26 
23 
37 
5 
9 
100 100 100 100 100 100 100 100 100 100 100 100 
1.3 0.5 14.8 11.1 24.1 9 4.5 15 0.1 1.5 11 7.2 74 
6 
11 
4 
5 
100 
100 
Source! DGXVI 
126 
v^ REGIONS ELIGIBLE FOR 
THE STRUCTURAL FUNDS 
1994-96/99 
S •T 
m * » 
.1 
Chapter 9 - Community regional policies 1994-1999 
the impact of the funds and is discussed in more detail 
below in the light of the new decisions on the Struc­
tural Funds, 1994-1999 (modifications to the other 
principles, which concern effective implementation 
of development programmes, were also introduced). 
The regulations governing the use of the Structural 
Funds for the new programming period introduced a 
number of changes with the aim of improving their 
effectiveness, as follows : 
• the integration of action in the fisheries sector 
and in fishing dependent areas into structural 
policies; 
• the creation of a new Objective 4 designed to 
facilitate the adaptation of workers to industrial 
change and changes in systems of production; 
• a broadening of measures in Objective 1 regions 
to include education and health; 
• a simplification of decision-making procedures; 
• the involvement of the social partners in 
decision-making; 
• a strengthening of procedures to verify 
additionality; 
• greater emphasis on evaluation, appraisal and a 
more precise formulation of quantitative inter­
mediate objectives; 
• indicative allocation by Member States for all the 
Structural Funds decided by the Commission. 
Concentration 
In order to be most effective in reducing disparities, 
the limited resources available for regional policy 
need to be concentrated on the worst-affected areas. 
The evidence suggests that there has been a greater 
concentration of Community support in the sense that 
a higher share of resources are going to Objective 1 
areas. Between 1989 and 1993, the proportion of 
funds going to these regions rose from 62% to 65% 
and by 1999, it will increase to 73% (including the 
Cohesion Fund). The four poorest Member States 
received 50% of the funds in 1992 as against 42% in 1988. With the Cohesion Fund, this share will rise to 
54% by 1999. For these four, total Community struc­
tural expenditure under Objective 1 in 1999 will be 
twice the level in 1992 in real terms. Other Objective 
1 regions will also receive a rising share of resources, 
from 19% to just under 23% over this period. Expen­
diture on other Objectives will therefore decline in 
relative terms (though it will rise in absolute terms). 
In terms of the population covered, the proportion for 
the Community as a whole for all regional 
Objectives, has risen from 43% in 1989 to 1993 to 
52% in 1994-96/9. Except for Greece, Ireland and 
Portugal, where all the population was already 
covered, coverage has increased in all Member States 
(Table 19) but half of this increase relates to the 
addition of the new Lander. Spain and the UK have 
experienced the smallest rise - 1-2% points - while 
in the other countries, apart from Luxembourg, the 
increases range from 7 percentage points (Belgium) 
to 20 (Germany). Denmark and Luxembourg are now 
the only Member States with no regions eligible 
under Objective 1 (Map 23). 
The decisions which led to the increased coverage 
were taken against an economic background which 
had deteriorated significandy since 1988/89. Econ­
omic growth rates declined markedly at the begin­
ning of the 1990s in most member States and unem­
ployment rose sharply. The need for coordinated 
action to revitalise the Community's economy was 
recognised at the Edinburgh summit at the end of 
1992, which agreed a package of infrastructure 
measures to stimulate economic activity, and a year 
later the Commission presented further proposals in 
the White Paper Growth, competitiveness and em­
ployment5. 
Against this background, regional policy was also 
seen to have a role in stimulating the growth of 
weaker regions. The general perception was that the 
number of regions suffering from lagging develop­
ment or structural decline - as opposed to temporary 
cyclical problems - was increasing. 
In determining eligibility under Objective 1, the 
regulations adopted by the Council maintained the 
central criterion that these should be NUTS 2 regions 
128 
*$•' 'X' '-'":%"^'"-'• ;-X'-fy>'^<•':-•-,-,'•$ ^P0'fi-'K ^Ct-^i' \ '[ ^IfÇvX Chapter 9\Ck>mrriffî^ 'pot\cfëj9&i999. 
Table 19 
Share of Member States' population 
covered by the regional Objectives of the Structural Funds (%) 
Objective 1 
1989 1994 Objective 2 
1990 1994 Objective 5b 
1989 1994 Total 
1989 1994 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
UK 
EUR12 
France includes DOM 
Germany, France and the UK include the regions added in 1990 under the RECHAR Community initiative 
Italy includes Abruzzi for 1994-1996 (2.2% of Italian population). All of the increase in population coverage between 1989 and 1994 is due to the 
fact that population growth rates in the Italian Objective 1 regions exceeded the national average. 
Source: DG VIandXVI 
with a level of GDP per head (in PPS) of less than 
75% of the Community average. At the same time, 
however, it applied the criterion more flexibly, so 
widening the scope for regions to be included under 
Objective 1. 
When the first list of Objective 1 regions was estab­
lished in 1988, this flexibility was used to allow the 
inclusion of Northern Ireland and Corsica. In 1993, 
the Council included some 8 regions or areas not 
stricdy fulfilling the GDP per head condition (North­
ern Ireland, Corsica, Abruzzi and Molise, the new 
areas of Hainaut in Belgium, part of Nord-Pas de 
Calais, the Highlands and Islands Enterprise Board 
Area and Merseyside). Other new additions to the list, with GDP per head below 75% of the 
Community average were the five new German 
Lander and East-Berlin, Cantabria in Spain and 
Flevoland in the Netherlands. 
Since no region has been taken off the list - though 
Abruzzi will be on 1 January 1997 - the result is that 
the population covered under Objective 1 has in­
creased from 70 million to 92 million or from 21.7% 
of the Community total to 26.6% (this will decline to 
26.2% when Abruzzi, the most prosperous of the 
Objective 1 regions, loses its status in 1997). 
The new Objective 1 regions in Belgium, France and 
the UK added a new dimension to the defining char-
129 
';?* 
Chapter 9-Community I policies 1994-1999 
acteristics of Objective 1 regions. These are not areas 
of lagging development in the traditional sense but 
regions where the decline from relative prosperity 
based on industrial activity has been particularly 
acute. 
East Berlin and the new German Lander with 
16.4million inhabitants also present a new type of 
regional problem - one of transition from a centrally 
planned to a market economy, a process without 
recent historical precedent (see Chapter 11). These 
were granted a total of 3 billion ECU (1991 prices) 
by the Council6 to assist economic and social reform 
between 1991 and 1993, bridging the gap before the 
start of the 1994-99 programming period. Although 
statistics on GDP on standard definitions did not exist 
for the relevant period, there was no question in 1993 
that the new Lander qualified for Objective 1 assist­
ance. The result is that over 20% of the population of 
Germany now lives in Objective 1 areas. 
In Belgium, almost 13% of the population lives in 
Hainaut, which has become an Objective 1 region, 
while the first Objective 1 region in the Netherlands, 
Flevoland, accounts for under 2% of national popu­
lation. There was also an increase in the proportion 
of the population of Spain, France and the UK living 
in Objective 1 regions. 
In summary, though the population coverage of Ob­
jective 1 regions has risen and the geographical con­
centration of assistance has declined, this is mainly 
due to German unification and the extension of aid 
to the former East Germany. Of the 21.9 million 
additional people covered, 16.4 milhon - 75% - live 
in East Germany. 
As regards Objective 2 assistance, the proportion of 
population covered remains at 16.8% as before 1994, 
though the numbers have increased from 54 million 
(in 1990) to 58 million in 1994-1996. In general, the 
average size of eligible area has declined while their 
number has increased. Many of the areas included on 
the new list7 were proposed by national governments 
in anticipation of a permanent shake-out of labour in 
key sectors caused by the current recession. Areas 
with population of over 20 million were included on 
the Objective 2 list under the declining sectors pro­visions. Four areas - Hainaut (part), Cantabria, Nord 
(part) and Merseyside - which used to qualify for 
support under Objective 2 now fall under Objec­
tive 1. Eligibility for Objective 2 status will last for 
three years, in the first instance, and will be reviewed 
in 1996. 
Objective 5b regions have been defined for the full 
six-year period on the grounds that structural changes 
in rural areas tends to be relatively slow. In addition 
to the general economic pressures discussed earlier, 
rural areas in the Community face new challenges 
from the reform of the Community agricultural pol­
icy as well as from the effects of the GATT Uruguay 
Round. Accordingly, the population covered under 
Objective 5b has been increased from 5% of 
Community population in 1989 to more than 8% 
in 1994. Though the increase is relatively uniform 
across the Community, there are large rises in the 
proportion of the population covered in Luxembourg 
and Denmark8. 
The macroeconomic 
weight of Community 
regional policies 
Community regional expenditure influences the de­
velopment of Member States and regions in two 
principal ways : 
• through the co-financing of investment in physi­
cal and human capital raising their productive 
capacity; 
• through income transfers which allow imports to 
be increased without a worsening of the balance 
of payments. 
The investment effect of Community regional 
policies can be illustrated by the ratio of ERDF 
expenditure - the principal vehicle for physical in­
vestment under the Structural Funds - to total gross 
fixed capital formation (GFCF) in the economies 
concerned. In 1989, the ERDF financed 0.4% of 
130 
Chapter 9 - Community regional policies 1994-1999 
Table 20 
Commitment of the ERDF and the other Structural Funds 
in Objective 1 regions 
Objective 1 
regions in 
Greece 
Spain1 
Ireland 
Portugal ERDF commitments as a percentage of 
investment (GFCF) 
1989 1993 1999 
7.3 
2.6 
5.2 
5.3 11.0 
4.0 
9.3 
7.0 12.6 
6.6 
7.8 
8.0 GDP The Structural Funds 
and Cohesion Fund 
as a percentage 
of GDP 
1989 1993 1999 ! 1989 1993 1999 
1.4 
0.7 
0.9 
1.4 1.9 
0.9 
1.5 
1.8 2.2 
1.5 
1.2 
2.1 2.5 
1.0 
2.1 
2.7 3.3 
1.5 
3.1 
3.3 4.0 
2.3 
2.7 
3.8 
EUR4 
(of which Cohesion Fund) 3.9 6.0 7.8 0.9 1.3 1.7 1.6 2.3 
(0.4) 2.9 
(0.6) 
New German Lander2 
Italy3 
Other Community Member 
States4 n.a. 
1.7 
2.0 (0.9) 
3.6 
3.3 1.8 
4.0 
2.5 n.a. 
0.4 
0.4 (0.4) 
0.7 
0.6 0.8 
0.8 
0.5 n.a. 
0.6 
1.0 (0.8) 
1.1 
1.4 1.7 
1.2 
1.1 
Ail objective 1 regions 3.0 5.0 4.7 0.7 1.1 1.2 1.2 1.8 2.1 
EUR12 0.4 0.6 0.9 0.1 0.1 0.2 0.1 0.2 0.3 
Estimates by DG XVI 
Increase in GFCF 1994-1999: 2,5% pa 
Increase in GDP 1994-1999 : 2,5% pa 
1999 figures include Cantabria 
Figures in brackets refer to amounts provided under EEC Reg. 3575/90 
1999 figures exclude Abruzzi 
For 1989 and 1993. Northern Ireland in the UK and Corsica in France; for 1999, including also Hainaut; the 'Arrondissements ' of 
Douai, Valenciennes and Avesnes; Flevoland; Merseyside and the Highlands & Islands Enterprise Area. 
Source : Eurostat, DG II, calculations DG XVI 
GFCF in the Community and 3% of that in Objec­
tive 1 regions. In the four poorest Member States, it 
financed^ 4% and in other Objective 1 regions, 
around 2% (Table 20). 
By 1993, the figure for all Objective 1 regions had 
risen to 5% and that for the four poorest Member 
States to 6%. By 1999, the Community's contribu­
tion to investment will rise further in real terms, 
though the share of GFCF will depend on what 
happens to the latter in the meantime. If GFCF were 
to grow by 2.5% a year, the average for the 
Community over the 1980s, the ERDF would still 
finance 5% of investment in (the now enlarged group of) Objective 1 regions but nearly 8% in the four 
poorest Member States. 
The effect of regional expenditure on the ability to 
import can be assessed by relating the amount in­
volved to the GDP of the area concerned. In 1989, 
Structural Funds' support to the Objective 1 regions 
as a whole was 1.2% of their GDP and in the four 
poorest countries, 1.6% of GDP. By 1993, these 
figures had risen to 1.8% and 2.3% respectively. 
By the end of the current programming period in 
1999, if GDP grows at 2.5% a year, the average for 
the Community in the 1980s, the Structural Funds 
131 
Chapter 9 ~ Community regional policies 1994-1999 
will represent 2.1% of GDP in Objective 1 regions 
and 2.9% of GDP in the four poorest Member States. 
To have a lasting effect on productive capacity, these 
funds need to be used to increase physical and human 
capital. Moreover, the scale of the effect depends on 
counterpart financing from the Member States con­
cerned, which is why the additionality principle is 
considered to be important and why it has been 
strengthened under the revised regulations, especial­
ly in relation to the provision, in the regional plan, of 
adequate financial information on the extent of na­
tional expenditure on development-related expendi­
ture. 
Community initiatives 
The total funds available for Community initiatives 
in the period 1994 to 1999 amount to 13.45 bil­
lion ECU in 1994 prices. Initiatives will focus on 
seven broad themes : cross-border and transnational 
cooperation, rural development, the most peripheral 
regions, employment and the development of skills, 
the management of industrial change, urban areas 
and fishing (Table A.22 in the Annex shows the full 
list of initiatives). There is, in addition, a reserve of 
1.6 billion ECUs for allocation at a later stage. 
Several of the initiatives reflect a desire for conti­
nuity. This is true of INTERREG, the largest one 
which is mainly for cooperation across internal bor­
ders but which is intended to cover cooperation on 
external and certain coastal borders to a greater ex­
tent than previously. This is linked with measures to 
promote energy networks formerly undertaken under 
REGEN. There are also follow-ups, with increased 
finance, for LEADER which is for rural development 
and REGIS which is for ultra-peripheral regions. 
In addition, it is proposed to continue initiatives 
assisting regions hit by the decline of the coal, steel, 
textile and defence industries - RECHAR, 
RESIDER, RETEX and KONVER - up to the end of 
1997 and a specific initiative for the Portuguese 
textile industry has been added. A new initiative, ADAPT, financed from the Social Fund, has been 
introduced to help workers threatened with unem­
ployment because of industrial change and to help 
enterprises improve their competitiveness. 
Another initiative directed at small and medium-
sized enterprises is also intended to ease adaptation 
to industrial change. This will incorporate some of 
the successful features of the existing PRISMA, 
STRIDE and TELEMATIQUE initiatives, as well as 
reflecting the thinking in the White Paper, and will 
be focused mainly on Objective 1 regions. 
The Employment Initiative will incorporate elements 
of the existing NOW programme, for women, and 
HORIZON, for the disabled, but will be widened to 
cover other disadvantaged groups such as the long-
term unemployed, while YOUTHSTART will aim to 
provide a guarantee of training and employment for 
the under 20s throughout the Community. 
The new initiatives for urban problems and PESCA 
for fishing dependent areas complete the list. 
The Structural Funds 
and the regions 
of the candidate countries 
The negotiations over the accession of the four EFTA 
countries have also included the issue of Structural 
Fund assistance. The allocation of Objective 1 assist­
ance has been agreed and a new category of aid, 
Objective 6, has been created. 
Only Austria has a region which qualifies for Objec­
tive 1 assistance, Burgenland with a population of 
269,000, 3% of the total population of Austria. Ac­
cording to the latest assessment, the financial aid 
fixed for the period 1995 to 1999 as a whole will be 
184 million ECU, which represents an amount per 
inhabitant of slightly less than in present Objective 1 
regions (outside Cohesion Fund countries) 
(Table 21). 
132 
Table 21 
The Structural Funds and the new Member States : 1995-1999 
Austria 
Population 
Objectives 1 and 6 
population ('000) 
Objectives 1 and 6 
as % of national population 
Structural Funds 1995-99 
(1995 prices MECU) 
of which : 
Objectives 1 and 6 
Other Objectives 
Structural Funds per head (ECU) 7699 
269 
3,50% 
1623 
184 
1439 
211 Norway Sweden Finland 
4241 
587 
13,80% 
1137 
384 
769 
268 8559 
450 
5,25% 
1420 
230 
1190 
166 4998 
837 
16,70% 
1704 
511 
1193 
341 EUR8 
(exd. GR, E, IRL, P) 
283365 
45036 
15,90% 
67247 
32247 
35000 
237 
estimate of Structural Funds outside Obf. 1 regions 
Source :DGXVl 
A new Objective 6 has been established for regions 
- defined at NUTS level LT - with outstandingly low 
population density (below 8 inhabitants per square 
kilometre). Regions eligible for this will be in the 
three Scandinavian countries. Objective 6 will be 
similar in kind to Objective 1 and will be subject to 
revisions in 1999 at the same time as the Structural 
Fund regulations are reviewed. Until then aid will be 
regulated through a protocol in the Treaty of Ac­
cession. The regions which are eligible, which are 
also identified in the protocol, cover a population of 
1.874 million and will receive a total of 1.109 mil­
lion ECU (at 1995 prices) over the period 1995 to 
1999 asja whole - equivalent to 592 ECU per person 
(an average of 118 ECU a year) which is 17% lower 
than the average for Objective 1 regions in the rest of 
the Community (outside Cohesion Fund countries). 
After negotiation, the position of each country under 
Objective 6 is as follows : 
in Sweden 450,000 people, or 5.3% of the popu­
lation, will live in regions eligible for assistance 
(mainly in three northern counties). They will receive a sum averaging around 101 ECU per 
person a year over the period 1995 to 1999; 
• in Finland, 837,000 people, 16.7% of the popu­
lation, live in eligible regions, mainly in Lapland 
and other areas bordering Russia. The sum in­
volved has been fixed at the equivalent of 
122 ECU per person per year over the period 
1995 to 1999; 
• in Norway, some 587,000 people, 13.8% of the 
population, are likely to live in eligible regions 
and to receive an average of 125 ECU per person 
per year over the period 1995 to 1999. 
So far as other objectives of the Structural Funds are 
concerned, the Commission has indicated, without 
giving a precise figure, that the population covered 
by Objective 5b is likely to be significant and larger 
than the population under Objective 2. Objective 5a 
is also likely to be important. 
Because of relatively low rates of unemployment in 
the candidate countries, with the exception of 
Finland, the population covered by Objective 2 as­
sistance will probably be minimal in Norway and 
Austria and well below the Community average in 
K*****.1**?) unitnmwwwwww 
133 
Chapter 9'a-Community regional policies 1994^1999 
Sweden. In Finland, as a result of high unemploy­
ment since 1990, the population covered by Objec­
tive 2 might be relatively high. 
Although neither the eligible areas nor the global 
coverage of population has yet been established (this 
remains to be done before the 1 st January 1995 which 
is the envisaged date of accession), the total amount 
of finance available for Objectives 2,3,4,5a and 5b 
has been agreed. Including Community initiatives, 
the Budget for 1995 to 1999 has been fixed at 4.6 bil­
lion ECU. 
The total available for the four candidate countries 
from the Structural Funds amounts to 5,884 mil­
lion ECU (at 1995 prices), which represents an addi­
tional expenditure of 4.5% in relation to an expansion 
of 7.4% in me Community's population. The average 
assistance per person under all the Objectives com­
bined is slightly below the average for the existing 
8 Member States excluding the four Cohesion coun­
tries. 
The budgetary period 1993-1999 differs from the programming period for regional actions which for Objectives 1 
and 5b runs from 1994 to 1999, and for two 3-year periods, 1994-1996 and 1997-1999, for Objective 2. 
European Commission : The means to match our ambitions. COM(92) 2000. 
Including innovative and transitional actions. 
European Commission (1992), Community Structural policies : Assessment and Outlook, COM (92) 84 
5 European Commission (1993), Growth, competitiveness and employment Com (93) 700 final 
Regulation (EEC) No 3575/90 of the Council at its meeting of 4 December 1990 
The list is published in the Official Journal, L81 of 24 March 1994. 
The list is published in the Official Journal, L96 of 14 April 1994. 
134 
{f $?*%rJ~"x ^f ChapfefylO -f^Regional ooilcîésih Jtërrt&ef^âtes : recent trends 
- ..-s- -tftï&vt.* rfC"1* * 
Chapter 10 Regional policies in 
IVIember States : recent trends1 
The past five years have been a period of consider­
able uncertainty and upheaval in the regional policies 
of Member States. Major geo-political develop­
ments, economic fluctuations and almost continuous 
structural change have combined to create a difficult 
environment for regional policy. These changes are 
reflected in Northern Member States in a decline in 
large scale, automatic support to business in favour 
of a more selective approach with more emphasis 
than in the past on developing the business environ­
ment (assistance to producer services) and small 
enterprises. In Southern Member States and Ireland, 
expenditure on regional incentives has increased and 
is now among the highest in the Community in rela­
tion to GDP. These countries have maintained rela­
tively extensive geographical coverage in their re­
gional incentive schemes whereas in Northern 
Member States such coverage has been reduced. This 
has tended to reduce differences in expenditure on 
regionaLjncentives across the Community when ex­
pressed per head of population. The major exception 
is Italy where expenditure per head remains substan­
tially ahead of the rest of the Community. ture to aid business expansion. Where major infra­
structure investment is concerned (transport, tele­
communications and energy networks) Member 
States tend not to distinguish systematically between 
that of a general nature and that undertaken specifi­
cally to promote regional development. For this rea­
son, regional policy conducted at Community level, 
which has a strong emphasis on infrastructure, is 
difficult to compare directly with that of the Member 
States. 
The analysis below is divided into three sections. The 
first reviews recent changes in the objectives, 
priorities and context of regional policy in Member 
States, including the importance accorded to regional 
incentives to business and to business-related infra­
structure. The second examines changes in the design 
of regional incentives as regards their form, value, 
spatial coverage and the targets of assistance. The 
final section considers trends in expenditure on re­
gional incentives since 1980, focusing, in particular, 
on developments during the late 1980s. 
Definitions of regional policy 
Since the promotion of productive investment is the 
major means of stimulating regional development in 
all Member States, the focus is on regional incentives 
and, to a lesser extent, on the provision of infrastruc-
135 
! Chapter 10 - Regional policies In Member States ; • 
The objectives and 
context for regional policy 
The major feature of national regional policy over the 
past decade has been the reformulation of policy 
objectives (see Box, for a summary of the major 
changes in policy in each of the Member States). 
During the 1980s, regional policy became less 
oriented towards redistributing income and employ­
ment and more towards encouraging structural 
change to achieve greater diversification and raise 
the overall potential for economic growth. 
In recent years, policy makers have had to contend 
with several different kinds of structural adjustment. 
The primary concern, particularly in Northern 
Member States, has continued to be regions depend­
ent on traditional industries. Problems of structural 
adjustment, however, have affected a much wider 
range of regions throughout the Community, es­
pecially those containing single activity towns or 
cities dependent on industries such as defence, which 
has experienced plant closure or conversion of pro­
duction to non-military goods, or fishing or agricul­
tural communities affected by over-capacity and 
quota restrictions. 
The emphasis on promoting structural adjustment of 
regions reflects the influence of macro-economic 
developments and geo-political changes. Economic 
crises during the 1970s and early 1980s, associated 
with widespread unemployment and accompanied 
by structural change affecting all regions, reduced 
the importance of regional policy on the political 
agenda in several Member States. Budgetary restric­
tions and changes in attitude towards subsidy-based 
intervention led to lower expenditure and a more 
selective approach to regional development in many 
countries. 
The recovery from the recession of the early 1980s 
was followed by strong economic growth throughout 
the Community, but unemployment in many regions 
remained high, including certain urban/industrial ag­
glomerations. (In the UK, the social, economic and 
environmental problems of inner city areas prompted 
a growing range of urban policy measures which gradually supplanted regional policy in terms of pol­
itical priority and expenditure.) The spatial concen­
tration of growth also brought problems for some 
developed regions : over-heating and congestion en­
couraged renewed interest in measures to decen­
tralise economic activity from cities such as Paris, 
Athens and London. 
Other aspects of structural adjustment are attribut­
able to geopolitical developments. Preparations for 
the Single Market, with the potential for enhanced 
cross-border cooperation and competition, promoted 
greater concern with the competitiveness and pro­
ductivity of industries and firms. The impact of pol­
itical and economic transformation in Eastern 
Europe has had greatest impact in Germany where 
unification has required major restructuring pro­
grammes in virtually all economic sectors of the new 
German Lander, including a massive increase and 
reorientation of regional policy resources. Elsewhere 
in the Community, the lowering of East-West tension 
is apparent in the closure or rationalisation of military 
bases and cutbacks in production and employment in 
defence industries. 
Against this background, regional policy has focused 
increasingly on assisting the restructuring of regional 
production systems. Although regional financial in­
centives are still the main instrument for the promo­
tion of new productive investment in the regions, 
policy makers are moving away from their former 
reliance on subsidies for investment and employ­
ment, and measures are being oriented more towards 
improving competitiveness and the regional business 
environment through business-related infrastructure 
development (notably in die Netherlands), technol­
ogy transfer and consultancy services, especially for 
marketing and exports. The nature of 
business-related infrastructure provision is also 
changing : the traditional provision of industrial es­
tates, factories and local services is being supplanted 
by the creation of enterprise and incubator units, 
technology and science parks and telematic centres. 
This broader approach to the promotion of produc­
tive activity in problem regions is also reflected in 
the administration of regional policy which is becom­
ing more integrated with other areas of policy (eg 
urban/regional policy coordination in the UK) and is 
136 
*K-K^\i Chapter 10- Regional poilcles In Member States ; recent trends 
the subject of more coordination between central and 
regional government (as in Belgium and Spain). 
The reorientation of policy is, however, being under­
taken within a context of tightening budgetary con­
straints and varying degrees of political commitment 
to regional policy. In addition, the monitoring of aids 
under Community competition policy - in the inter­
ests of creating a 'level playing field' - has focused 
on both the extent (coverage of assisted areas) and 
intensity (rates of assistance) of regional policy. This 
is particularly so in the Northern Member States. In 
Denmark, almost all conventional regional incen­
tives were abandoned in 1991 in favour of a new 
national system for the promotion of business devel­
opment; in the Netherlands, regional assistance has 
been confined to the North of the country (although 
there are some other areas with temporary designa­
tion); and in Germany, both the level of expenditure 
and the extent of assisted areas have been reduced 
substantially in the former West Germany - though 
assistance has been increased massively in the new 
Eastern Lander. 
By contrast, Member States in the South have gener­
ally maintained or increased expenditure on regional 
policy in recent years, aided by support from the 
Structural Funds, especially to Objective 1 regions, 
and more liberal conditions under competition pol­
icy. Nevertheless, they too have not been immune 
from cutbacks, at least as regards the promotion of 
productive investment. Besides Italy, where political 
change has led to the temporary suspension of re­
gional agencies and programmes, in both Spain and 
Portugal reductions in national expenditure on aid is 
expected to occur over the next few years. As indi­
cated in Chapter 11, however, it is important for the 
weaker Member States and regions that overall re­
gional expenditure is maintained so that, with the 
increased resources available under the Structural 
Funds for the period 1994-99, a firm foundation is 
laid for catching up. The design of 
regional incentives 
The shift in national regional policy objectives to 
focus more on structural adjustment, with increas­
ingly limited resources in many Member States, is 
evident in the design of incentives to attract new 
productive activity. A common theme in the compo­
sition of incentive packages, their administration, 
spatial coverage, the conditions for eligibility and the 
rates of support is a more selective approach to 
promoting indigenous regional development 
Over the past decade, both the number and form of 
regional incentives used by Member States have 
become more limited. The diversity of incentives, com­
mon in most Community countries during the 1970s, is 
disappearing (particularly as regards fiscal concessions 
and interest-related subsidies), and most incentive 
packages are now heavily grant-based. The diversity 
which remains tends to be greatest in the less developed 
countries : Greece, Italy, Ireland and Portugal typically 
have more numerous and varied incentives, including 
labour-related subsidies, than other Member States. 
Many of the incentives which have been abolished in 
recent years were major, high value, automatic 
schemes. Examples include WIR regional allow­
ances in the Netherlands (terminated in 1983), re­
gional development grants in Great Britain and 
standard capital grants in Northern Ireland (1988), 
investment allowances in West Germany (1989) and 
almost the entire package of Danish measures 
(1991). By contrast, the new schemes introduced 
have tended to be less costly,, indirect or focused on 
small firms, eg regional enterprise grants in Britain 
(introduced in 1988), aids for decentralisation and 
small firms in France (1991) and the business envi­
ronment policy 'BOB' in the Netherlands (1992). 
The demise of major automatic schemes has given 
rise to an important shift in the administration of 
regional incentive policy. Whereas at the start of the 
1980s automatically-administered incentives were 
prevalent, especially in the larger Community coun­
tries, by the end of the decade only in Italy was 
large-scale automatic support still the basis of re-
137 
Chapter 10 - Regional policies in Member States : recent trends 
gional incentives. Elsewhere, most support now has 
a significant discretionary component. An additional 
administrative trend, as noted above, has been the 
development of a more decentralised approach in 
many Member States, particularly in respect of sup­
port for smaller projects and firms. 
Associated with these administrative developments, 
the eligibility conditions for regional incentives now 
involve greater selectivity and more discretion so as 
to increase the cost-effectiveness of assistance. In a 
number of countries, assistance has come to be 
limited to those sectors where it is considered effec­
tive, excluding sectors with over-capacity. In other 
countries like Belgium and Portugal, eligibility con­
ditions take more account of the industrial charac­
teristics of projects. The emphasis on promoting the 
business environment is reflected in the extension of 
eligible activities to include certain producer services 
with a greater focus on high-tech, innovation and 
consultancy. 
Incentives have also increasingly been focused on 
new firms or projects as opposed to existing ones, 
especially in Germany, Ireland and the Netherlands. 
Start-up projects qualify for more generous awards 
and are subject to less restrictive eligibility 
conditions than extensions, while projects involving 
rationalisation and reorganisation rarely receive as­
sistance. 
34 Population living in regions assisted by the 
Member States, 1980,1986 and 1992 
% population 
DK NL D IRL B ECS I UK F GR E 
P, E : no data before 1986; GR : data for 1981, not 1980 At the same time, the spatial coverage of assisted 
areas has become more restricted and more focused 
on problem regions in Northern Member States. Over 
the period 1980 to 1992 in Belgium, Denmark, 
(West) Germany, the Netherlands and the UK, the 
average population in designated problem regions 
has fallen from just over 35% of the total to 
around 27% (Graph 34 and Table 22). Apart from 
Denmark, where although there are designated prob­
lem regions they have not received assistance so far, 
the most notable reductions have occurred in the 
Netherlands (a decline of two-fifths), the UK (one-
fifth) and Germany (one-third). 
By contrast, in Southem Europe and Ireland - much of 
which are designated as Objective 1 regions -there has 
been no reduction in spatial coverage since 1985. In 
Greece, Portugal and Spain, there has been virtually no 
change in areas eligible for assistance since their ac­
cession to the Community, while in Ireland the only 
change has been a temporary extension to assisted areas 
between 1989 and 1991. Nevertheless, within assisted 
areas, Southern Member States are targeting regional 
aid more precisely through graduating rates of support. 
In Italy, different rates have been introduced in different 
parts of the Mezzogiorno and in Spain, six different 
maximum rates of support apply according to the de­
velopment status of the area. 
In general, the overall maximum rates of award of 
regional support on offer in the Member States have 
not changed markedly, being determined primarily 
by Community aid ceilings. However, there has been 
a number of changes to the rates of support for 
specific incentive schemes reflecting the greater se­
lectivity noted above. In Northern Member States, 
the changes were mostly in, a downward direction and 
in favour of start-up projects. In the Netherlands, the 
maximum rates of support under the IPR were re­
duced from 25% to 20% (15% for subsequent exten­
sions), in the former West Germany, the maximum 
preferential rate was reduced from 25% to 18% and 
in Ireland, the maximum rate for extensions was 
reduced in two stages from 60% or 45% (depending 
on location) to 15%. By contrast, in Southern 
Member States, rates of support generally increased.. 
In Italy, rates were raised in the mid-1980s and in 
both Portugal and Spain, new regional incentive sys-
138 
Chapter 10 - Regional policies in Member States ; recent trends 
Table 22 
Regional Incentive Expenditure indicators 
Belgium 
Denmark 
France 
Germany 
Greece1 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
Spain 
UK 
EUR9 
EUR12 Population coverage 
in assisted regions 
(% national population) 
1980 1986 1992 
39.50 
27.00 
38.20 
36.00 
65.0 
28.00 
35.60 
100.00 
27.40 
49.50 33.10 
24.00 
39.00 
35.00 
58.00 
28.00 
35.60 
100.00 
25.00 
100.00 
58.60 
36.80 33.10 
19.90 
40.00 
27.00 
58.00 
28.00 
35.60 
79.70 
19.90 
100.00 
58.60 
36.80 
37.90 35.50 
41.00 33.40 
39.10 RIE per head 
of population 
in assisted regions 
(ECU 1990 prices) 
1980 1985 1990 
38.15 
9.82 
16.85 
30.07 
7.13 
117.00 
185.19 
63.97 
58.45 
70.61 49.67 
10.62 
11.73 
28.38 
36.28 
57.46 
238.72 
23.72 
42.10 
62.27 44.71 
5.40 
7.57 
33.15 
52.47 
58.14 
404.63 
70.91 
33.09 
27.35 
31.93 
36.92 RIE 
(% national GDP) 
1980 1985 
0.13 
0.02 
0.05 
0.08 
0.07 
1.66 
0.60 
0.51 
0.13 
0.30 0.14 
0.02 
0.04 
0.07 
0.35 
0.75 
0.72 
0.17 
0.08 
0.20 1990 
0.11 
0.01 
0.02 
0.07 
0.49 
0.63 
1.04 
0.41 
0.05 
0.38 
0.19 
0.10 
For Greece the figure for population coverage under 1980 is for 1981; the figures for RIE under 1980 are for 1982 and under 1990 are for 1988\ 
Source : EPRC (1993) 
terns introduced after their entry into the Community 
involved higher ceiling on support. 
Expenditure on 
regional incentive policies 
The differences in policy trends across the 
Community are reflected in the changes in expendi­
ture which have occurred over the past decade. In 
most Northern Member States, spending on regional 
incentives declined markedly in the course of the 
1980s (Graph 35). This is especially true of 
Denmark, the Netherlands and the. UK where the fall 
was more than 50%. However, in Belgium and - to a lesser extent - Luxembourg, there was no clear 
tendency either up or down, while in Germany a 
tendency for expenditure to fall in the first half of the 
1980s was reversed as spending on investment 
allowances increased dramatically in the second half 
prior to their withdrawal in 1989. With their abolition 
and the withdrawal of special depreciation allow­
ances (for the former Border Area) in 1994, the 
regional aid expenditure in West Germany will be 
30% lower than in 1991. On the other hand, in the 
new East German Lander, regional expenditure is 
rising rapidly. The total regional budget for the new 
Lander was DM 11.4 billion in 1992, over ten times 
more than in the West of the country. 
While the underlying expenditure trend in most 
Northern Community countries is clearly down­
wards, in Southern Member States regional incentive 
139 
récent trends •^-s£ "•"• J?*~-"^-*^5JC-MÎNW 
35 The Importance of regional Incentive expenditure 
In the Member States, 1980 and 1990 
%GOP 
DK F NL D UK B E P L GR IRL t 
Oat» tor Graece for 1982.1988; No (fata fer C. F Mom 1989 36 Expenditure per capita in regions assisted by the 
Member States, 1980,1985 and 1990 
ECU {1990 prices) 1980 • 1985 • 1990 1 500 : 
] j 
•I 450 | 
250 
'Wm 
M-ii 
DK F P E NL D UK ; * GR IRL L 
Data «or GR «or 1982.1985 & 1988; P, € : no data before 1988 
spending has increased significantly since the mid-
1980s. Current budgetary pressures, however, sug­
gest that growth is unlikely to continue in the 1990s. 
Member States can be divided into four groups in 
terms of expenditure on regional aid. At the bottom 
come Denmark and France, with expenditure of 
under 0.02% of GDP in 1990. The second group 
comprises, in ascending order, the Netherlands, 
Germany, the UK and Belgium with expenditure of 
0.05-0.1 % of GDP and with the Netherlands rapidly 
declining towards the bottom group. The third group 
consists of Luxembourg plus four countries where all 
or most areas are Objective 1 regions - Spain, 
Portugal, Greece and Ireland - with expenditure of 
0.4-0.6% of GDP. (Spending in Spain, in fact, was 
lower than this in 1990 but within the range in 1989.) 
Finally, in Italy, expenditure in 1990 amounted to 
just over 1% of GDP, reflecting significant social 
security concessions and a marked increase in spend­
ing in 1990 (in previous years, expenditure generally 
being around 0.7% of GDP - still more than else­
where in the Community). 
Because, however, countries with a low level of 
expenditure tend to confine the coverage of policy to 
relatively few and narrowly defined assisted areas, differences between countries in terms of expendi­
ture per head of assisted population tend to be much 
less marked. Thus, with the exception of Denmark 
and France at one extreme and Italy at the other, in 
all countries spending in 1990 was between 27 and 
70 ECU per head of the population of assisted re­
gions, with Luxembourg, Ireland and Greece close 
to the top of this range and Spain and Portugal and 
the other countries close to the bottom (Graph 36). 
These figures indicate that the intensity of regional 
aid to business in the Northern Member States has 
declined relative to that in Southern Member States. 
wtmm.wm9mm*»Mmmfiflfmtmii 
1 This chapter is based on a short study : European Policy Research Centre (1993), The regional policies of the Member 
States : a review of recent trends, study financed by DG XVI of the European Commission. 
140 
v?4?V*X&:y&&V& 
îjrte^OJr Hegionaf pollcïësln SrecefiftrerKis^ 
Major policy charges in the Member States 
The key changes in regional incentive policy since 1980 in each Member State are as follows : 
Belgium 
1980 ; Administration and funding of regional policy de­
volved to Flanders and Wallonia. 
1982 : New Development Zones reviewable every 3 years 
announced; the population in problem regions reduced 
from 39.5% to 363%. 
1983 : Population in problem regions reduced further to 34.7%. 
1985 : Review of DevelopmentZones: reduced population in 
problem regions to 33.1%. 
1988 : The two regional governments made responsible for 
industrial policy. 
1992 : New directives introduced in Wallonia which, inter 
alia, abolished interest subsidies. 
Denmark 
1982 : Population of General Development Regions reduced 
from 27% (and 31% in the late 1970s) to 25% (and to 
24% in 1984). 
1985 : Soft loans to companies and a number of minor incen­
tives withdrawn. Maximum grant increased from 25% 
to 35% in the Special Development Regions. 
7957; New problem region map drawn with population in 
problem regions reduced to 20% by 1990. 
1988 : Support made more selective, with focus on projects 
with fundamental development impact. 
J 991 : Conventional regional development grants, loans and 
authorities abandoned in favour of new national busi­
ness development system. 
1992 : New problem region map agreed for the period 1992 
to 1996, covering 20% of the population. 
France 
1982 : Regional incentive system simplified, regional policy 
grants (PAT) and regional employment grants (PRE) 
replacing five different measures. Decentralisation 
subsidy abolished. Incentive administration decen­
tralised more. Designated areas reduced from three 
grades to two 
7957: Regional component of the PAT abolished. Scheme 
changed from semi-automatic grant to being discre­
tionary aimed at influencing location decisions. 
7955 : Special depreciation allowances on the construction of 
new buildings abolished. 
1990 : With Commission agreement a number of areas desig­
nated as permanent problem regions instead of receiv­
ing assistance under exceptional provisions. 
7997 : Aid to decentralisation (from the Ile-de-France region) 
and a new regional incentive for smaller projects in 
rural areas (the AITZR) introduced. 
Germany 
7957 : Assisted areas to be reduced from 36% of the popula­
tion to 30% by 1993. Special investment grants for 
high-grade jobs introduced. 
7952 ; Special Steel Location Programme introduced (1982-85). 7955. 
7997 
7992. 1984 : Under Commission pressure, areas with 1.4% of popu­
lation de-desîgnated. Bremen designated as a special 
area because of shipbuilding probIems(1984-87) and 
Gelsenkirchen designated because of other structural 
problems. 
7955 ; Measures introduced to encourage service-related activities, 
innovation and R&D, with emphasis on infrastructure. 
Aid ceilings reduced. Special programme for mining 
regions introduced (1988-91). Abolition of investment 
allowances in 1989 announced, but with en increased 
budget for investment grants. 
1990 : Regional policy assigned a leading role in measures to 
assist the development of Eastern Germany. 
• Designation of the Zonal Border Area withdrawn, 
though certain measures continued until 1994. As­
sisted population in the Western Lander reduced to 
27% with maximum aid of 18% (as against 23% in the 
East). ; 
Regional budget for the new Lander set at ten times 
that in the West Special programmes introduced for 
areas affected by coal mine closures. 
Greece 
7957 : Investment grants, interest rate subsidies, increased 
depreciation allowances and tax allowances introduced 
to bring policy into line with rest of Community. 
7952 ; More emphasis given to expenditure, less to fiscal 
concessions. A new assisted areas map introduced and 
administration made more decentralised. 
1990 : Emphasis shifted from expenditure to fiscal measures. 
Regional incentives reduced, with support channelled 
more through infrastructure spending via the 
Community Structural Funds. 
Ireland 
7957 : Export sales relief withdrawn (largely in response to 
Commission pressure) and replaced by a 10% rate of 
corporation tax for manufacturing industry. New 
measures introduced for the service sector, particularly 
international services. 
7952 : Applications under the IDA modernisation and re-
equipment grants scheme suspended and the scheme 
subsequently abolished. 
7956': Selectivity increased. Reduced emphasis on job cre­
ation per se and more on maximising added value to 
the Irish economy. 
7957 : Support made more target-oriented4>erformance-related. 
7955 : Support for fixed investment reduced. 
7959 ; Entire country made eligible for Community support. 
Population of Designated Areas increased temporarily 
(1989-1991) 28% to 34%. 
7997 : Ceiling on aid for extensions of projects reduced from 
25% to 15%. More emphasis placed on repayable 
forms of support 
*aap**#&S3*^«M*<ï^^*tt^^ 
141 
in Member States ; recent trencte 
Italy 
7956* : New legislation for the Mezzogiorno introduced. Eligi­
bility iForaid extended. Three-year rolling programmes 
implemented. Mezzogiorno divided into three grades 
'of area and discrimination in rate of support intro­
duced Rates of maximum support increased. 
1988: Under Commission pressure, certain parts of the North 
Mezzogiorno de-designated as from 1990 and others 
from 1992. 
1990: Discrimination on rates of support increased. 
7992 .* "Special intervention* for the Mezzogiorno abolished 
asfroml993. = '',., 
Luxembourg 
7956" : Discrimination in rates of support between different 
parts of the country introduced. More services made 
eligible for support 
1991 : Area eligible for support reduced to cover 80% of the 
population. 
The Netherlands 
7957 .• SIR levy withdrawn, reducing the aid differential be­
tween designated IPR (investment premium) areas and 
the rest of the country. 
7952 : Population in IPR Areas increased from 27.4% to 28.7%. 
7953 : First step to decentralise IPR administration. The item-
related WIR regional allowance withdrawn, partly in 
response to Commission pressure. Under Commission 
pressure, population in IPR Areas reduced from 28.7% 
to under 25% by 1985. 
1986: Reductions in aid to project extensions awards. IPR 
budgets decentralised to the provinces. Minor adjust­
ments made to designated areas. 
1988 : Population in ÎPR Areas reduced from almost 25% to 
20%. Maximum rate of aid reduced from 35% to 25% 
for start-up projects and to 15% for extensions. 
7997 : IPR Areas limited to the North of the country (some 
10% of the population) from 1993. IPR rates reduced 
to 20% for start-up projects. BOB (business environ­
ment policy) approved, aimed at facilitating economic 
development by removing infrastructure bottlenecks. 
Portugal 
7956; New regional incentive system introduced to bring 
incentives in Portugal more into line with other 
Community countries, with capital grants, employ­
ment premiums and support for innovation. Aid set at 
a maximum of 33% of eligible expenditure. 
7955 ; SIBR grants introduced covering up to 65% of eligible 
expenditure. SIPE introduced to improve the business 
environment by providing support for 'softer' or intan­
gible investments. SIFTT introduced to support tour­
ism. 70% of aid budget provided by the Community 
Structural Funds. 
7959 : Amendme nts made to the SIBR to ensure its consist­
ency with new industrial incentive system (SENPEDIP) 
introduced under the PEDIP (specific industrial devel­
opment programme for Portugal) to support innovation 7990 and modernisation. Financial support for the PEDIP 
from Community Budget additional to Structural Fund 
support 
Increased emphasis placed on industrial characteristics 
of project proposals. 
Spain 
7956 ; New regional incentive legislation introduced defining 
regional incentives ind specifying eligible types of 
problem region. 
7957.* The new zones eligible for regional assistance speci­
fied and the maximum rates of support for each grade 
of zone stipulated, rangHg from 20% to 50% (75% in 
Zones of Industrial Decline). 
7997 : Zones of Industrial Decline incorporated into the more 
general Zones of Economic Promotion. 
UK 
7950 : Population in Assisted Areas reduced from almost 44% 
to 26% by 1982. Regional development grants with­
drawn from Intermedia^ Areas and the rate of grant in 
Development Areas cut from 20% to 15%. 
7952 : Population in Assisted Areas increased to 27.5%. In­
dustrial Development Board established in Northern 
Ireland. 
7954.'Population in Development Areas reduced to 15% 
though overall Assisted Area coverage increased from 
27.5% to 35%. Regional Development Grants made 
automatic and rate of award cut to 15%, OSIS (office 
and Service Industry Scheme) incorporated into re­
gional selective assistance, though eligibility for grants 
extended to specified business services. Expenditure 
reduced significantly. 
1985 : The value and industry coverage of the standard capital 
grant in Northern Ireland reduced significantly. 
7955." The British Regional Development Grant and Northern 
Ireland standard capital grant abolished. New regional 
enterprise grants introduced in Britain for small firms. 
Selective assistance made the main source of regional 
aid. A national consultancy scheme (the Enterprise 
Initiative) introduced favouring problem regions. 
7990: Industrial development support in Northern Ireland 
focused less on capital projects and more on marketing, 
product design and development with a view to im­
proving international competitiveness. 
1992 : Size limit for the innovation component of the regional 
enterprise grant increased from 25 to 50 employees and 
grants extended to Intermediate Areas. 
142 
'* - >M* -sht -«*.: K""*-*' Section D Deepening arid widening and the regions of the Community 
Section D Deepening and widening and the 
regions of the Community 
Current issues and problems 
Prospects for the regions under EMU 
The previous enlargement : the situation of, and prospects for, 
the new German Lander 
Regional structures and problems in neighbouring countries 
The EFTA countries 
The Visegrad countries 
w»!K»!^*ag^^a»»^w^yw^?»»*J«<<>wii..-«.i»..«..iliiMll,w,ia^w, 
143 
rftjieCornmuntty 
144 
.y,, w_ .-*^ '*f7jSfc^^^*^-^-ï.-l*^-.'V - >. * CrwjrterUf Cùiréntlssi^anclproblems" 
Chapter 11 Current issues and problems 
Prospects for the regions 
under EMU 
The achievement of Economic and Monetary Union 
in the Community promises enhanced prospects for 
the developed and the less favoured regions alike. 
The reduction of transaction costs and the elimina­
tion of exchange rate risk may promote regional 
specialisation and intra-Community trade in goods 
and services. The weaker regions can benefit from 
this specialisation by exploiting more fully their 
comparative advantage. Furthermore, a general ex­
pansion of trade is likely to be beneficial for econ­
omic growth which provides in turn favourable con­
ditions for lagging regions to catch up. Finally, 
increased capital mobility encouraged by fixed ex­
change rates and the tendency towards quasi-uniform 
inflation rates will tend to equalise interest rates for 
any given level of risk, which should favour the less 
developed regions where capital is often relatively 
scarce and capital costs, therefore, relatively high. 
While yielding potential benefits, the increased inte­
gration of the Community under EMU is, however, 
not without costs or risks for the lagging regions. 
These arise both from the macroeconomic adjust­
ments required in the run-up to EMU and from the 
additional constraints imposed on Member States by 
full membership of EMU which could adversely 
affect economic and social cohesion. Both aspects 
are examined in more detail below. Transition to EMU 
The final transition to EMU requires Member States 
to meet strict nominal convergence criteria regarding 
inflation and public finances, as well as to maintain 
exchange rate stability. These criteria are specified 
in the Maastricht Treaty. They are interlinked and the 
need for progress in meeting all criteria in a majority, 
at least, of Member States was underlined by events 
in 1992 and 1993 which, as discussed below, led to 
a series of crises in the Exchange Rate Mechan­
ism (ERM). In fact, very few Member States fulfilled 
these criteria in 1992 or 1993. With the exception of 
Ireland, the countries with the highest concentration 
of Objective 1 regions in particular still have some 
way to go. Italy, Spain, Portugal and Greece all had 
rates of inflation and long-term interest rates well 
above the Maastricht norms and none achieved the 
necessary exchange rate stability. The budget deficits 
of Italy and Greece represent a,major problem, while 
in both countries as well as in Belgium and Ireland, 
public debt ratios are much higher than the bench­
mark set. The transition to EMU will in these coun­
tries and in others involve the implementation of 
appropriate policies to meet the Maastricht criteria 
(Graphs 37 - 40 and Table 23). Such policies involve 
the control of inflation - both actual (as measured by 
the consumer price index) and expected (as reflected 
in long-term interest rates) - a reduction in budget 
deficits and public debt and the avoidance of ex­
change rate fluctuations. 
**i«^W*WW*Wi*ot*^^ 
145 
37 inflation rates In the Member States, 1993 
10 -
8 • 
« • Maastricht 
convergence 
criterion 
I v •••••111 .llllllllllll 
OK IRL NL F B UK, L £t( 0 - t E P OR 14 
12 
10* 3d Budget deicfc In the Member States. 1993 
;i:%QDPj: 
i 10 
i 
* a 
l 8 
i 
j 6 
i 
\ 4 Maastricht 
criterion Illl 
«L L D HL W ? «12 B € «K P I OR 
39 Debt ratios In the Member States, 1993 40 Long-term interest rates in the Member States, 
1992 
% 
L O NL F 8 DK UK «L E12 1 E P GR 
146 
Chapter 11 - Current issues and problems 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
UK Table 23 
The Maastricht convergence criteria, 1993 
Inflation 
rate Public Finance 
EUR12 average 
Convergence criteria 2.8 
1.4 
3.4 
13.7 
4.7 
2.3 
2.0 
4.4 
3.6 
2.1 
6.7 
3.4 
3.8 
3.3 Budget 
deficit1 
7.0 
4.4 
4.2 
15.5 
7.2 
5.5 
2.3 
9.4 
2.5 
4.0 
8.1 
7.6 
6.0 
3.0 Debt 
ratio2 
138.4 
90.6 
48.9 
121.2 
55.9 
44.1 
99.0 
118.1 
10.0 
81.4 
66.4 
48.8 
65.9 
60.0 Interest 
rate3 
1992 
8.7 
9.0 
8.0 
16.6 
12.1 
8.6 
9.1 
11.9 
7.9 
8.0 
13.2 
9.1 
10.2 Exchange 
rate4 
10.7 Yes 
Yes 
Yes 
No 
No 
Yes 
No 
No 
Yes 
Yes 
No 
No Total 
score 
—H 
General government deficit as a percentage of GDP 
General government debt as a percentage of GDP 
Long-term interest rates in 1992 
Currency stability criterion : the national currency has not devalued in the past two years and has remained within the normal 
2.25% fluctuation margins of the exchange rate mechanism 
Source : Abraham and Van Rompuy (1993), updated DGXVI 
Experience during 1992 and 1993 demonstrated the 
degree to which the Maastricht criteria are inter­
linked. The persistence of differences in inflation 
rates, budgetary imbalances and the situation in the 
real economy produced a series of crises in the ERM. 
This culminated in the withdrawal of two currencies 
from the system, realignments of other currencies 
and a substantial wfdening of fluctuation margins to 
plus or minus 15%. This experience demonstrated 
the very real difficulties faced by some Member 
States in adjusting to the Maastricht criteria without 
damaging economic performance. In order to maintain a fixed exchange rate, it is not 
sufficient for price inflation in each Member State to 
remain in line with the average of the others. As 
experience has demonstrated, it has to be reduced to 
the level prevailing in the countries with the lowest 
inflation rates. Italy, Spain, Portugal and Greece will 
each have to adopt a policy to curb inflation in the 
run-up to EMU, which can be a painful process, since 
it implies tighter control on domestic production 
costs and, in particular, the cost of labour. This 
cannot easily be achieved where annual rises in 
prices and wages are institutionalised and where 
labour organisations are asked to moderate wage 
demands in anticipation of lower inflation. Where 
147 
Chapter 11 - Current issues and problems 
wages rise but prices aie restrained, there would be 
a squeeze on domestic profit margins and a tempor­
ary or possibly more permanent contraction of do­
mestic production and employment. This could be 
avoided if productivity increased more rapidly to 
reduce unit labour costs. 
Tentative estimates of the effects of reducing the 
1992 inflation rate to the EC inflation convergence 
criterion for EMU suggest that the average unem­
ployment rate would increase, at least in the medium-
term, by 4 percentage points in Greece, by 2 percent­
age points in Portugal and by 1 percentage point in 
Spain and Italy1. 
In addition to the implementation of anti-inflationary 
policy, Greece, Italy and, to lesser extent, Portugal 
and Spain, will have to endeavour to reduce budget 
deficits to the 3% Maastricht level. On the basis of 
1993 figures, the required reduction in the budget 
deficit would be over 10 percentage points of GDP 
in Greece and 7 percentage points of GDP in Italy. 
For Portugal and Spain, the effort required is more 
modest (respectively around 2 and 1 percentage 
points of GDP). 
The benefits of a significant improvement in the 
fiscal position of Greece and Italy and further con­
solidation in Portugal and Spain are important insofar 
as they contribute to alleviating the 'crowding out' 
effect of interest payments on growth-enhancing 
public and private investment. The combined effect 
of fiscal restraint and exchange rate stabilisation 
should result in lower levels of nominal and real 
interest rates. This should help to create a more 
favourable climate for domestic and foreign invest­
ment. Finally, fiscal restraint is also likely to reduce 
the balance of payment deficits of the four countries 
concerned to levels compatible with sustainable capi­
tal inflows and transfers from other countries. 
However, the positive effects of sustained fiscal con­
straint have to be balanced against its potential costs, 
which in some degree will depend on the way it is 
achieved. If it is attained by a mixture of tax increases 
and public expenditure cuts, it may entail short-term 
deflationary effects, especially in countries such as 
Greece and Italy, where the scale of measures re­quired to achieve the Maastricht targets is substan­
tial. This would delay the catching-up process in 
these countries and their regions in both the short and 
medium-term. 
Given the need for real convergence and the streng­
thening of cohesion in the long-term, it is essential 
that the required fiscal consolidation is pursued se­
lectively in a manner which does not jeopardise the 
competitive position and, therefore, the growth pros­
pects of these countries concerned. The Fourth Peri­
odic Report identified the key determinants of the 
competitiveness of lagging regions as the cost of 
credit - especially for small and medium-sized firms 
- income and corporate tax rates, the supply of quali­
fied manpower and the availability and quality of 
basic infrastructure. Every effort should be made to 
avoid fiscal consolidation reducing development-
related public expenditure in the lagging regions or 
increasing the costs facing local businesses. 
In this context, the recent decline in the share of 
public gross fixed capital formation in GDP in some 
of the weaker Member States suggests there is some 
cause for concern. Whilst for the Community as a 
whole, the share was the same in 1992 as in 1985, a 
substantial reduction is apparent for Ireland and 
Greece and to a lesser extent Italy (Table 24). This is 
a worrying development, even for Ireland despite the 
rate of economic growth being relatively high in 
recent years while public capital formation has been 
cut back. Over the longer term, such reductions are 
likely to depress the rate of economic growth. 
In view of the need to sustain efforts towards real 
convergence, the necessary cut in the real growth of 
total government expenditure should be accompa­
nied by a restructuring of expenditure which avoids 
cuts in capital formation in lagging regions. The same 
holds for public expenditure on education and train­
ing. Only if the least developed Member States and 
regions step up their investment in basic infrastruc­
ture and human capital can they hope to sustain 
significantly higher growth rates over the longer 
term. 
To summarise, the necessary budgetary restraint 
agreed at Maastricht should be pursued in a way 
148 
fc>^3a£ Chapter 111^ CurrwtissUe|tàncJ problems ? 
Table 24 
Government gross fixed capital formation in the weaker Member States 
%GDP 
1985 1992 % change 
1985-1992 
Greece 
Ireland 
Italy 
Portugal 
Spain 
EUR12 
which minimises the burden on the lagging regions. 
The required reduction in the growth of public ex­
penditure should be accompanied by a restructuring 
of expenditure and taxes as appropriate, in favour of 
the elements which foster the competitiveness of the 
weakest regions. A balanced restructuring of public 
expenditure will, in addition, complement the 
Community's efforts under the increased Structural 
Funds and enhance the growth prospects of lagging 
regions. At the same time, any strengthening of the 
investment effort in absolute and relative terms will 
ease the burden of meeting inflation targets to the 
extent that productivity is increased and unit costs 
reduced. 
The benefits of such an approach are likely to emerge 
over the medium-term as the Irish experience shows 
to some degree. Sound macroeconomic policies and 
fiscal consolidation will tend to lead to lower costs 
and higher post-tax rates of return on private capital. 
These will in turn give rise to better investment 
opportunities if at the same time infrastructure and 
labour force skills in lagging regions are streng­
thened and upgraded. 
Adjustment mechanisms 
under EMU 
A full-fledged EMU, and the imposition of. fixed 
exchange rates in particular, will impose additional constraints on the regions which could have an im­
portant effect on economic and social cohesion. 
Exchange rate flexibility is important in that, in prin­
ciple, it enables a country, through devaluation, to 
offset a loss in international competitiveness in a 
relatively painless manner. As such it facilitates 
short-term adjustment to general, or country-specific 
economic shocks which reduce regional growth and 
raise unemployment. 
The nature of the shocks to which regions are ex­
posed greatly affects the balance of benefits and costs 
of economic and monetary integration. Most analysts 
agree that the cost of removing the exchange rate as 
an instrument of stabilisation is lower the more simi­
lar is the economic structure of the countries joining 
the monetary union. Countries or regions whose 
structure differs substantially from the norm are 
more vulnerable in the vent of a shock. The evidence 
available suggests that this is certainly the case for 
some of the least developed Member States like 
Greece and Portugal. The removal of the possibility 
of exchange rate adjustment, therefore, represents a 
more important loss to them than to the stronger 
countries. 
The question remains as to how a Member State or 
region can adjust to adverse shocks under EMU. In 
the US, workers losing their jobs in one State often 
move to another in search of work. Labour mobility 
149 
Chapter 11 -Current Issues and problems 
does not occur to the same degree in the Community, 
where interregional and international migration is 
comparatively limited within the Community. Nor is 
a massive labour outflow necessarily beneficial for a 
depressed region especially if it takes the form of an 
exodus of more skilled and better educated workers. 
Variations in labour costs represent a second poten­
tial adjustment mechanism though for these to occur 
wages and labour costs need to respond to employ­
ment conditions. Evidence relating regional and na­
tional wages to unemployment suggests that a 10% 
increase in the unemployment rate will tend to reduce 
wages by 0.5% to 1.5%1. Unfortunately, there is no 
way of judging whether a reduction in labour costs 
of this scale is sufficient to offset the employment 
effects of economic shocks. Rigid labour contracts 
and national systems of wage determination tend to 
impede regional wage adjustment in the Southern 
Member States. 
A third regional adjustment mechanism comes from 
the action of automatic fiscal stabilisers which oper­
ate to reduce the tax-take from, and increase the 
public expenditure transfers to, hard-pressed regions 
as economic activity declines. Estimates suggest that 
the US fiscal system offsets in this way about 20-33% 
of any decline in regional income relative to the 
national average. Most Community countries are 
characterised by an even higher degree of regional 
stabilisation because tax rates and the level of unem­
ployment benefit tend to be higher than in the US. 
This mechanism is, however, much more effective 
within Community countries than between them be­
cause there is no central mechanism which plays the 
role of the Federal Budget. change rates as an instrument of adjustment could 
adversely affect the economic performance of a num­
ber of Member States. 
At the Edinburgh Summit meeting at the end of 1992, 
Member States agreed to increase resources to sup­
port economic and social cohesion in the context of 
EMU. The expansion in the Structural Funds and the 
creation of the Cohesion Fund should make it easier 
for weaker countries to achieve the budget targets 
specified in the Maastricht Treaty whilst maintaining 
the relatively high levels of development-related 
public expenditure required to reduce the deficiency 
in their infrastructure and human capital and modern­
ise their economies (see Chapter 9). 
In the longer term, Member States which have tradi­
tionally relied on periodic devaluation to maintain 
national and regional competitiveness and whose 
capacity to absorb adverse economic shocks is rela­
tively limited give potential cause for concern. Rela­
tively low labour mobility and lack of wage flexi­
bility tend to inhibit adjustment in these economies. 
The Structural and Cohesion Funds' support for 
measures aimed at improving underlying competi­
tiveness and increasing diversification should help to 
reduce dependency on exchange rates and vulnera­
bility to shocks. At the same time, the Funds could 
focus more on strengthening the regional capacity for 
adjustment, stimulating processes of adaptation in 
the labour markets of less developed regions and 
increasing action to create new jobs. 
The need for 
Community intervention 
In summary, EMU is not without risks for some of 
the weaker Member States and regions. In particular, 
some of the weakest countries need to make major 
adjustments to meet the nominal convergence crite­
ria laid down in the Maastricht Treaty. Anti-inflation 
policies, fiscal consolidation and the loss of the ex-The challenges faced by these regions in the transi­
tion and final stage of EMU represent an important 
additional justification for the agreed enhancement 
to resources for structural action in order to promote 
lasting improvements in their underlying competi­
tiveness. Community efforts cannot, however, re­
place behavioural changes and government policy, 
as the example of German unification demonstrates. 
150 
"ïf .Chapter 11 - Curïent issues and problems 
The previous enlargement : 
the situation of, and 
prospects for, the new 
German Lander 
S ince unification in 1990, a clear picture has emerged 
of the effort required in the new German Lander to 
turn them from a centrally-planned into a social 
market economy. The transformation encompasses a 
rapid introduction of wide-ranging changes in the 
legal, social and financial framework, including the 
administration of regions, as well as in external com­
mercial and political relations. It also requires 
changes in the structure of economic activity and 
employment, in the tax system, in pricing, in the 
management of enterprises and in property rights as 
well as modernisation of the infrastructure. Just as 
importantly, environmental improvements need to be 
made to comply with more advanced Community 
standards. 
These challenges face each of the five new Lander as 
well as East Berlin, but vary in nature and scale 
according to regional circumstances. Substantial ef­
forts have been made over the 3 years since unifica­
tion but the process of reform and restructuring has 
proved more difficult and more protracted than many 
had initially foreseen. 
Population 
The population of the new German Lander is declin­
ing, whereas in the rest of Germany and the 
Community, it is rising, if only at a low rate (Annex, 
Table A.23). Only in a few regions of Greece and 
Italy, is there a more rapid decline. Except for short 
periods of growth at the end of the 1960s and 1980s, 
population in the former East Germany has been in 
continuous decline since 1950, as a result of outward 
migration accompanied in the 1970s by low birth 
rates. In the past few years, the decline has accel­
erated and between 1989 and 1992 the new Lander 
lost more than 5% of their population, when the 
annual rate of decline was six times more than be­
tween 1950 and 1980. Net outward migration of more than a million between 1989 and mid-1992 was 
the most important factor, though there was also a 
dramatic fall in birth rates. Births per thousand of 
population fell from 13 in 1990 to an average of under 
8 in 1992 and to 5 in mid-1993, lower than in any 
other part of the Community (the lowest figure in 
other regions being 6 per thousand in Liguria in 
Italy). This led to a natural decline of 100 thousand 
a year in 1991 and 1992 - or 0.6% of East German 
population. The decline was particularly marked in 
already sparsely populated rural areas (especially in 
Mecklenburg-Vorpommern and Northern 
Brandenburg), small and medium-sized industrial 
towns and inner-city areas, while growth has oc­
curred in suburban areas of larger towns, where 
economic performance has been stronger and unem­
ployment lower. Declining job opportunities in the 
West and rising wages in East Germany, combined 
with some inward migration, have reduced the rate 
of net outward migration. For the reduction to con­
tinue, however, depends on improvements in econ­
omic and labour market conditions and specifically 
more job creation. 
Economy 
Output and employment in the new Lander have 
fallen dramatically since unification. With the former 
Czechoslovakia, the GDR was generally recognised 
41 Migration between the new and old German 
Lander, 1988-1992 
*?$S&*S&&*&&4**1&tV-l<W^^ 
151 
Chapter 11 - Current Issues and problems 
Table 25 
Key investment and demand indicators 
in the new and old German Lander and EUR12 
Area 
New Lander 
Old Lander 
Germany 
EUR12 
EUR12+1 Gross fixed capital 
formation (% GDP) 
1991 1992 1993 
48.2 
21.4 
23.2 
20.3 
20.8 49.5 
21.2 
23.4 
19.8 
20.4 50.5 
20 
22.7 
19.6 
20.3 Gross fixed capital 
formation per 
person employed 
(1000 ECUs) 
1991 1992 1993 
5.9 
9.4 
8.7 
7.8 
7.7 9.0 
10.0 
9.8 
8.0 
7.8 11.7 
10.1 
10.4 
8.2 
8.3 Domestic 
demand/GDP 
(% GDP) 
1991 1992 1993 
194.8 
93.6 
100.1 
98.6 
99.9 184.7 
93.0 
100.1 
98.1 177.1 
92.1 
99.6 
98.2 
100.0 100.0 
1 BUR12+ includes the new German Lander 
Source : Eurostat, national statistics, calculations DG XVI GDP per head in 
new Lander 
(% GDP 
in other area) 
1991 
28.7 
33.4 
34.1 
35.1 
as the most advanced part of the COMECON area. 
GDP per head was estimated to have been around 
two-thirds of the Community average in 1988. By 
1991, the level had fallen to a third of the average. 
Since then, however, it has recovered to a level of 
nearly half the Community average. Preliminary es­
timates suggest a level of GDP per head of some 43% 
of the Community average in 1992 and 49% in 1993. 
This was accompanied by a fall in employment im­
plying an even bigger increase in labour productivity. 
At the same time, average wages increased by nearly 
35% in 1992 and 12% in 1993. 
Underlying the recent growth in output there was a 
significant rise in investment, of 24% and 16% in 
1992 and 1993, respectively, in the form mainly of 
an increase in construction (36% and 24%), though 
the rise in investment in new capital equipment (11% 
and 8%) was also significant. This pushed up the 
share of gross investment in GDP to nearly 50% in 
1992 and 1993, much higher than in the rest of the 
Community (20%) (Table 25). Investment has been 
largely concentrated in services, the share in industry 
declining from around 33% to under 30% between 
1991 and 1993. (Economic surveys suggest that such 
high rates of investment growth are unlikely to be maintained in 1994 especially in manufacturing, 
where even lower investment than in 1993 is ex­
pected.) 
The restructuring of the East German economy has 
led to significant imbalances in trade between the two 
parts of Germany, with East Germany being very 
dependent on financial transfers from the rest of the 
country. This is reflected in the fact that domestic 
spending in East Germany exceeded internally 
generated real income by around 80% in 1992 and 
1993 subsidised mainly by transfer payments (of the 
order of 100 billion ECU) from West Germany. 
The instability of the East German economy is espe­
cially evident in the performance of manufacturing, 
the output of which fell in 1992 and in 1993 was only 
two-thirds the level in the second half of 1990. The 
structure of industry has changed extensively since 
unification. In particular, mechanical engineering 
has declined in importance while strong demand for 
food combined with the boom in construction have 
increased the importance of related industries. This 
has also influenced the pattern of privatisation which 
has progressed most in these sectors, while small and 
152 
3lï- >~#4 % "*% »TW ' Chapter 11 - Current issues and problems 
medium-sized firms in these industries have per­
formed better since privatisation. 
The privatisation of companies is intended to be 
completed by the end of 1994, though the task is 
becoming increasingly difficult. Among the enter­
prises remaining with the State Trust Agency are 
large-scale producers in chemicals and mechanical 
and electrical engineering in which there are likely 
to be further job losses. These industries are concen­
trated in such regions as Halle, Magdeburg, Dessau, 
Cottbus and Chemnitz and it is here that the process 
of restructuring and the need to revitalise industrial 
centres will be particularly acute over the coming 
years. Privatisation has produced no net revenue for 
the government budget - on the contrary, the State 
Trust Agency will probably show a large deficit of 
nearly 140 billion ECU or more at the end of the 
privatisation process. Employment 
The decline in employment has been widespread, 
affecting all five new Lander as well as East 
Berlin .The extent of the adjustment and restructuring 
process is perhaps most clearly indicated in the rapid 
fall in employment between 1989 and 1992 
(Graph 42). The figures suggest that since unifica­
tion one in every three East Germans has lost their 
job. Sectoral changes have been extensive. Between 
1989 and 1992, employment in agriculture fell to a 
third of its previous level; in mining and manufactur­
ing, it declined to below 30% of the level in 1989. In 
1993, although the rate of decline in both total and 
manufacturing employment slowed down throug­
hout the region, there was still an overall fall of just 
over 3 %, while «he share of employment in manufac­
turing declined to 20% (35% in West Germany). This 
decline was accompanied by a fall in employment in 
research and development in industry (from 80,000 
in 1990 to 20,000 in 1992). At the same time, the 
42 Development of the labour market in the new German 
Lander, 1989-1993 
10 population (millions) 
m 
o 10 
8 • Net out-migration of 
working-age people 
B Unemployed 
B Other job losses 
El Commuters to the old 
Lander 
6 ED Short-time workers 
B Public work 
programmes 
B Employees (excl. 
Treuhand) 
B Employees in Treuhand 
89/I 90/1 90/11 91/1 91/11 92/1 92/11 93/1 93/11 Other job losses = early retirement 
0 and participants in further education 
measures. 
153 
Chapter 11 - Current issues and problems 
Map 24 Unemployment in the new 
German Lander, 1994 
Figures based on registered 
unemployment according to 
the German national concept. 3/94 
number of self-employed increased (from around 
200,000 in 1989 to 560,000 in 1992), reflecting the 
growth in services, though by not nearly enough to 
compensate for losses in other sectors. 
Unemployment 
Job losses led to registered unemployment increasing 
to around 15% in both 1992 and-1993, well above the 
average rate in Germany and the Community 
(Graph 43). On Community Labour Force Survey 
estimates, the unemployment rate on ILO definitions 
was 13% in April 1993, 3 percentage points above 
the Community average. Without the many direct 
labour market measures (short-time working, public 
works and further education programmes) unem­
ployment might well have exceeded 30%. Including 
early retirement and commuting to the West, the 
deficiency in jobs amounted to some 38% of the 
labour force in 1992. 
Women have been more seriously affected by unem­
ployment than men, their share of employment fall­ing from 49% to 43% between 1989 and 1992 and 
their share of unemployment exceeding 60%. In 
January 1994, registered unemployment was 23% for 
women as against 13% for men. Activity rates among 
women have remained well above the Community 
average (at 77% in 1992 as against a rate of 58% for 
West German women). 
Long-term unemployment has also emerged as a 
problem. 27% of those registered as unemployed in 
May 1992 had been out of work for more than a year 
and by November 1992, this had risen to 46%. Short-
time working, further training and public work pro­
grammes as well as commuting to the West to work 
are indicative of the extreme pressure on the East 
German labour market, and for some time the rate of 
job creation is unlikely to be sufficient to prevent 
long-term unemployment from continuing to rise. 
Although all East German Lander show similar 
trends in unemployment, there are signs of a growing 
disparity among them. The difference between the 
NUTS level 3 regions with the lowest and highest 
unemployment rate widened from 5 percentage 
points in 1991 to 17 percentage points at the end of 
1993. The capital cities of the new Lander - Dresden, 
Berlin, Potsdam, Magdeburg and Erfurt - as well as 
a number of other larger urban areas have profited 
from job creation in public and private services and 
have relatively low levels of unemployment. The 
highest levels of unemployment are in rural regions, 
especially Mecklenburg-Vorpommern and in single-
industry regions where factories have been closed 
- for example, Erzgebirge (textiles and mechanical 
engineering), the Northern region of Thuringen 
(mining, textiles and light industry), the Southern 
region of Sachsen-Anhalt and parts of the 
Oberlausitz (Sachsen)(Map 24). The situation is es­
pecially difficult in the Eastern parts of 
Mecklenburg-Vorpommern and Sachsen (bordering 
Poland) as well as in some central areas of East 
Germany where the opportunities of commuting to 
the West, to Western parts of Berlin or to the capital. 
cities of the new Lander are non-existent. These areas 
also registered high rates of outward migration. 
154 
Jf*/V •*« -fry,-•»£•. y v rt «-^^#«^^-
Chapter ^Current issues arid problems 
Infrastructure 
As noted in the Fourth Periodic Report, the problems 
of an inadequate and decaying infrastructure in the 
former GDR are acute. Recent estimates suggest that 
to bring the East German infrastructure up to Western 
standards will cost : 
• for residential accommodation, 225-300 bil­
lion ECU; 
• for cleaning up the environment, 100-250 bil­
lion ECU; 
• for transport infrastructure, 100-250 bil­
lion ECU; 
• for telecommunications, 30-50 billion ECU. 
These figures, however, apply to average 
Community standards which vary widely between 
countries and regions. The state of East German 
infrastructure is no worse in many respects to that in 
some of the Community's weaker regions. The main 
exception is telecommunications which because of 
years of neglect are far inferior to anywhere in the 
Community. Here, improvements have already been 
made. In 1991, the number of connections per inhabi­
tant were a third of the number in the rest of Germany 
as against a fifth in 1989. By 1995, the plan is for this 
difference to be eliminated completely. Neverthe­
less, the general catching-up period for infrastructure 
in other areas will vary from 10 to 20 years in most 
cases. 
Prospects 
The new German Lander face the basic challenge of 
finding their niche in a more competitive European 
market. Because of trade liberalisation, they have to 
compete not only with the more advanced regions in 
the West but also with the less developed regions in 
Central and Eastern Europe. The former have par­
ticular advantages, better infrastructure and higher 
productivity in particular, though they also have high 
wages and high land prices. The latter have much 
lower labour costs, though other conditions of pro­duction, such as labour force skills, organisational 
structure or the low quality of infrastructure, which 
are a legacy of central planning systems, are similar 
to East Germany. The Czech Republic, in particular, 
seems to have been successfully adapting its econ­
omy, exploiting its specific advantages and attracting 
foreign investment. 
For East Germany to adapt to Western standards in 
the face of wages and labour costs increasing ahead 
of productivity and a declining industrial base is 
proving to be extremely difficult. An urgent task 
remains, therefore, to diminish the deficiencies of 
infrastructure, labour productivity, capital stock and 
technology. Particular attention needs to be given to 
small and medium-sized enterprises and to producer 
services which are likely to be the main sources of 
job creation. These sectors also hold the key to re­
ducing the concentration of production in certain 
regions in single sectors of activity which are not 
competitive. 
At the same time, the restructuring of regional econ­
omies needs to be based more on specific endow­
ments, indigenous potential and the experience of the 
local workforce. Advantages include skilled labour, 
the high proportion of qualified personnel in research 
and development, experience of Eastern European 
markets, the central European location and cities rich 
in cultural history and tradition. They also include 
43 Unemployment rates in trie new German Lander, 
1990-1993 
1990/11 1991 1992 1993/1 1990/11 1991 1992 1993/1 
Data (or 1990: last 6 months only; Data (or 1993: first 6 months only 
K*W«Mfl»H»«W«^ÎWSWM«WW:^ 
155 
|^^^11^D*îrï^îssues-erwl problems 
land space in urban areas, mineral resources for the 
building industry, an agricultural sector which is 
potentially productive and a high level of social 
infrastructure. Exploiting these advantages depends 
on striking a balance between higher labour produc­
tivity and increased wages and standards of living. 
This needs to be supported by extensive modifica­
tions to the regulatory framework in line with local 
conditions. 
The convergence to Western levels of labour produc­
tivity and infrastructure will inevitably be a long-
term process. As in certain other regions of the 
Community, the risk is that nominal wages and la­
bour costs will converge more rapidly than produc­
tivity. This will tend to slow down the process of real 
convergence by preventing the desirable growth of 
employment and giving rise to high unemployment 
despite massive support measures. The absence of 
self-sustaining growth based on indigenous potential 
could give rise to a situation of permanently high 
transfers of resources only to maintain disappoint­
ingly low levels of economic activity. This has been 
the case in Italy for a long time. As a result, financial 
difficulties have multiplied and the growth of the 
national economy has been held back. 
In sum, to arrest the process of deindustrialisation 
and to reconstruct the economy requires improving 
the competitiveness of existing enterprises, support 
for the creation of new firms and better use of the 
skills of the labour force. To this end, the high level 
of public and private transfers, in general, and invest­
ment, in particular, must be efficiently used to ensure 
that the economy becomes more productive as the 
only sustainable basis for the creation of new jobs 
and the promotion of economic convergence and 
successful integration into the national and 
Community framework. 
F. Abraham and P. Van Rompuy, The regional policy implications of Economic and Monetary Union, study financed by 
DG XVI of the European Commission, 1993 
156 
countries 
Chapter 12 Regional structures 
and problems in 
neighbouring countries 
The countries belonging to the European Free Trade 
Area (EFTA) have formally concluded new arrange­
ments with the Community in the form of the forma­
tion of the European Economic Area (EEA). 
Switzerland, however, has decided against joining 
the EEA. This chapter examines the socio-economic 
situation in the regions of the 4 EFTA countries 
which have completed negotiations leading to full 
membership of the Community - Austria, Finland, 
Norway and Sweden. 
For the former centrally-planned countries of Central 
and Eastern Europe, the Europe Agreements con­
cluded with the Community provide for closer co­
operation on a wide range of matters (including trade 
liberalisation in their favour and consultation on re­
gional policy issues, as described below). These 
Agreements tend to be seen as a step towards full 
membership of the Community, especially in the four 
countries - Poland, Hungary and the Czech and 
Slovak Republics - examined later in the chapter. grouped together, while Austria is somewhat differ­
ent geographically and economically. 
Demography 
The population of the EFTA countries totals 25 mil­
lion or just over 7% of the present Community. In 
general, the demographic situation and prospects for 
the four EFTA countries are similar to many parts of 
the Community. The differences are largely a matter 
of timing and the Nordic countries, in particular, 
experienced falling fertility and a consequent ageing 
of the population somewhat in advance of most of the 
Community. There is therefore an older age structure 
of population in the four EFTA countries, especially 
in Sweden and Norway. There are signs, however, of 
a recovery in fertility rates in these countries and, 
combined with recent trends towards increasing mi­
gration, population growth could begin to accelerate 
gently. 
The EFTA countries 
For purposes of analysis, the three Scandinavian 
countries - Sweden, Finland and Norway - can be The recovery in fertility rates will only impact on the 
population of working age and the labour force at the 
beginning of the next century. With the exception of 
Austria, activity rates, especially for women, are 
already close to those of Denmark - the highest in 
the Community - and further significant increases 
are therefore improbable. Consequently, numbers in 
157 
^^^^i ^fte^^'àî^rl«ciofi^èaâr«fâ^ 
Table 26 
Demographic and economic indicators in the EFTA countries 
Indicator 
Population 
Population change 
Area 
Density 
GDP per head 
Unemployment rate 
Agr. empl/Total empl. 
bid. empl/Total empl. 
Ind. employment 
change Period Unit Austria 
(litutor) Finland 
(maakunta) 
8» ™ g> o> C 
o 
O) 
o *- +* o « to O) 2 o <o 
O) £ o> 
-=' o > 
X -I < l" r 
« - SI 5 1 S 
£> S §> 
x -J < Norway 
(filke) Sweden 
(Ian) 
c o 
(0 0) 
o> c o 
2 
(0 I c i c c c 
5 ? o o 2. 
5? ]- £> "Ob 5? 
£ ! £ £ £ 
2» i « ~ 2. 
S 1 5 | S 
< ! i -J < 
1990 1000 inhab 
1980-90 % 
1000 ha 
1990 inhab/km2 
PPS 1990-92 (EUR12=100) 
1991-93 % 
1989 % 
1990 % 1515 269 770 1248 25 263 460 74 249 1636 57 357 
7.9 -1.5 2 10.3 -2.9 4.4 12.4 -5.4 3.8 9.1 -2.7 2.8 
1917 41 837 9894 155 1780 4864 45 1905 9891 294 1712 
3651 49 92 120 2 15 1013 2 13 252 3 21 
153 67 107 131 73 95 210 75 103 128 81 103 
5.1 2.5 3.9 15.1 3.1 12 6.8 3.9 5.7 7.2 3.6 4.7 
15 0.4 7.6 21.3 1.9 8.7 18.1 0.1 6.7 11.6 0.5 3.3 
45.4 26.1 34 40.3 16 29.3 32.2 15.6 24 36.2 18.7 27.6 
1980-90 % 0.4 -2.6 •1 2.5 -1.7 -0.6 0.6 -4.9 -1.4 2.3 -0.4 0.8 
Xftwfcr are comparable to WITS 2; others comparable ta NUTS 3 
Source : Eurostat, calculations DGXVI 
the labour force in the EFTA countries - some 
12.8 milhon - are unlikely to change much during 
the rest of this century but could rise in the next. 
The three Nordic countries together cover an area of 
over 1.1 million square kilometres and have a total 
population of 18 milhon, equivalent to half the area 
of the Community but with only 5% of the population 
(Table 26). 
The very low average population density -16 people 
per square kilometre as against 145 in the EC -
conceals wide differences (Map 0). South of a hori­zontal Une north of the cities of Bergen and Oslo in 
Norway), Uppsala in Sweden and Tampere in 
Finland, there is 25% of the land-mass and 70% of 
the population. North of the Une, there is a vast area 
of small settlements typically dependent on basic 
economic activities. 20% of the land-mass lies North 
of the Arctic circle. Climatic extremes are a particular 
feature with long winters and low temperatures. 
Austria, one-fifth of the size of Sweden, has a similar 
population and is the most densely populated of the 
EFTA countries, though sparsely populated by 
158 
Map 25 GDP per head (PPS) In the EFTA countries, 1991 
Index (EUR12 - 100) 
U <73.0 
Hi 73.0-865 
U 86.5 -100.0 
• 100.0-113.5 
• 113.5-127.0 
• > 127.0 Map 26 Regional unemployment in the 
EFTA countries, 1993 
Community standards. Like Norway and Sweden, 
substantial parts are mountainous. 
The Nordic countries cover large areas and tend to 
be a long distance from the major European markets. 
For example, in Norway the distance from Oslo to 
the North Cape is 1,700 km, which is more than the 
distance from Oslo to Rome. Austria is both smaller 
and considerably closer to the major European mar­
kets. 
Economy 
Natural resources are a key aspect of the Nordic 
economies whereas Austrian prosperity is based on 
trade in manufactures and tourism. Forests cover a 
large part of Sweden and Finland while Norway has 
large reserves of offshore oil and gas. Other re­
sources include metals, large stocks of fish off the 
coast in the case of Norway and access to hydroelec­
tric power. 
Until recently, the four countries had slightly higher 
levels of income per head than the present Community despite their distance from the main 
centres of economic activity in Western Europe 
(Map 25). With the exception of Austria there has 
been a relatively sharp fall in GDP per head since the 
mid-1980s and Sweden and Finland are now below 
the Community average. 
In the 1980s, the Austrian economy grew slightly 
faster than the Community, but the Scandinavian 
countries have all experienced a decline in GDP per 
head relative to the Community. In the case of 
Finland, the economy has been severely affected by 
the collapse of trade with the former Soviet Union 
and its GDP per head fell to 86% of the Community 
average in 1993. 
As in the Community, GDP per head in the 
four EFTA countries is highest in the capital cities 
and surrounding areas. In the Nordic countries there 
is a general North-South divide between poor and 
rich regions, though the gap is relatively narrow 
despite the harsh climatic conditions of the North, 
partly because of the scale of public sector employ­
ment and transfers. In Austria, there is no simple 
159 
geographical division, the Western regions which are 
at the other end of die country from Vienna being 
As in the Community, many border areas in the 
EFTA countries experience disadvantages, espe­
cially the Eastern regions of Finland which border 
Russia and Austriaregions which border Hungary, 
Slovenia, the Czech Republic and Slovakia. 
Similar to the Community, over 60% of employment 
in the Nordic countries is in services. Agricultural 
activity is United largely due to the climate and 
terrain. The growing season at the latitude of Oslo, 
Stockholm and Turku is on average 30-40 days shor­
ter than in Denmark and at the latitude of Oulu and 
Narvik 60-70 days shorter. Yields per hectare are 
significantly lower than in the non-Mediterranean 
parts of the Community - for barley, rye, oats and 
potatoes 20-30% lower, for sugar 17% lower and for 
wheat 49% lower. Other primary activities, forestry 
and fishing in Norway in particular, are important and provide a major source of income and employ­
ment in some of the more isolated areas. 
Compared to the Community, die share of employ­
ment in industry is small in Norway and large in 
Austria and about the same in Finland and Sweden. 
In the Nordic countries, industry is concentrated in 
the processing of natural resources, though Sweden 
has a more diversified manufacturing base than the 
others. 
Longer-term structural developments have been 
similar to those in the Community, with a general 
shift of employment out of agriculture and industry 
into services. 
So far as the spatial distribution of economic activity 
is concerned, in the Nordic countries, primary acti­
vities are important for the Northern and Central 
regions, industry for the South and services both for 
capital regions and the most peripheral parts of the 
44 Regional variations in GDP per head and unemployment 
rates In the EFTA countries 
GOP per head , M Above nat average 
• Below nat average 
Osb 240 r (PPS). 1991 
200 m 
ISO! 
120; Above nat. average 
Below nat. average 
60 
ME Katniw Unemployment rate 
{%).1993„ 28 
mi 
EUR12 average 
SognegFjoitton» 
SF N :;;si: m 20 
M: 
112:; 
160 
stru riA||^gfi^^^^jog;|^%^ 
North- in the latter, largely public sector services. 
In Austria, the Alpine areas in the West are major 
centres of tourism and modem industry, while more 
traditional industry is concentrated in the North and 
East. 
Unemployment 
In all four EFTA countries, unemployment has been 
much lower historically than in the Community. In 
1990, average unemployment rates were only around 
a third of the average for the Community, varying 
from 5% in Norway to just 1.5% in Sweden, this 
despite rates of labour force participation being sig­
nificantly higher than the average for the 
Community. 
Since 1990, however, Nordic countries have experi­
enced substantial increases in unemployment. In Fin­
land, recession has been particularly severe because 
of its dependence on trade with the former Soviet 
Union. In 1993, unemployment reached 7.7% in 
Sweden, 6.9% in Norway, 17.6% in Finland while in 
Austria it was lower at 4.5%. 
Unemployment traditionally has been higher- about 
three times higher- in the Northern regions of Nordic 
than in the South (Map 26). In the central areas, 
unemployment rates have been somewhat lower but 
still double those in the South. In Austria, unemploy­
ment is linked to the decline of traditional industries 
affecting many urban centres including Vienna 
(Graph 44). 
The incidence of unemployment in the Nordic coun­
tries has changed during the present recession, the 
prosperous industrial parts of the South being more 
severely affected than the North. 
Unemployment in the EFTA countries is no longer 
that much lower than in the Community. Indeed in 
Finland, rates are similar to those in the Communitys 
worst-affected regions. It remains to be seen, how­
ever, to what extent recent developments are structu­
ral as opposed to cyclical in nature. Administrative structure 
The Nordic counties have a three-tier administrative 
system consisting of central government, counties 
and municipalities. As in some Community countries 
(eg Ireland and Denmark), Scandinavian counties 
have limited autonomy from central government, the 
head of-administration being appointed by central 
government. There are elected regional County Coun­
cils, which are responsible within the framework of 
national policy for areas such as education (secondary 
schools), social services, health care, land manage­
ment, business promotion and, in some cases, even 
regional planning. 
In comparison with the Community, the counties 
, appear to be numerous and small in terms of popula­
tion (24 in Sweden, 19 in Norway and 12 in Finland), 
though they are large in terms of land area. This is 
reflected in low population density giving rise to a 
tendency to group settlements together in order to 
provide services cost-effectively. In 1952, the number 
-, of municipalities were reduced in Sweden from 2,600 
- to 284, though still their average population is small 
at only around 30,000 inhabitants. 
In Finland, territorial administration was reformed in 
1992.12 counties were maintained as bodies to carry 
out central government policies, 19 regions were cre­
ated in addition, grouping together municipalities 
with new responsibility for regional policy and spatial 
planning. At a lower level there are 88 joint intermu­
nicipal boards, to undertake spatial planning at the 
< local level. The role of counties is likely to diminish 
further in the future as more of their functions are 
transferred to die intermunicipal boards. 
Austria, as a Federal State, has a different administra­
tive structure which is very similar to that of 
Germany, with 9 Lander created after the First World 
War, each with its own Parliament and government. 
The powers of the Lander are, however, not so exten­
sive as those in Germany. They account for only 27% 
of government expenditure. For administrative pur­
poses the country is divided into 84 Landbezirke plus 
15 urban authorities while at the local level there are 
2350 municipalities. The Federal, Lander and local 
governments are all involved in regional policy, their 
activities being coordinated by the Austrian Con­
ference on Regional Planning (ÔROK). 
161 
Regional policy The Visegrad countries 
Them are certain differences in regional policy in the 
Nordic countries as compared wim fee Community. 
Policy is focussed to a lesser extent on reducing 
disparities by promoting the growth of output and 
employment in the weaker regions. Given the diffi­
cult natural living and working conditions, the low 
population densities and long distances in northern 
parte of these countries, the emphasis has been on 
maintaining population, employment and incomes in 
remote areas. This has resulted in a system of long-
term transfers to these areas. Since transport and 
communication networks are already relatively well 
developed, regional policy is mainly orientated to­
wards business support and public services, rather 
than infrastructure. The main measures in operation 
are investment and development grants, loans and 
guarantees and employment and transport subsidies 
- in many cases regionally differentiated to cover 
part of the cost of conveying goods into and out of 
less favoured regions. 
Regional policy objectives in Austria are more varied 
than in the Nordic countries and have tended to 
change as the economy has developed and the inter­
national context has altered. They included a land-
use and spatial planning dimension. The present aims 
are: 
• spatial planning and protection of the environ­
ment, mainly in the Alpine regions; Economic Trends 
Since 1989, the four 'Visegrad' countries - Poland, 
Hungary, the Czech Republic and Slovakia - have 
undergone dramatic economic transformation. The 
abandonment of central planning and the progressive 
re-orientation of production was initially accompa­
nied by massive falls in output, though these were 
much smaller in size in 1992 and there were clear 
signs of improvement in 1993. Inflation rates, which 
rose sharply - to over 600% in Poland in 1990 - have 
also fallen to more manageable levels. 
As a result of privatisation programmes, virtually 
complete for small firms, the private sector is making 
a growing contribution to both output and employ­
ment - in Poland, for 45% of the former and over 
50% of the latter at the end of 1992. Cumulative 
foreign direct investment in the region has grown 
from less than US$500 million in 1989 to more than 
US$11 billion by the end of 1992, US$4 billion of 
this in Hungary, where the number of joint ventures 
grew from 1,300 to over 9,000 between 1989 and 
1991. New financial institutions and other business 
services have been established, providing important 
support for the privatisation and restructuring pro­
grammes. 
The adverse consequences are most apparent in 
rapidly rising unemployment, from negligible levels 
in 1989 to between 12% and 14% in the first half of 
1993 in Poland, Hungary and Slovakia. Prices have 
risen, while real wages have fallen, and access to 
housing, health and education has become more un­
equal between social groups. 
• transfrontier cooperation in border regions, espe­
cially those where agriculture and declining in­
dustries are important; 
reorientation of international transport networks, 
especially rail, towards Central and Eastern 
European countries. Regional Disparities 
The regional impact of the restructuring processes 
varies greatly across the region. In the first place, 
there is a pronounced difference between the 'core' 
areas - the capital cities of Warsaw, Prague, 
Bratislava, Budapest and the other major cities 
(Poznan, Wroclaw, Krakow, Gdansk, Veszprem, 
Kosice, Brno) - and other parts. The position of such 
162 
in «Chaptef^2BR«gïonal structures and problems m neighbouring countries 
Table 27 
Demographic and economic indicators 
in the Visegrad countries and the Community 
Total Population 
Active Population 
Unemployment 
Employment 
% total 1991 Total fOOOs) 
1992 
Density 
1992 
% change 
1989-92 
%0-14 
1991 
% over 60 
1991 
(%) 
1992 
(*000s) 
1991 
% rate 
1992 
% change 
1990-92 
Agriculture 
Industry 
Services 
Agriculture 
Employment change 
1989-1991 
(% point) Industry 
Services •o c m 
o 
0. 
38250 
122 
0.7 
29.5 
13.0 
41.5 
15861 
13.6 
122.8 
29.5 
25.4 
23.8 
-6.5 
-2.9 
0.5 (0 
c 
3 
X N Q. 5 Q. CM 
r-
QC 
=) UJ 
10340 
111 
-0.4 
19.4 
19.2 
43.8 
4527 
10.1 
443.8 
15.4 
31.1 
26.1 
na 
na 
na 10320 
131 
-0.5 
21.0 
12.7 
52.6 
5421 
2.6 
259.9 
11.6 
37.3 
27.3 
-7.5 
-3.7 
41.0 5310 
108 
0.6 
24.9 
10.3 
49.3 
2618 
10.4 
592.5 
13.9 
33.1 
28.4 
-12.5 
2.6 
41.2 345400 
146 
1.0 
18.1 
44.8 
146300 
9.4 
13.5 
6.1 
31.5 
62.4 
-5.0 
-0.6 
0.8 ££ 
UJ UJ 
o 
62700 
78 
0.4 
19.6 
18.9 
44.3 
25400 
13.9 
12.9 
13.8 
31.3 
54.9 
-5.9 
0.0 
1.8 
Total population figures for EUR12, EUR4 and Poland are for 1991. 
For the Czech and Slovak republics, the figure given for percent aged over 60 is for those over 65 and for Poland, 
the figure given is for those over 59 for women and over 64for men. 
Figures for emptoyment by sector omit certain miscellaneously defined activities 
Source: EPRC( 1993) 
163 
centres as the predominant concentrations of econ­
omic, social, cultural, political, administrative and 
intellectual activity and was furthered by the central­
ist policies under Communist regimes but is likely to 
continue under market conditions. This is reflected 
in the patterns of inter-regional migration, privatisa­
tion and foreign investment 
Secondly, there is a growing disparity between West­
ern and Eastern regions, with higher levels of econ­
omic development and growth in the former. Gener­
ally, economic conditions tend to deteriorate - in 
terms of unemployment, high dependence on agri­
culture, number of private firms, foreign investment, 
the quality and density of infrastructure - with dis­
tance from Western Europe. 
Demography 
Population growth in the region has slowed down in 
recent years. Between 1989 and 1992, the total popu­
lation of the four countries increased by only 0.1 % a 
year, compared with an average of 0.4% a year over 
the period 1980 to 1989 (Table 27). 
According to official figures, migration amounted to 
under 1% in Poland and Slovakia, for example. How­
ever, unreported, illegal migration seems to have 
been important, especially from the former 
Yugoslavia and Romania and from African and 
Asian countries using the Visegrad countries as a 
transit route to Western Europe. 
At the regional level, there are major differences in 
demographic trends : 
• natural increases in population are still signifi­
cant in rural and underdeveloped areas (eg North-
East Poland, Eastern Slovakia), which have a 
higher proportion of young people and larger 
minority groups; 
• birth rates tend to be constant or falling in capital 
cities and other urban and industrial areas, 
though these are partly offset by inward migra­
tion. Employment 
and unemployment 
Employment in the Visegrad countries in 1992 
totalled 26.2 million. The scale of the fall in employ­
ment over the period 1989-1992 has diverged be­
tween the four countries, ranging from 9% in the 
Czech Republic to 16% in Hungary. In all the 
Visegrad countries, labour markets are being restruc­
tured as economic reforms are implemented. The 
most important features are : 
• a widespread decline in employment, which has 
been particularly severe in regions where pro­
duction is concentrated in a single activity; 
• a significant reduction in employment in energy, 
mining, heavy industry and defence (eg Upper 
Silesia and Slovakia) (Map 28); 
• a major fall in agricultural employment in re­
gions around capital cities and other major urban 
areas. There has been little change in traditional 
rural areas (eg Eastern Poland), but this masks 
significant underemployment, with a lot of 
young people staying on farms as they have no 
other choice (Map 29); 
• growth of employment in services, which has 
occurred in all regions, notably in capital cities 
and other urban centres (Map 30); 
• a shift in employment from the public to the 
private sector, particularly in urban areas and in 
sectors such as construction and distribution, re­
flecting privatisation and the growth in self-
employment, on the one hand, and the closure or 
rationalisation of state enterprises, on the other. 
The effects are reflected in unemployment rates 
ranging, in the first half of 1993, from 4% in the 
Czech Republic to 14% in Poland. Average rates of 
unemployment conceal extremely wide regional 
variations ranging from 24% in North-West Poland 
(Koszalinkie) to 0.3% in Prague. The major concen­
trations of unemployment (of 16% or more) are in 
the North and East of Hungary (Nograd, Borsod-
164 
^^2^^^^^0^^^^^^^^^^^^^^-^ty^^im^^^^^^LfiMW^^ P> *» - -. - ^^Chaptè6l2^j^îojria1 structures and problems In neighbouring countries 
Abauj-Zemplen, Szatbolcs-Szatmar-Bereg) and 
North Poland (Koszalin, Olsztyn, Slupsk and 
Suwalki)(Map 27). The main features of regional 
unemployment are : 
• rates tend to be lower in the West, in areas 
bordering West European countries than in the 
East, though this is less so in Poland than in the 
other three countries; 
• capital cities and other major urban centres also 
tend to have low unemployment reflecting their 
economic structure and infrastructure and con­
centrations of private business and foreign in­
vestment; 
• agricultural regions have in many cases been 
more affected by economic restructuring labour 
shedding and tend to have higher unemployment 
because of the greater problems of job creation 
in these areas. 
• unemployment is set to increase in many indus­
trial regions since privatisation and restructuring 
of large industrial enterprises are still to take 
place raising the prospect of large-scale job 
losses in areas such as Upper Silesia in Poland 
and North-Central Slovakia. 
Economy 
At present no official data exist for GDP per head at 
the regional level in any of the Visegrad countries. 
Unofficial estimates indicate that virtually all regions 
experienced a significant decline in GDP over the 
period 1989 to 1992 resulting from the collapse of 
state enterprises in all major economic sectors, 
though less so in the capital cities, larger urban areas 
and regions close to Western Europe. Per capita 
income levels are highest in cities such as Budapest, 
Prague, Warsaw, Lodz, Wroclaw, Katowice and 
Gdansk and lowest in the Eastern parts of all coun­
tries. four countries. The large privatisation programmes, 
by contrast, are still in their early stages, in some 
cases delayed by administrative problems, disputes 
over property rights and shortages of domestic capi­
tal. This is not always the case, however; in Poland, 
for example, Parliament has accepted the General 
Privatisation Plan (and created National Investment 
Funds, to be managed by firms on a tender basis). 
There is a clear correlation between the rate of new 
firm creation and the economic base of regions, the 
former being much higher in the capital cities; under 
both the small-scale and large-scale privatisation 
programmes the large urban areas have dispropor­
tionate concentrations of new enterprises and entre­
preneurs in relation to population. These areas have 
the benefit of well-developed infrastructure, a rela­
tively diversified industrial structure, good interna­
tional links, access to financial and intellectual skills 
and support services. By contrast, Eastern regions 
tend to suffer from under-development. 
Foreign investment has been rising in all four 
Visegrad countries, although data on the number and 
capital value of joint ventures are often contradic­
tory. By mid-1993, Hungary had been the recipient 
of foreign investment worth around $5.3 billion, 
while the former Czechoslovakia received $2.2 bil­
lion between 1990 and 1992, half in 1992 alone. In 
Poland, foreign investment at the end of 1992 
amounted to over $1.3 billion, with a further $5,2 bil­
lion planned in respect of activities already estab­
lished. 
The main recipient sectors of foreign investment are 
automobiles and transport, finance and insurance, 
and import-export services. The main source of in­
vestment are Germany, Austria and Italy, though 
France, the UK and the USA are also important. 
As with privatisation, the regional distribution of 
foreign investment is related to the level of economic 
development, the capital cities being the major loca­
tions. 
As noted earlier, the small enterprise privatisation 
process - covering small retail shops, restaurants, 
workshops and so on - is virtually complete in the At the end of 1991, Prague accounted for 49% of all 
firms with foreign capital participation in 
Czechoslovakia and Budapest for 56% in Hungary. 
165 
!r^S^<^»^^^'t^ir^-r-rr^^ 
Chapter 12^™Regîonal stmcture^arkiproWerrisinneij j$me&£2g&f& 
In Poland, where there are other major cities in 
addition to the capital, Warsaw accounted for 37% 
of such firms, other favoured centres being Lodz, 
Katowice, Wroclaw and Poznan. geographic peripherality and infrastructure, in­
cluding proximity to larger urban centres, trans­
port networks such as international airports and 
sources of capital and innovation. 
Regions close to the border with Western Europe, 
which are also usually more developed, tend to have a 
greater concentration of foreign companies than others. 
In Hungary, foreign investment is concentrated, as well 
as in Budapest, in the Lake Balaton area, the Western 
border with Austria and along the Danube, whereas 
there is relatively little in the North-Eastern regions (eg 
Borsod-Abauj-Zemplen and Szatbolcs-Szatmar-
Bereg). In the Czech Republic, the South Moravian 
region on the Austrian border has the highest number 
of joint ventures after Prague, while in Slovakia, most 
investment is in Bratislava and the Western regions 
bordering Austria, and in Poland in the regions borde­
ring Germany (eg Zielona Gora). 
Regional problems 
All regions in the four countries have been affected 
by economic restructuring, the impact being positive 
and balanced in 'innovative' and 'adaptive' regions 
but negative in 'crisis' regions where mechanisms of 
restructuring are either absent or poorly functioning. 
Those regions which are highly urbanised and indus­
trialised, especially those with a diversified industrial 
structure and well-developed infrastructure, appear 
less vulnerable to the costs and difficulties of econ­
omic transformation. Privatisation has proceeded 
more rapidly, new enterprises established more eas­
ily and foreign investment attracted more readily. 
The adaptation of regions to new economic condi­
tions appears to depend critically on : 
• economic structure, including the skills of the 
workforce, the quality of fixed assets and the 
degree of diversification; 
• the level of development, including the number 
and types of employment opportunities and such 
factors as the extent of 'entrepreneurship'; The 'crisis' and problem regions suffer from a num­
ber of overlapping difficulties : 
• declining heavy industry, such as coal and iron 
ore mining, steel production and armaments, giv­
ing rise to high unemployment and limited op­
portunities for diversification (eg Kladno, 
Ostrava, Pribram and Vsetin in the Czech 
Republic, Katowice, Lodz and Walbrzych in 
Poland, Baranya and Northern Nograd in 
Hungary and most regions in Slovakia); 
• agricultural underdevelopment (eg Szabolcs-
Szatmar-Bereg, Borsod-Abauj-Zemplen in 
Hungary and Suwalki, Ciechanow and Ostroleka 
in Poland); 
• underdeveloped infrastructure (eg Szabolcs-
Szatmar-Bereg in Hungary, North-East Poland 
and Eastern Slovakia); 
• peripherality and an Eastern location 
(eg Zamosc, Przemysl and Krosno in Poland, 
Eastern Slovakia and Hadju-Bihar and Szabolcs-
Szatmar-Bereg in Hungary); 
• environmental degradation (eg the coal basin of 
North-West Bohemia in the Czech Republic and 
Upper Silesia and the Legnica copper mining 
area in Poland); 
• demographic pressures, such as an ageing popu­
lation (eg Suwalki in Poland and Borsod-Abauj-
Zemplen in Hungary), or the presence of mi­
nority ethnic groups (eg gypsies and Slovaks in 
Hungary and the Czech Republic and 
Hungarians in Slovakia); 
• lack of a major urban centre which could act as 
a growth pole (eg South-East Hungary). 
166 
'tîv^^SSSP^^^Cwmerrj2 r Régional structures and problems in neighbouring countries 
Direct investment in, and 
trade with, Central and 
Eastern Europe2 
In 1990-91, in the immediate aftermath of the col­
lapse of Communism and the initiation of economic 
and political reform programmes in Central Europe, 
some observers expressed the expectation that 
Hungary, Poland and Czechoslovakia would attract 
large volumes of foreign direct investment More­
over, assuming that Bulgaria, Romania and the (then 
still integral) USSR and Yugoslavia were able to 
embark on successful reform programmes, they 
would on this view also be attractive to foreign 
investors - in particular, the USSR with its large-
scale oil and gas reserves and other natural resources. 
Indeed, there was discussion at the time that these 
countries could be sufficiently attractive to large 
corporate investors to divert substantial amounts of 
foreign direct investment (FDI) flows from other 
countries. This is not very surprising if one compares 
the population of all of Western Europe (380 million) 
with that of Eastern Europe plus the successor states 
to the former USSR (410 million). 
Three years after the initiation of the reforms, the 
expectation of large FDI flows into the eastern coun­
tries has not up to now been fulfilled. Due to the 
serious difficulties that these countries have en­
countered in establishing a reasonably well function­
ing market economy by introducing a new commer­
cial and legal infrastructure, obstacles to Western 
companies doing business in Central and Eastern 
Europe have been much more numerous than ex­
pected. The sharp declines in output, and the difficul­
ties in (re-)creating macro-economic stability and 
growth (let alone undertaking large scale privatisa­
tion programmes), suggest that the costs and the 
economic and political risks associated with invest­
ing in the Central and Eastern Europe are much 
higher than was initially perceived. 
It does not seem likely that the financing needs of the 
countries of Central and Eastern Europe and the 
former Soviet Union will within the next decade be 
a drain on world savings. Ultimately, the very sub­stantial investments needed to consolidate economic 
and social reform in Eastern Europe will have to be 
financed by increased savings in both East and West 
In geographical terms, it does not appear likely that 
the Eastern countries are competitors for FDI inflows 
with countries on Europes Western periphery like 
Ireland, Spain and Portugal, assuming that much of 
the FDI is to build up capacity to serve local or 
proximate markets. Other lagging regions like 
Greece and southern Italy are geographically closer 
at least to the Balkan countries but the prospects for 
foreign investment in Bulgaria, Rumania and the 
former Yugoslavia are even worse than those in 
Central Europe. 
In the 1980s, the main investing countries in the 
Communitys lagging regions were the UK, France 
and the Netherlands together with the US and Japan, 
whereas a recent survey of 144 from the top 500 
companies in the world identified firms from 
Germany and EFTA nations, i.e. countries which are 
geographically closest to Eastern Europe, as well as 
Benelux as major investors in the East. The corpor­
ations based in the US and Japan have so far shown 
relatively little interest in investing in the countries 
of Central and Eastern Europe (including the former 
Soviet Union). 
The total foreign direct investment flowing into these 
countries (almost $10 billion up to October 1991) is 
considerably less than that received by Spain in 1990 
alone ($ 14 billion). One explanation is the very small 
size of individual projects : the average capital com­
mitted to joint ventures (the primary method of direct 
investment in the region) is $330,000. Until 1991, 
Hungary was the only country in Central Europe that 
had attracted foreign investment on any noticeable 
scale. Of the $2 billion cumulative inflow, over one 
half was committed in 1991. The largest capital 
commitments were in telecommunications and 
chemicals. 
There seems to be little reason to fear that develop­
ments in Eastern Europe will lead to lower invest­
ment inflows to the economically less developed 
regions of the Community. Only 15% of the firms 
surveyed said that commitments to Eastern Europe 
167 
m in 
were diverting investment from other areas, while 
most companies would invest in both regions. This 
suggests that FDI encouraged by the continuation of 
economic and political reform in Eastern Europe 
would act in the first place as a boost to world growth 
and not lead to a displacement of economic activity 
from regions like the Mediterranean or the Atlantic 
coast. 
In the longer term, there is likely to be an expansion 
of FDI in Central and Eastern Europe, provided that 
the reforms undertaken lead to the establishment of 
a satisfactory commercial and legal framework 
within which national and foreign investors feel com­
fortable to operate. 
Such an outcome would in fact benefit the 
Community as a whole : investment and economic 
growth in the East would stimulate exports and sales 
by EC enterprises. A recent Commission study aims 
to assess these benefits with the help of two alterna­
tive scenarios for prospective economic develop­
ments in the countries of Central and Eastern Europe, 
which broadly represent the range of plausible out­
comes. imports and exports each would reach values of 
around 200 billion ECU per year (at 1991 prices). 
In the absence of any restrictions on trade, there 
would be a very substantial positive EC balance on 
manufactured goods with these countries, perhaps as 
high as 70 billion ECU by 2010. Nevertheless, EC 
market penetration by manufacturers from the East-
em European countries should be expected to in­
crease : the share of their exports in EC manufactured 
imports would almost triple to more than 15% in 
2010. The counterpart to the Community surplus in 
manufactured products would be substantial deficits 
in energy trade (with the former Soviet Union) and, 
more significantly in policy terms, in agricultural 
trade. 
The pessimistic scenario generates little in the way 
of direct economic impact through trade, which 
could be expected to increase by less than 50% 
between 1991 and 2010 (i.e. less than 2% annually). 
Exports of Central and Eastern Europe would remain 
heavily concentrated in a few 'sensitive' industries : 
clothing, metal manufacturing, chemicals, timber 
and furniture. 
In the optimistic scenario, Eastern Europe would 
experience rapid growth from the mid-1990s on­
wards, with the achievement of macroeconomic sta­
bility and economic reforms leading to improved 
supply and the successful transformation of existing 
productive capacity, in an international environment 
characterised by a general absence of trading restric­
tions. The pessimistic scenario is one in which the 
reforms fail. 
The 'successful reform' case generates a very sub­
stantial increase in trade with the Community. In 
1991, trade flows (exports and imports) between the 
EC and the countries of Cencral and Eastern Europe 
and the former Soviet Union accounted for 67 bil­
lion ECU or 7% of EC trade (excluding trade flows 
between Community Member States). Within a time­
frame of twenty years, these countries could expect 
a six-fold increase in their trade flows with the 
Community and at least a doubling of their share in 
EC trade. This would imply that by the year 2010 The 'successful reform' case should lead to a new 
international division of labour characterised by a 
progressive diversification of Eastern Europes ex­
ports to the EC. New trade patterns should tend to 
mitigate problems for particular Community regions 
or sectors in adjusting to increased imports from 
across the Communitys eastern borders. 
In this scenario there is clearly scope for considerable 
growth in intra-industry as well as inter-industry 
trade. The studys projections for the year 2010 in­
clude large EC trade surpluses in motor vehicles and 
other transport, in mechanical and electrical engin­
eering, chemicals and textiles. A number of case 
studies in the Communitys lagging regions con­
firmed that a prosperous Central and Eastern Europe 
could provide a strong market for lagging regions 
exports of clothing and textiles as well as of machine 
tools, automobiles etc. Conversely, the threat of low 
price competition and dumping is much greater in the 
pessimistic scenario. 
168 
ghbouring countries 
The projected changes in trade in the various indus­
trial sectors were allocated to the EC regions with the 
help of a gravity model of interregional trade. The 
reduction of tariff and non-tariff trade barriers as well 
as the removal of a number of other economic and 
political impediments to trade was modelled by a 
substantial reduction in the 'distance' separating the 
Community regions from their trading partners in 
Central and Eastern Europe and the former Soviet 
Union. restrict exports from the East over the next few years 
would contribute to such failure.) There could then 
be potentially serious implications for the financial 
burden on the EC public sector of aid programmes 
benefiting the Eastern countries, which, in turn, 
might well reduce the public funds available for 
Community structural policies. Threats to the level 
of future EC regional assistance flows was a much 
greater concern for the lagging regions than any 
East-West trade effect. 
The expected impact on the Communitys lagging 
regions differs quite substantially from one country 
to another. The case studies confirmed the good 
economic prospects for Greece if reform in Central 
and Eastern Europe succeeds; the small positive net 
effects on Spanish and Portuguese industry; and the 
minimal effects on Ireland and Northern Ireland. The 
evidence on Southern Italy was inconclusive, where 
the modelling results presented a much more optim­
istic picture than the case study. 
The regional policy response to the potential changes 
in the economies of Central and Eastern Europe 
should therefore start from the perspective that these 
changes are not creating new problems for the re­
gions. They are in a few cases exacerbating existing 
problems but, in most cases, not by nearly as much 
as the advent of the Single European Market nor by 
as much as the challenge from the Japanese and other 
Asian economies. The main extra problem possibly 
arising from Eastern exports seems to be in the steel 
industry and perhaps other metal manufactures or 
chemicals. In the longer term, the main problem is 
likely to be over agricultural trade, if the countries of 
Eastern Europe manage to develop and successfully 
exploit their potential in this sector. 
Both the modelling analysis and the case studies 
show sizeable potential benefits to the EC lagging 
regions from successful economic reform in Central 
and Eastern Europe. The main danger is a failure of 
the reform process. (EC trade restrictions on 'sensi­
tive' products and the use of anti-dumping actions to 
EPRC (1993), Regional Socio-economic Development in Poland, Hungary, the Czech Republic and Slovakia. Study 
financed by DG XVI of the European Commission. 
NERA (1992), Trade and Foreign Investment in the Community's regions : the impact of economic reform in Central 
and Eastern Europe. Regional Development Studies N°7. Study financed by DG XVI of the European Commission. 
169 
Map 27 Regional unemployment in the 
Visegrad countries, 1993 
Poland 
Hungary 
Figures are for the end of June 1993 Map 28 Agricultural employment in the 
Visegrad countries, 1991 
Czech R 
Hungary 
1990 data used for Hungary. 
Map 29 Industrial employment in the 
Visegrad countries, 1991 
Hungary 
1990 data used for Hungary. Map 30 Service employment in the 
Visegrad countries, 1991 
.^SYBL ^^BBBBBEnHlBk 
^MBBBBBL '•»?*jaBBB»HsBBrJSgllfflaB^ 
Czech R. 
% total 
employment 
H <35 
fl 35-40 
B 40-45 
B >45 
1990 data used ~> *~» t'-i 
P 
Slovakia yi|HBBB^HtfnlNll^^^47 
JB«*WV1"JWHHP 
•Mr - *M * ï * ^^s^sf^IFf 
^^M^JBF Hungary 
or Hungary. 
'te 
Statistical annex 
A. 1 Correspondence between NUTS levels and national administrative divisions in the Community 
A.2 Area and population ofthe regions of the Community 
A.3 GDP per person employed in the Member States (PPS), 1984-1993 
A.4 Disparities in GDP per head (PPS) in EUR12, 1980-1990 
A.5 GDP per head in the Member States and the EFTA countries, 1980-1991 
A.6 Unemployment rates in EUR12,1983-1993 
A.7 Employment in the automobile industry 
A.8 Employment in the aerospace industry 
A.9 Employment in textiles and clothing 
A. 10 Defence-dependent NUTS 2 regions 
A. 11 Road transport infrastructure 
A. 12 Gross investment in road transport infrastructure 
A. 13 Rail transport infrastructure, 1990 
A. 14 Gross investment in rail transport infrastructure 
A. 15 Telecommunication Mrastructure, 1992 
A. 16 Investment in telecommunication infrastructure 
A. 17 Borders of EFTA countries, 1993 
A. 18 Employment in Objective 1 regions, 1990 
A. 19 Unemployment rates in Objective 1 regions, 1986-1993 
A.20 GDP per head (PPS) in Objective 1 regions, 1986-1991 
A.21 Employment change and productivity, 1986-1991 
A.22 Community initiatives, 1994-1999 
A.23 New German Lander: demographic and economic indicators 
A.24 Sectoral changes in the new German Lander 
A.25 Regions, GDP ranking 
A.26 Regions, Unemployment ranking 
A.27 Regions, socio-economic indicators 
171 
Definition, level and size of regions 
1. The Nomenclature of territorial units for statistics (NUTS) was established by the Statistical Office of the 
European Communities in cooperation with the Commission's other departments, so as to provide a single, 
uniform breakdown of territorial units for the production of Community regional statistics. 
2. Various systems of territorial division are possible: 
(i) normative regions (administrative boundaries), 
(ii) analytical regions: 
- (a) functional 
(aggregations of complementary zones). 
- (b) homogeneous 
(aggregations of zones with similar characteristics). 
For practical reasons to do with data availability and the implementation of regional policies, the NUTS 
nomenclature is based primarily on the institutional divisions currently in force in the Member States. 
The NUTS Usts of regional Umits is of a general character: it thus excludes territorial units serving specific 
purposes. It employs a three-level hierarchical classification of regions for each Member State (NUTS 1 -
NUTS 2-NUTS 3). 
The NUTS nomenclature subdivides each Member State into a whole number of level 1 regions, each of 
which is in turn subdivided into a whole number of level 2 regions, which are themselves subdivided into a 
whole number of level 3 regions. 
3. The present NUTS nomenclature subdivides the territory of the European Community into 71 regions at 
level 1,183 at level 2 and 1044 at level 3 (see Table A1 ). 
Despite the aim of ensuring that regions of comparable size aU appear at the same NUTS level, each level 
still contains regions which differ greatly in terms of area, population, economic weight or administrative 
powers. 
172 
^^:Jl;^Mitical^nnex.::: œMyil8É^li&M^ attelai 
Tabfe^A.1 
:::"V; ^Corresppndence^b^een'NUtS Jëyels^S5^ ^Ç^?^ 
and national administrative divisions in the Community 
NUTS1 NUTS 2 NUTS 3 
B 
DK1 
D 
GR 
IRL 
I 
L 
NL 
P 
UK Régions 
Lander 
Groups of 
development regions2 
Agrupacion de 
comunidades autonomas 
ZEAT 
+ DOM 
Gruppi di regioni2 
Landsdelen 
Continente 
+ Regioes autonomas 
Standard regions 3 Provinces 9 
1 1 
16 Regierungsbezirke 40 
4 Development regions 13 
7 Comunidades autonomas 17 
+ Melilla Y Ceuta 1 
8 Régions 22 
1 4 
1 1 
11 Regioni 20 
1 1 
4 Provincies 12 
1 Commissaoes de 5 
2 coordenaçao regional 
Regioes autonomas 2 
11 Group of counties 35 Arondissements 
Amter 
Kreise 
Nomoi 
Provincias 
Départements 
Planning regions 
Provincie 
COROP-Regio's 
Grupos de Cancelhos 
Counties/Local 
authorities areas 43 
15 
543 
51 
50 
2 
96 
4 
9 
95 
1 
40 
30 
65 
EUR12 71 183 1044 
A breakdown of Denmark into three regions is given in most of the tables and maps 
Grouping for Community purposes 
Source : Eurostat 
173 
V? * ^ 
• 3» 4yt. u&_ ; *~ **mmmmmmm^ËSgm 
Table A.2 
Area and population of the regions of the Community 
. Ï-1 -SÏ 5 > •..-%* s J fi 
Area of the regions (1000 km ) 
B 
DK 
D 
GR 
E 
F 
IRL 
I 
L 
NL 
P 
UK 
EUR12 NUTS1 NUTS 2 
Number Min Max Average Number Min Max 
2.4 
43.1 NUTS 3 
Average Number Min Max Average 
3 
1 
16 
4 
7 
9 
1 
11 
1 
4 
3 
11 0.2 
43.1 
0.4 
3.8 
7.2 
12.0 
68.9 
13.6 
2.6 
7.3 
0.8 
7.3 16.8 
43.1 
70.6 
56.8 
215.0 
145.6 
68.9 
44.4 
2.6 
11.3 
88.9 
78.8 10.2 
43.1 
22.3 
33.0 
72.1 
60.4 
68.9 
27.4 
2.6 
10.3 
30.7 
22.2 9 
1 
40 
13 
18 
26 
1 
20 
1 
12 
7 
35 0.4 
2.3 
0.03 
1.1 
68.9 
3.3 
2.6 
1.4 
0.8 
0.7 4.4 
43.1 
17.5 
19.2 
94.2 
83.5 
68.9 
25.7 
2.6 
5.7 
27.0 
31.7 3.4 
43.1 
8.9 
10.2 
28.0 
20.9 
68.9 
15.1 
2.6 
/ 3.4 
13.1 
7.0 
71 0.2 215 j 33.3 | 183 
|ii|iWMW>ww#)ii*|iV#lj»»wiM!it|.fitn)iii|i»Miini^in.»iT.fi|î.rif.m|[in 0.03 94.2 12.9 43 
15 
543 
51 
52 
100 
9 
95 
1 
40 
30 
65 0.1 
0.1 
0.03 
0.33 
0.01 
0.11 
3.3 
0.21 
2.6 
0.13 
0.8 
0.4 2.0 
6.2 
2.9 
5.4 
21.7 
83.5 
12.2 
7.5 
2.6 
3.4 
8.6 
26.1 0.7 
2.9 
0.7 
2.6 
9.7 
5.4 
7.7 
3.2 
2.6 
1.0 
3.1 
3.8 
1044 0.01 83.5 2.3 
Population of the regions -1.1.1990 (1000) 
NUTS1 
Number Min Max Average Number NUTS 2 
Min Max Average Number 
1107 NUTS 3 
Min Max Average 
5141 
2007 
785 
2164 
2182 
3503 
2883 
381 
1246 
1410 
1640 
1860 43 
15 
543 
51 
52 
100 
9 
95 
1 
40 
30 
65 
1044 38 
46 
17 
21 
56 
73 
198 
94 
381 
56 
52 
73 
17 962 
601 
3446 
3507 
4878 
2533 
1330 
3990 
381 
1278 
1850 
_6794^ 
6794 232 
343 
148 
200 
749 
567 
389 
607 
381 
374 
329 
883 
330 
Source. Eurostat 
174 wwwriTWEWtfwwrtWflW 
^Sv^^r^^^Ç^'-^ 
Table A.3 
GDP (PPS) per person employed in the Member States 
1984 (PPS), 1984-1993 
EUR12=100 
1987 1990 1993 
EUR12 100.0 100.0 100.0 100.0 
B 
DK 
D 
GR 
E 
F 
IRL 
I 
L 
NL 
P 
UK 114.2 
89.0 
108.1 
. 52.4 
95.6 
113.4 
76.4 
100.9 
105.9 
130.7 
50.0 
89.8 111.1 
86.2 
105.2 
51.6 
94.0 
114.4 
79.8 
102.0 
103.0 
120.4 
54.6 
93.5 113.7 
86.2 
106.5 
51.2 
92.4 
116.2 
87.6 
103.7 
104.9 
120.1 
57.8 
88.9 114.3 
88.4 
104.6 
55.1 
96.0 
116.7 
89.6 
101.7 
101.2 
117.5 
58.8 
88.8 
Disparity 16.0 14.4 15.1 14.3 
Change 100.0 105.6 111.5 116.2 
Source : Eurostat 
Table A.4 
Disparities in GDP per head (PPS) in the Community, 
1980-1991 (EUR12=100) 
1980 
1981 
1982 
1983 
1984 
1985 
1986 
1987 
1988 
1989 
1990 
1991 
19912 Average 
10 weakest 
regions Average 
10 strongest 
regions Average 
25 weakest 
regions Average 
25 strongest 
regions 
44.0 
44.0 
44.7 
43.8 
42.6 
43.2 
42.6 
41.7 
41.0 
41.1 
40.5 
41.8 
33.4 145.8 
149.2 
149.4 
151.0 
150.6 
152.1 
151.4 
151.9 
152.4 
152.8 
150.6 
151.6 
151.6 54.9 
53.7 
53.8 
53.5 
52.8 
52.6 
51.9 
52.1 
52.7 
53.5 
53.1 
54.4 
42.9 135.3 
137.7 
138.5 
138.2 
138.5. 
139.3 
138.3 
138.7 
137.5 
138.0 
137.4 
137.0 
137.0 Disparity 
26.6 
28.4 
28.2 
28.3 
28.6 
29.0 
28.5 
28.2 
28.2 
27.9 
27.9 
27.9 
30.6 
NUTS 2 : French Overseas Departments, Azores and Madeira not included 
Disparity is the standard deviation weighted by the size of the population in each region 
Including the new German Lander 
Source : Eurostat 
175 
ffj ->t*.à i^;* NS /'Table ÀS# 
GDP per head (PPS) in the Member States and the EFTA countries, 
1980-1993 (EUR16= 100) 
w i 
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 
B 
DK 
D 
D (+ new 
Lander) 
GR 
E 
F 
IRL 
I 
L 
NL 
P 
UK r 107 
106 
118 
52 
72 
113 
63 
103 
116 
108 
53 
98 106 107 
106 108 
118 117 
52 52 
71 71 
114 116 
65 65 
104 103 
115 117 
107 104 
54 54 
97 98 106 106 104 103 102 103 104 104 104 107 106 
109 112 114 115 112 109 107 106 106 104 106 
118 119 119 118 117 116 116 117 119 120 117 
102 105 104 
51 51 51 51 49 49 49 47 47 49 49 
71 71 70 71 72 73 74 75 78 76 76 
114 113 112 111 110 110 111 111 110 109 109 
64 64 65 63 64 64 67 71 72 75 78 
103 103 104 104 104 104 104 104 105 104 104 
117 119 120 125 119 122 128 127 127 128 132 
104 104 104 104 102 100 101 102 100 100 101 
53 51 51 52 54 54 55 56 59 61 60 
100 100 101 102 104 105 103 101 95 96 99s 
AUS 
NOR 
SWE 
FIN 108 107 108 109 108 
102 103 102 105 109 
112 113 113 113 115 
97 98 101 101 102 108 107 105 105 106 106 106 107 107 
111 113 111 106 103 102 103 105 105 
115 114 115 112 111 108 103 98 98 
103 102 103 104 106 103 95 86 86 
EFTA 
EUR31 
EUR92 
EUR163 106 107 107 108 109 
54 55 55 54 53 
103 104 103 104 104 
100 100 100 100 100 110 109 109 107 107 105 102 100 
53 53 53 53 54 54 56 56 57 
104 104 104 104 104 104 103 103 103 
100 100 100 100. 100 100 100 100 100 
Disparity 
(EUR12) 
Disparity 
(EUR16) 18.5 19.8 18.6 
17.9 18.2 18.0 18.7 19.0 19.0 18.9 18.2 17.9 17.5 17.5 
18.2 18.5 18.5 18.4 17.7 17.4 17.0 16.9 175 
(1484) 
169 
(1444) 175 
(150) 
17.0 
(14o) 168 
(14-8) 
* Greece, Ireland, Portugal 
* Outers 
Source : Eurostat, calculations DG XVI EUR16 * EUR12 + Norway, Sweden. Austria, Finland 
Figures in brackets include the new German Lander 
HâtttMtmnnvtiriviiam y^rtwiWirittiftliWiîWiffiyfiTiTftWiïiy^Trrn'iYffiiTi 
176 
*W.i* ,<Ë£Viv k* 3?y^È$$(iË$^*v<£y . i' : Î< .<-„* •„,.*•$* V"«£ Y -• - -• *. > - *i«rtv.î "- *'•* Statistical annex » 
Table A.6 
Unemployment rates1 in EUR12, 
•'"\ 1983-1993 >* 
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 
Unemployment rate EUR12 9.6 10.5 10.8 10.7 10.5 9.9 9.0 8.2 8.5 9.3 10.4 
Average 25 highest 
Average 25 lowest 
Difference 
Disparities3 : 
Between Member States 
Between ail regions 
Within Member States : 
B 
DK 
D 
GR 
E 
F 
IRL 
I 
L 
NL 
P 
UK 17.5 19.4 20.8 20.4 20.1 
5.4 5.4 5.3 4.7 4.6 
12.1 14.0 15.6 15.7 . 15.3 
3.3 3.9 4.4 4.3 4.2 
4.1 4.8 5.2 5.3 5.5 
1.7 
1.5 
1.7 
0.7 
3.9 
1.5 1.9 
1.2 
2.0 
0.9 
5.4 
1.9 2.3 2.4 
1.0 0.7 
2.2 2.2 
1.8 2.6 
5.1 5.0 
2.0 1.8 2.9 
0.9 
2.2 
1.9 
5.7 
1.8 19.9 
4.1 
15.8 
4.1 
5.4 
2.9 
0.9 
2.2 
2.1 
5.0 
1.8 18.5 
3.4 
15.1 
3.6 
5.2 
2.8 
1.0 
2.0 
1.9 
5.4 
1.8 17.0 
2.9 
14.1 
3.4 
4.9 
2.7 
0.9 
1.8 
1.9 
5.4 
1.7 17.8 18.6 21.0 
2.8 3.3 4.1 
15.0 15.4 16.9 
3.5 3.4 4.3 
4.9 5.2 5.9 
2.6 
0.7 
1.6 
2.1 
5.3 
1.7 
1.8 1.4 1.1 1.0 1.0 1.1 1.1 1.2 
1.6 1.9 1.9 2.8 2.5 3.2 2.5 2.1 
3.5 3.4 3.4 3.4 3.6 3.5 3.5 3.3 2.7 
0.5 
1.7 
2.5 
5.3 
1.9 2.8 
0.6 
1.5 
2.1 
5.3 
1.8 
2.7 3.0 3.3 4.0 5.2 6.4 7.0 6.4 6.7 6.2 7.0 
0.8 1.0 1.0 
1.6 1.2 1.3 
2.7 2.3 2.3 
NUTS2 : French Overseas Departments, Azores and Madeira not included 
1991 exclude the new German Lander NUTS2 : French Overseas Departments, Azores and Mi 
2 Data for 1983 to 1991 exclude the new German Lander 
Weighted standard deviation 
Source .* Eurostat, calculations DG XVI 
177 
B 
DK 
D1 
GR 
E 
F 
IRL 
I 
NL 
P 
UK 
EUR12 Table A!7 
Employment in the automobile Industry 
% of total 
employment, 1993 
3.1 
0.3 
43.9 
0.1 
8.3 
18.5 
0.1 
10.1 
1.6 
0.9 
13.1 
100 % change 
1981-1991 
11.4 
30.5 
15.1 
-55.8 
0.9 
-25.4 
-67.7 
•26.2 
15.3 
16.7 
-23 
-9 % change 
1991-1993 
-5.4 
-5.5 
-10.2 
-5.2 
-2 
-7 
-7.4 
-14.3 
-5.6 
-17 
-6.8 
-9.8 
West Germany only 
Definition: NACE 35 
Source: Visa database, Statistical Office of the European Communities 
Table A.8 
Employment in the aerospace industry 
D1 
GR 
E 
F 
I 
UK 
B, DK, IRL, NL 
EUR12 % of total 
employment 1993 % change 
1981-1991 
West Germany only 
Definition: NACE 364 
Source: Visa database, Statistical Office of the European Communities % change 
1991-1993 
178 
-$£~ ~_. '< -* **% ,'*, ^'* „ :'^^#^'l%^v' Statistical annex ' 
B 
DK 
D1 
GR 
E 
F 
IRL 
1 
L 
NL 
P 
UK 
EUR12 Table A.9 
Employment in textiles and clothing 
% of total 
employment, 1993 
3.8 
0.9 
17.4 
3.2 
9.5 
14.6 
1.1 
19.8 
0.04 
1:6 
8.2 
19.8 
100 % change 
1981-1991 
-16.4 
-14.8 
-28.7 
-22.2 
-25.1 
-34 
-28.7 
-15.8 
8.8 
6.1 
-5.9 
-26.8 
-25 % change 
1991-1993 
-12.8 
-5.5 
-18.1 
-20.8 
-19.8 
-12.4 
-9.2 
-9.7 
-19.4 
-4.7 
-20.3 
-4.1 
-13 
West Germany only 
Definition: NACE 43 + 453 + 455+456 
Source: Visa database. Statistical Office of the European Communities 
t«<yWï&j2fc<tt^^W^**W*^* 
179 
Statistical annex 
Table A.10 
Defence-dependent NUTS 2 regions 
NUTS 2 
GR Voreio Aigaio 
E Ceuta Y Melilla 
P Acores 
GR Noto Aigaio 
GR Kriti 
I Friuli-Venezia Giulia 
GR Dytiki Makedonia 
GR Anatoliki Makedonia, Thraki 
UK Hampshire, Isle of Wight 
D Trier 
UK Cumbria 
UK Cornwall, Devon 
UK North Yorkshire 
E Madrid 
D Koblenz 
F Bretagne 
D Lûneburg 
D Bremen 
F Provence-Alpes-Côte d'Azur 
UK Avon, Gloucester, Wiltshire 
D Rheinhessen-Pfalz 
D Schleswig-Holstein 
F Aquitaine 
EC average Defence Industries 
only Employment shares (%) 
Military only Total 
Defence-related 
0.0 
0.0 
0.0 
0.0 
0.0 
1.7 
0.1 
0.1 
1.2 
0.1 
6.4 
1.6 
0.0 
0.6 
0.1 
2.5 
0.1 
2.7 
2.1 
1.3 
0.1 
0.5 
2.4 
0.6 29.9 
22.9 
11.8 
11.3 
10.6 
9.0 
10.4 
10.1 
7.8 
8.7 
1.0 
5.3 
6.3 
5.6 
6.0 
3.6 
5.9 
3.1 
3.8 
4.3 
5.1 
4.5 
2.6 
1.9 29.9 
22.9 
11.8 
11.3 
10.6 
10.6 
10.5 
10.1 
9.0 
8.8 
7.4 
6.8 
6.3 
6.2 
6.1 
6.1 
6.0 
5.8 
5.8 
5.5 
5.2 
5.0 
4.9 
2.4 
| Regions listed include the highest ranking NUTS2 regions in all Member States where dependence twice or above the EC weighted average 
Source : European Commission (1992) 
180 
s?m®m%œ& w^^m^^^^m^^0^annex 
Table A/M 
Road transport infrastructure 
Road surface Road surface per Road surface Length of Number of people 
per km2 1000 inhabitants composite motorways kilted in road 
indicator composite1 accidents 
indicator per 100,000 
inhabitants 
Index index index index 
1986 1986 1986 1990 1990 
EUR12 100 100 100 ^100 31 
Belgium 328 145 236 266 45 
Denmark 51 62 57 117 33 
Germany (W) 176 101 139 195 24 
France 107 152 129 103 38 
Italy 107 81 94 124 23 
Luxembourg 222 224 223 207 35 
Netherlands 238 88 163 249 23 
UK 185 115 150 73 22 
Greece 23 45 34 9 69 
Spain 23 43 33 50 43 
Ireland 76 211 144 5 50 
Portugal 42 58_ 50 29 69 
average of figures in columns 1 and 2 
Source : D. Biehl and Eurostat 
Table A/12 
Gross investment in road infrastructure, 1975-1989 (% of GDP) 
EUR12 
EUR8 
EUR4 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 
1.1 
1.1 
0.8 1.0 
1.0 
0.8 0.9 
0.9 
0.8 0.8 
0.8 
0.6 0.8 
OS 
05 0.8 
0,8 
0A 0.8 
0.8 
05 0.7 
0.8 
0.6 0.7 
0.7 
0.6 0.7 
0.7 
05 0.7 
0.7 
0.6 0.7 
0.7 
0.6 0.7 
0.7 
0.6 0.7 
0.7 
0.8 0.8 
0.7 
1.0 
Greece 
Spain 
Ireland 
Portugal 0.7 0.7 0.6 05 05 0.3 0.4 04 0.5 05 0.6 05 0.4 0.4 0.4 
1.0 L0 1.0 0.6 05 0.4 0.4 05 0.7. 05 05 0.6 0.7 0.9 1.1 
05 0.4 0.5 05 0.6 0.6 0.7 0.8 0.9 0.9 1.0 1.0 0.9 0.8 0.8 
0.1 0.1 0A 05 0.5 0.6 0.7 0.6 05 0.3 0.4 0.5 0.7 0.8 0.9 
EUR8 : B, DK, D, F, 1, L, NL UK EUR4 : GR, E, IRL, P 
Source : European Conference of Ministers ef Transport 
181 
mmmmm 11 annex 
Table A.13 
Rail transport infrastructure, 1990 
Belgium 
Denmark 
Germany (W) 
France 
Italy 
Luxembourg 
Netherlands 
UK 
Greece 
Spain 
Ireland 
Portugal Length of rail lines 
per km2 per 1000 inh. composite 
indicator 
Index Index Index 
205 
100 
195 
113 
96 
189 
123 
125 
34 
51 
51 
63 91 
122 
112 
157 
73 
187 
49 
77 
65 
97 
145 
87 Percentage of rail lines 
which is which is with 
electrified at least automatic 
double track block signals 
148 
111 
153 
135 
85 
188 
86 
101 
49 
74 
98 
75 66 
11 
43 
37 
59 
73 
70 
29 
0 
48 
2 
15 74 
34 
46 
46 
35 
64 
64 
69 
10 
19 
27 
14 65 
na 
na 
35 
25 
68 
na 
57 
na 
13 
0 
13 
Source ; Eurostat 
Table A. 14 
Gross investment in rail Infrastructure, 1976*1989 (% of 
EUR12 
EUR8 
EUR4 
Greece 
Spain 
Ireland 
Portugal 76 77 78 79 80 81 82 83 84 85 86 GDP) 
87 88 89 
0.19 0.19 0.19 0.18 0.20 0.19 0.18 0.19 0.20 0.19 0.19 
0.19 0.19 0.19 0.18 0.20 0.19 0.18 0.18 0.20 0.19 0.20 
0.25 0.23 0.13 0.19 0.22 0.22 0.22 0.28 0.24 0.13 0.16 
0.06 0.06 0.04 0.05 0.09 0.04 0.08 0.06 0.07 0.09 0.12 
0.29 0.27 0.16 0.24 0.28 0.29 0.28 0.36 0.31 0.15 0.17 
0.08 0.09 0.08 0.05 0.05 0.05 0.03 0.03 0.04 0.03 0.02 
0.32 0.24 0.13 0.09 0.06 0.08 0.13 0.12 0.06 0.11 0.17 0.19 0.22 
0.19 0.22 
0.15 0.21 
0.11 0.10 
0.16 0.26 
0.01 0.01 
0.17 0.15 0.19 
0.19 
J?-22 
0.13 
0.26 
0.01 
0.11 
EUR8 : B, DK. D, F, I, L, NL, UK EUR4 : GR, E, IRL P 
Source : European Conference of Ministers of Transport 
182 
_rJ|àt^îcàrannex'' 
EUR12 
Belgium 
Denmark 
Germany (W) 
France 
Italy 
Luxembourg 
Netherlands 
UK 
Greece 
Spain 
Ireland 
Portugal TableA.15 
Telecommunication infrastructures, 1992 
Number of 
telephone lines 
per 100 inhabitants Percentage of subscibers 
connected to 
digital local exchanges Number of faults 
per line per year 
Source : Ewbank Preece Lid 
. lrJ.'^.L:-.~i TableA.16 _ ^ . :. ..-
Investment in telecommunication infrastructure, 1987-1992 (% 
EUR12 1987 
0.59 1988 1989 1990 
0.59 0.65 0.70 1991 of GDP) 
1992 
0.70 na 
Belgium 
Denmark 
Germany (W) 
France" 
Italy 
Luxembourg 
Netherlands 
UK 
Greece 
Spain 
Ireland 
Portugal 0.38 
0.49 
0.76 
057 
0.46 
0.49 
0.35 
0.55 
0.42 
0.73 
0.68 
0.76 0.33 
0.56 
0.73 
0.49 
0.45 
0.54 
0.43 
0.56 
0.45 
0.93 
0.60 
1.07 0.42 
0.47 
0.73 
0.50 
0.49 
0.62 
0.62 
0.65 
0.56 
1.33 
0.56 
1.12 0.43 
0.41 
0.80 
0.51 
0.62 
0.60 
0.52 
0.65 
057 
1.38 
0.63 
1.34 0.42 
0.34 
0.87 
0.51 
0.68 
0.67 
0.56 
057 
0.77 
1.10 
0.65 
1.41 na 
na 
na 
0.44 
0.71 
na 
na 
0.49 
na 
0.70 
0.55 
1.16 
Source : Ewbank Preece Ltd. 
183 
Statistical annex 
TableA.17 
Borders of EFTA countries, 1993 (Kilometres)1 
Austria 
Finland 
Norway 
Sweden Land borders with EUR12 
Germany France Italy Land borders with: 
other 
EFTA other 
countries All land 
borders 
375 
0 
0 
0 182 
1170 
2297 
2095 1092 
1207 
161 
0 2378 
2377 
2458 
2095 Coast 
lines 
0 
11090 
23090 
9106 
Sum 
Total borders2 375 
375 5744 
2872 2460 
2460 9308 
6436 43286 
Automatic measures made on a 1:1,000,000 scale respectively (borders with Russia on a 1:10,000,000 scale). 
Error in estimates is around 10%. 
Double counting of borders between neighbouring countries has been eliminated. 
Source : Eurostat 
184 
'i!?é.'''$OrH'i''- ' 
.^i^^li^"„ "ïï'—'j-î^^ i^gt'U^^f Statistical annex 
TableA.18 
Employment in Objective 1 regions, 1990 
t - — — * ~ ""*• ; " 
Region 
Ellada Agri. Employment (1,000) 
indu. Serv. Total 
876 1,016 1,952 3,844 Agri Employment 
Indu. (%) 
22,8 26,4 Serv. 
50,8 
Galicia 
Asturias 
Castilla-Leôn 
Castilla-La Mancha 
Extremadura 
Comunidad Valenciana 
Andalucia 
Murcia 
Ceuta y Melilla 
Canarias 
Espana 334 
57 
167 
96 
74 
115 
281 
45 
0 
35 
1,438 249 
122 
254 
165 
65 
489 
477 
107 
3 
90 
4,176 478 
195 
462 
257 
167 
724 
1,135 
192 
32 
307 
7,407 1,061 
374 
884 
518 
307 
1,328 
1,893 
344 
35 
431 
13,021 31,5 
15,2 
18,9 
18,5 
24,3 
8,7 
14,8 
13,1 
0,8 
8,0 
11,0 23,5 
32,5 
28,8 
31,9 
21,3 
36,8 
25,2 
31,0 
9,6 
20,8 
32,1 45,0 
52,3 
52,3 
49,6 
54,5 
54,5 
60,0 
55,9 
89,5 
71,2 
56,9 
Corse 
France 1,349 17 
6,494 60 
14,098 85 
21,941 9,3 
6,1 20,4 
29,6 70,3 
64,3 
Ireland 165 317 631 1,113 14,8 
Campania 
Abruzzi 
Molise 
Puglia 
Basilicata 
Calabria 
Sicilia 
Sardegna 
Italia 289 
75 
27 
173 
49 
169 
234 
80 
2,235 410 
137 
33 
323 
56 
118 
318 
128 
6,915 1,205 
303 
68 
852 
113 
371 
1,053 
373 
14,121 1,904 
515 
127 
1,349 
218 
658 
1,604 
581 
23,271 15,2 
14,6 
20,9 
12,8 
22,6 
25,7 
14,6 
13,7 
9,6 
Norte 
Centra 
Lisboa e vale do Tejo 
Alentejô 
Algarve 
Acores 
Madeira 
Portugal 281 
236 
141 
66 
31 
20 
25 
800 611 
196 
369 
30 
20 
18 
32 
1,274 524 
234 
849 
71 
63 
38 
44 
1,821 1,415 
666 
1,358 
167 
114 
76 
101 
3,896 19,9 
35,5 
10,4 
39,8 
27,3 
25,7 
25,1 
20,5 43,1 
29,4 
27,2 
17,8 
17,5 
23,9 
31,3 
32,7 37,0 
35,1 
62,5 
42,4 
55,2 
50,4 
43,6 
46,7 
Northern Ireland 
United Kingdom 33 
577 176 
8,589 392 
17,430 602 
26,596 5,6 
2,2 
EUR12 
Objective 1 9,016 
4,182 43562 
6346 83,256 
13,142 135,834 
23,669 6,6 
17,7 
Source : Eurostat, estimates DG XVI 
185 
Statistical annex 
TableA.19 
Unemployment rates in Objective 1 regions, 1986-1993 
Region 
Ellada 
Galicia 
Asturias 
Castilla-Leon 
Castilla-La Mancha 
Extremadura 
Comunidad Valenciana 
Andalucia 
Murcia 
Ceuta y Meiilla 
Canarias 
Espana 
Corse 
France 
Ireland 1986 1987 1988 1989 1990 1991 1992 1993 Change 
1986-91 
7.4 7.4 
13.9 
18.8 
18.1 
15.4 
28.3 
19.7 
30.3 
18.4 
28.7 
26.5 
21.4 
11.7 
10.0 13.4 
19.7 
17.6 
15.1 
25.9 
20.1 
31.1 
21.4 
29.8 
25.5 
20.8 
11.9 
10.3 7.7 
13.2 
20.2 
17.8 
16.6 
27.1 
18.3 
29.2 
17.6 
35.4 
22.5 
20.1 
10.6 
9.6 7.5 
12.4 
17.4 
17.4 
14.8 
26.8 
15.3 
27.2 
16.2 
31.6 
22.5 
17.4 
9.4 
9.3 
18.1 18.1 17.5 16.1 JUL 
11.9 
17.4 
15.5 
13.3 
25.4 
14.1 
25.9 
15.8 
29.7 
23.1 
16.3 
»«»»«»«• 
9.7 
8.7 
14.2 7.7 
12.4 
16.1 
14.5 
13.6 
24.2 
15.9 
24.7 
165 
29.7 
24.4 
10.9 
9.0 7.7 
16.0 
17.4 
17.0 
15.0 
25.9 
18.4 
265 
19.0 
25.1 
24.4 
XUL 
10.4 
9.7 
15.8 17.6 7.8 
17.0 
19.6 
19.2 
18.6 
28.9 
22.8 
30.8 
23.4 
21.9 
26.7 
21,3 
11.0 
10.3 
18.4 £1 -1.6 
-2.6 
-3.6 
-1.8 
-4.0 
-3.7 
-5.6 
-1.9 
1.0 
-2.1 
-5.4 
-0.8 
-1.0 
-2.3 Change 
1986-93 
0.4 
3.1 
0.9 
1.0 
3.2 
0.7 
3.1 
0.5 
4.9 
-6.8 
0.1 
-0,1 
-0.7 
0.4 
0.2 
Campania 
Abruzzi 
Molise 
Puglia 
Basilicata 
Calabria 
Sicilia 
Sardegna 
Italia 16.6 
11.7 
7.1 
14.3 
21.0 
15.4 
15.1 
20.2 
105 21.5 
8.6 
12.2 
13.2 
15.9 
17.8 
16.0 
16.2 
10.2 23.0 
9.3 
12.4 
15.7 
215 
22.6 
18.6 
18.4 
11.0 22.3 
10.3 
13.1 
14.8 
20.5 
25.1 
21.6 
18.9 
10.9 18.6 
9.6 
11.3 
13.6 
20.1 
21.2 
20.4 
17.8 
95 20.4 
9.4 
14.7 
15.1 
19.6 
21.3 
21.4 
18.1 
10.0 20.1 
11.0 
13.8 
13.8 
205 
17.4 
20.5 
17.5 
9.9 22.8 
12.4 
15.6 
15.6 
23.0 
19.6 
23.1 
19.8 
11.2 3.7 
-2.4 
7.6 
0.8 
-1.4 
5.9 
6.3 
-2.1 
-0.6 6.2 
0.7 
8.5 
1.3 
2.0 
4.2 
8.0 
-0.5 
0.6 
Norte 
Centra 
Lisboa e vale do Tejo 
Alentejo 
Algarve 
Acores 
Madeira 
Portugal 6.7 
5.6 
11.3 
14.9 
8.8 
5.0 
6.3 
8.6 4.9 
5.5 
9.7 
11.9 
7.2 
37 
4.5 
7.0 3.6 
3.7 
8.8 
14.6 
5.5 
2.2 
4.8 
6.0 3.0 
3.0 
6.9 
115 
3.1 
2.5 
5.5 
4.8 2.6 
2.1 
5.8 
9.7 
3.8 
3.1 
5.0 
4.1 2.7 
2.4 
45 
9.0 
3.9 
3.8 
3.1 
3.6 3.1 
2.2 
4.7 
7.0 
2.6 
3.1 
3.0 
3.7 
Northern Ireland 
United Kingdom 17.7 
11.5 18.6 
11.0 17.1 
8.9 17.3 
7.3 17.1 
7.0 16.3 
8.8 15.6 
9.9 4.2 
3.4 
6.0 
8.1 
4.8 
4.6 
3.4 
4.9 
15.0 
10.3 
EUR12 
Average Objective 1 10.7 
15.4 10.5 
155 9.9 
15.8 9.0 
15.2 8.2 
13.9 85 
14.3 9.3 
.14.8 10.4 
16.7 -4.0 
-3.3 
-6.9 
-5.9 
-4.9 
-1.2 
-3.2 
-5£ 
-1.4 
âtJL 
-2.2 
-1.0 -2.5 
-2.2 
-5.3 
-6.8 
-4.0 
-0.4 
-2.9 
-2.7 
-JUL 
-0.3 
1.3 
Source : Eurostat 
186 
^*^ *fi v>;;rr.;;r- - Table A.20 
GDP per head (PPS) in Objective 1 regions, 1986|l991 
'"'*:^: *':-- ":.: '' * EUR12 = 100 r * • "->>r :;"^: 
Region 
Ellada 1986 1987 1988 1989 
51 49 49 49 1990 
47 1991 
47 
Galicia 
Asturias 
Castilla- Leôn 
Castilla- La Mancha 
Extremadura 
Comunidad Valenciana 
Andalucia 
Murcia 
Ceuta Y Melilla 
Canarias 
Espana 56 
71 
66 
55 
45 
72 
53 
68 
64 
70 
71 56 
69 
67 
58 
47 
73 
55 
69 
65 
72 
72 57 
71 
67 
60 
49 
73 
55 
67 
65 
74 
73 58 
72 
66 
62 
48 
74 
56 
69 
63 
74 
74 57 
70 
66 
63 
50 
76 
58 
71 
64 
73 
75 59 
73 
67 
64 
51 
78 
60 
74 
64 
77 
78 
Corse 
France 82 
111 81 
110 80 
110 79 
111 80 
111 80 
110 
Ireland 60 61 62 65 69 70 
Campania 
Abruzzi 
Molise 
Puglia 
Basilicata 
Calabria 
Sicilia 
Sardegna 
Italia 69 
89 
78 
73 
65 
60 
70 
75 
103 69 
90 
78 
74 
66 
61 
71 
75 
103 69 
89 
80 
75 
66 
58 
68 
75 
103 70 
90 
79 
75 
64 
61 
67 
74 
103 70 
90 
79 
74 
65 
57 
68 
74 
102 70 
91 
79 
74 
65 
57 
68 
74 
105 
Norte 
Centra 
Lisboa e vale do Tejo 
Alentéjb 
Algarve 
Acores 
Madeira 
Portugal 46 
38 
70 
34 
39 
52 45 
39 
75 
34 
40 
54 47 
39 
72 
34 
47 
54 49 
39 
74 
34 
46 
55 50 
39 
76 
33 
48 
56 52 
41 
80 
35 
50 
59 
Northern Ireland 
United Kingdom 79 
102 78 
104 78 
105 77 
103 76 
101 72 
95 
EUR12 
Average Objective 1 100 
61 100 
62 100 
62 100 
63 100 
63 100 
64 
Source : Eurostat 
187 
Statistical annex 
Table A.21 
^WÊ^B^^^W^j^M^jfJ^SiblaJ^^^^^ 
Region 
Eliada 
Galicia 
Asturias 
Castilla - Leôn 
Castilla - La Mancha 
Extremadura 
Comunidad Valenciana 
Andalucia 
Murcia 
Ceuta Y Melilla 
Canarias 
Espana 
Corse 
France Employment change 
1986-91 
(%) 
Ireland 5.5 
45 
11.8 
8.7 
12.9 
19.8 
21.1 
26.5 
27.2 
17.1 
16.3 
7.5 
3.6 
4.1 GDP/employed 
(EUR12 = 100) 
1986 
56 
64 
89 
85 
76 
72 
95 
89 
96 
114 
105 
95 
101 
114 
81 1991 
55 
65 
90 
82 
88 
79 
91 
90 
89 
92 
108 
95 
117 
94 
Campania 
Abruzzi 
Molise 
Puglia 
Basilicata 
Calabria 
Sicilia 
Sardegna 
Italia 
Portugal 
Northern Ireland 
United Kingdom 
EUR12 
Average Objective 1 2.9 
6.3 
3.1 
2.5 
4.9 
-2.2 
2.0 
8.5 
2.9 
3.4 
5.2 
5.6 
6.4 
6.4 83 
90 
82 
87 
76 
74 
89 
90 
101 
53 
86 
ii 100 
75 88 
92 
86 
92 
76 
76 
90 
87 
105 
61 
79 
il 100 
78 
Source : Eurostat, estimates DG XVI 
188 
• Statistical annex 
Table A.22 
Community initiatives, 1994-1999 
(bn ECUs, 1994 prices) 
Interreg/Regen 
Rural Development (Leader II) 
Regis 
Employment 
Now 
Horizon 
Youthstart 
Industrial Change 
Adapt 
Rechar 
Résider 
Konver 
Retex 
Portuguese Textiles Industry 
SMEs 
Urban Policy 
PESCA (fisheries) 
Reserve 
TOTAL 
To meet the commitments agreed at Edinburgh and included in the regulations, at least 8.15 billion ECUsHhus't go to Objective 1 regions and at 
least 5.2 billion ECUs to Greece, Spain, Ireland and Portugal. 
Source : European Commission 
189 
Table A.23 
mm 
Indicator 
Population 
Population change 
Net migration 
Territory 
Density 
Total employment 
change 
Industrial 
employment change 
Participation rate 
Unemployment rate 
Agriculture 
(% total emp.) 
Industry 
(% total emp.) 
Services 
(% total emp.) 
GDP per head (PPS) 
GDP per head (ECU) 
GDP per person 
employed (PPS) 
GDP per person 
employed (ECU) 1 
o 
Q. 
90 
90/80 
90 
90 
90 
92/90 
92/90 
91 
93 
90 
90 
90 
91-92 
91-92 ! Regions 
ê 
c •° i c E 
o o 
.* 0. II O) 
1-
3 
C 
0> 
T3 
C 
S CO 
£ 
C 
< 
c 
Û) 
CO 
£ 
o 
CO 
CO c o 
CO JZ o 
CO 
en c 
<D c 
I. o Û) 
OQ 
CO 
CO 
UJ 8 c 
CO 
E 
I-
o + 
CM 
tx 3 Hi 
1000s 
%p.a. 
% 
1000 km2 
inhab/km2 
%p. a. 
%p. a. 
% 
% 
% 
% 
% 
EUR12 = 100 
EUR12=100 1976 2664 2995 4979 2713 1279 
0.9 0.0 -0.3 -0.5 -0.1 1.1 
-2.1 -2.3 -2.6 -2.4 -2.5 -2.3 
23.6 29.1 20.6 18.3 16.3 0.4 
82.0 89.0 139.0 260.3 161.0 3862.0 
-15.6 -12.2 -15.3 -12.7 -14.9 -11.9 
-22.1 -21.7 -23.0 -27.8 -28.6 -24.4 
53.0 54.4 53.5 52.7 52.6 55.2 16434 
-0.2 
-2.2 
108.2 
148.9 
-14.0 
-25.6 
53.3 | 79113 
0.2 
0.8 
| 356.9 
222.0 
-2.0 
-8.4 
48.9 
7.0 14.1 12.0 13.6 11.5 12.8 10.9 j 12.5 
I 
163 112 10.0 6.0 8.1 0.8 I 8.9 j 4.4 
29.9 41.4 46.6 51.9 51.0 32.7 
53.8 46.4 43.4 42.1 40.9 66.5 
37.3 40.8 39.6 37.3 34.1 48.7 
40.8 44.6 43.4 40.8 37.3 53.4 
91-92 | EUR12=100 ! 35.4 37.3 35.6 36.9 -32.5 38.9 
91-92 EUR12=100 | 38.8 40.9 39.0 40.4 35.7 42.6 44.7 
46.4 
38.4 
42.1 
36.1 
39.6 344149 
0.3 
0.1 
2361.0 
145.8 
0.0 
0.0 
45.3 
10.4 
8.1 
40.1 32.3 
55.5 59.7 
106.5 
117.0 100.0 
100.0 
94.3 100.0 
103.2 100.0 
New Lander included in Germany (except for employment structure) and EUR12 (except for employment structure and participation) 
industrial employment change : for manufacturing and mining industries only enterprises with more than 20 employees 
Participation rate : Arbeitsmarkt-Monitor 7/91. Aggregate migration between East and West only 
Unemployment rates : LFS and DG XVI calculations 
GDP : preliminary results for 1992 
190 
Agriculture 
Industry 
Services . ,;;.: Table A.24 * - ;:;4^v^^f^;T^:s' 
.. > Sectoral changes in .the new German l^ndër,^^||^%ip ::V 
compared to the old German Lander and EUR12;f A 
1989 New Lander 
1990 1991 1992 
10 
45 
45 8.9 
44.7 
46.4 6.2 
41.6 
52.2 4.4 
36.6 
59 Old Lander 
1990 
3.7 
38.6 
57.4 Germany 
1990 
4.4 
40.1 
555 EUR12 
1990 
8.1 
32.3 
59.7 
Source : National statistics 
191 
msmm «5F %i^mTv, ^ ~-- - -'-*>* <-J: * 
Table A-25 
Regions of the Community ranked according to their level of GDP per head1 
Rank [ Region GDP/heid in PPS 
average 
(89-90-91) 
EUR12=100 Unemployment 
rate average 
(91-92-93) Population 1991 
Total 
(in millions) cumulative 
share (%) 
1 
2 
3 
4 
S 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
60 
61 
62 Thûringen (0) 
Mecklenburg-Vorpommern (0) 
Sachsen (D) 
Alentejo (P) 
Sachsen - Anhalt (D) 
Voreio Aigaio (GR) 
Brandenburg (D) 
Ipeiros (GR) 
Guadeloupe (F) 
Centra (P) 
Dytiki Ellada (GR) 
Anatoiiki Make, Thraki (GR) 
Ionia Nisia (GR) 
Thessalia (GR) 
Réunion (F) 
Kriti (GR) 
Kentriki Makedonia (GR) 
Peloponnisos (GR) 
Algarve (P) 
Extremadura (E) 
Dytiki Makedonia (GR) 
Norte (P) 
Notio Aigaio (GR) 
Attiki (GR) 
Martinique (F) 
Guyane (F) 
Andalucia (E) 
Calabria (I) 
Sterea Ellada (GR) 
Galicia (E) 
Castilla - La Mancha (E) 
Ceuta Y Melilla (E) 
Basilicata (I) 
Castilla - Leôn (E) 
Sicilia (0 
Ireland (IRL) 
Campania (I) 
Murcia (E) 
Asturias (E) 
Puglia (I) 
Sardegna (I) 
Cantabria (E) 
Canarias (E) 
Northern Ireland (UK) 
Comunidad Valenciana (E) 
Usboa e vale do Tejo (P) 
Merseyside (UK) 
Highlands, Islands (UK) 
South Yorkshire (UK) 
Hainaut (B) 
Flevoland (NL) 
Molise (I) 
Corse ,(F) 
Cornwall, Devon (UK) 
Northumberland, Tyne, Wear (UK) 
Clwyd, Dyfed, Gwynedd, Powys (UK) 
LQneburg (D) 
Namur (B) 
Uncolnshir© (UK) 
Friesland (NL) 
Cleveland, Durham (UK) 
Gwent. Mid Glamorgan (UKi 30.0 
33.0 
33.0 
33.9 
35.0 
35.2 
36.0 
36.2 
39.0 
39.6 
40.8 
43.3 
43.7 
43.7 
45.0 
45.5 
46.8 
47.3 
47.9 
49.5 
50.2 
50.2 
52.2 
52.3 
53.0 
54.0 
57.8 
57.9 
58.0 
58.3 
63.1 
63.6 
64.5 
66.7 
67.5 
68.0 
70.2 
71.3 
71.5 
74.1 
74.2 
74.4 
74.5 
75.1 
76.0 
76.6 
76.7 
76.9 
77.5 
77.6 
78.1 
78.8 
79.8 
80.2 
80.4 
81.1 
81.9 
82.6 
83.1 
83.6 
83.8 
84.5 139.3 
158.8 
125.9 
85.1 
145.3 
100.8 
129.4 
111.1 
250.5 
28.3 
98.8 
61.1 
44.7 
78.6 
304.2 
45.3 
70.0 
63.7 
39.8 
279.9 
90.5 
35.0 
40.7 
1116 
239.9 
231.3 
290.5 
206.4 
79.5 
160.3 
167.2 
271.7 
223.5 
179.6 
230.4 
183.3 
224.0 
208.8 
188.4 
157.5 
196.2 
179.3 
267.0 
165.8 
2022 
53.5 
1525 
114.1 
124.5 
141.8 
78.3 
156,5 
114.7 
105.7 
126.7 
92.7 
49.9 
107.5 
85.7 
105.5 
124.5 
JIM. 2.6 
1.9 
4.8 
0.5 
2.9 
0.2 
2.6 
0.3 
0.4 
1.7 
0.7 
0.6 
0.2 
0.7 
0.6 
0.5 
1.7 
0.6 
0.3 
1.1 
0.3 
3.5 
0.3 
3.5 
0.3 
0.1 
6.9 
2.2 
0.6 
2.8 
1.7 
0.1 
0.6 
2.6 
5.2 
3.5 
5.8 
1.0 
1.1 
4.1 
1.7 
0.5 
1.5 
1.6 
3.8 
3.3 
1.4 
0.3 
1.3 
1.3 
0.2 
0.3 
0.3 
1.5 
1.4 
1.1 
1.5 
0.4 
0.6 
0.6 
1.2 
_L8 0.8 
1.3 
2.7 
2.9 
3.7 
3.8 
4.5 
4.6 
4.7 
5.2 
5.4 
5.6 
5.6 
5.9 
6.0 
6.2 
6.7 
6.9 
7.0 
7.3 
7.4 
8.4 
8.4 
9.5 
9.6 
9.6 
11.6 
12.2 
12.4 
13.2 
13.7 
13.7 
13.9 
14.7 
16.2 
17.2 
18.9 
19.2 
19.5 
20.7 
21.2 
21.3 
21.8 
22.2 
23.3 
24.3 
24.7 
24.8 
25.1 
25.5 
25.6 
25.7 
25.7 
26.2 
26.6 
26.9 
27.4 
27.5 
27.6 
27.8 
28.2 
192 
%t>Vf,"• "JTW,$WX>?pil 'j-*,- :'*•, 
Statistical annex 
Table A.25 
Regions of the Community ranked according to their level of GDP per head1 
Population 1991 Rank Region GDP/head in PPS 
average 
(89-90-91) 
EUR12=100 Unemployment 
rate average 
(91-92-93) (in Total 
millions) cumulative 
share (%) 
63 j Rioja (E) 
64 j Luxembourg (B) 
65 I Aragon (E) 
66 : Salop, Staffordshire (UK) 
67 I Languedoc-Roussillon (F) 
68 | Trier (D) 
69 ! Limousin (F) 
70 | Essex (UK) 
71 I Hereford, Worcs, Warwick (UK) 
72 j Dumfries-Gall, Strathciyde (UK) 
73 ! Drenthe (NL) 
74 ! Gelderland (NL) 
75 ; PafsVasco (E) 
76 ! Overijssel (NL) 
77 | Nord - Pas-de-Calais (F) 
78 I 0st for Storebit (DK) 
79 S Kent (UK) 
80 ; Abruzzi (I) 
81 ! Derbyshire, Nottingham, (UK) 
82 | Poitou-Charentes (F) 
83 \ Lancashire (UK) 
84 j Bretagne (F) 
85 ! Greater Manchester (UK) 
86 I Auvergne (F) 
87 I West Yorkshire (UK) 
88 j Koblenz (D) 
89 ! Dorset, Somerset (UK) 
90 j North Yorkshire (UK) 
91 j Cataluna (E) 
92 j Lorraine (F) 
93 j Weser-Ems (D) 
94 ! Bord-Centr-Fife-Lothian-Tay (UK) 
95 i Madrid (E) 
96 I Limburg (NL) 
97 j West Midlands (County) (UK) 
98 { Picardie (F) 
99 I Basse-Normandie (F) 
100 ! Midi-Pyrénées (F) 
101 i Munster (D) 
102 ; Humberside (UK) 
103 i Oberpfalz (D) 
104 i Liège (B) 
105 j Navarra (E) 
106 ! Niederbayern (D) 
107 j Schleswig-Holstein (D) 
108~* I Pays de la Loire (F) 
109 I Hampshire, Isle of Wight (UK) 
110 ; GieBen (D) 
111 \ Baléares (E) 
112 ; Noord-Brabant (NL) 
113 ! Bourgogne (F) 
114 ! Umbria (I) 
115 I Surrey, East-West Sussex (UK) 
116 i Vest for Storebit (DK) 
117 i Unterfranken . (D) 
118 i Oost-Vlaander (B) 
119 j EastAnglia (UK) 
120 ! Provence-Alpes-Côte d'Azur (F) 
121 ! Bedford, Hertfordshire (UK) 
122 | Centre (F) 
123 I Cumbria (UK) 
J.24, I LJmbyrq ffiL 84.6 
84.7 
84.8 
84.8 
85.1 
86.5 
86.8 
86.8 
87.5 
88.4 
88.5 
88.9 
89.1 
89.7 
89.8 
90.0 
90.2 
90.2 
90.3 
90.5 
91.1 
91.4 
91.7 
91.7 
92.2 
92.4 
92.5 
92.6 
92.7 
93.1 
94.0 
94.3 
94.4 
94.8 
95.0 
95.2 
95.2 
95.3 
95.4 
95.4 
95.6 
95.8 
95.9 
96.5 
96.9 
97.6 
97.9 
97.9 
98.3 
98.6 
98.9 
98.9 
99.4 
99.4 
99.6 
99.7 
99.8 
101.5 
102.6 
103.0 
103.3 125.8 
63.4 
125.4 
82.3 
141.6 
40.7 
88.4 
89.0 
80.0 
125.0 
92.1 
75.8 
212.5 
77.2 
132.4 
111.7 
89.3 
116.1 
98.6 
121.0 
88.2 
93.0 
109.9 
105.6 
99.9 
36.8 
87.2 
62.5 
150.8 
95.6 
59.9 
96.3 
143.6 
76.1 
133.6 
107.1 
90.7 
91.1 
60.3 
120.5 
44.7 
116.2 
118.0 
34.6 
51.3 
103.2 
83.1 
47.1 
123.3 
74.7 
100.6 
94.7 
71.4 
105.7 
37.2 
58.6 
78.9 
133.6 
76.7 
98.9 
81.3 0.3 
0.2 
1.2 
1.4 
2.1 
0.5 
0.7 
1.5 
1.2 
2.5 
0.4 
1.8 
2.1 
1.0 
4.0 
0.6 
1.5 
1.3 
2.0 
1.6 
1.4 
2.8 
2.6 
1.3 
2.1 
1.4 
1.1 
0.7 
6.0 
2.3 
2.2 
1.9 
4.9 
1.1 
2.6 
1.8 
1.4 
2.4 
2.5 
0.9 
1.0 
1.0 
0.5 
1.1 
2.6 
3.1 
1.7 
1.0 
0.7 
2.2 
1.6 
0.8 
2.4 
2.8 
1.2 
1.3 
2.1 
4.3 
1.5 
2.4 
0.5 28.7 
28.8 
29.2 
29.6 
30.2 
30.3 
30.5 
31.0 
31.3 
32.0 
32.2 
32.7 
33.3 
33.6 
34.7 
34.9 
35.4 
35.7 
36.3 
36.8 
37.2 
38.0 
38.7 
39.1 
39.7 
40.1 
40.4 
40.6 
42.4 
43.1 
43.7 
44.2 
45.6 
46.0 
46.7 
47.2 
47.6 
48.4 
49.1 
49.3 
49.6 
49.9 
50.0 
50.4 
51.1 
52.0 
52.5 
52.8 
53.0 
53.6 
54.1 
54.3 
55.0 
55.8 
56.2 
56.6 
57.2 
58.4 
58.9 
59.5 
59.7 
59.9 
193 
•s*/y/• « iAn*rvaç8»**'A **,'Sir!S' 
Table Â.25 
Regions of the Community ranked according to their level of <*DP per head1 
Rank T Region GDP/head in PPS 
average 
(89-90-91) 
EUR12=100 Unemployment 
rate average 
(91-92-93) Population 1991 
Total 
(in millions) cumulative 
share (%) 
125 
126 
127 
128 
129 
130 
131 
132 
133 
134 
135 
136 
137 
138 
139 
140 
141 
142 
143 
144 
145 
146 
147 
148 
149 
150 
151 
152 
153 
154 
155 
156 
157 
158 
159 
160 
161 
162 
163 
164 
165 
166 
167 
168 
169 
170 
171 
172 
173 
174 
175 
176 
177 
178 Aquitaine (F) 
Oberfranken (D) 
Cheshire (UK) 
Arnsberg (D) 
Franche-Comté (F) 
Leicester, Northampton (UK) 
Marche (I) 
Detmold (D) 
West-Vlaanderen (B) 
Zuid-Holland (NL) 
Avon,Gloucester,Wiltshire (UK) 
Utrecht (NL) 
Kassel (D) 
Saarland (D) 
Haute-Normandie (F) 
Zealand (NL) 
Toscana (I) 
Rhône-Alpes (F) 
Freiburg (D) 
Champagne-Ardenne (F) 
Berks, Bucks, Oxfordshire (UK) 
Rheinhessen-Pfalz (D) 
Schwaben (D) 
Braunschweig (D) 
Kôln (D) 
Tubingen (D) 
Alsace (F) 
Noord-Holland (NL) 
Uguria (I) 
Berlin (D) 
Hannover (D) 
Brabant (B) 
Veneto (I) 
Lazio (I) 
Grampian (UK) 
Piemonte (I) 
Friuli-Venezia Giulia (I) 
Trentino-Alto Adige (I) 
DQsseldorf (D) 
Karlsruhe (D) 
Antwerpen (B) 
Hovedstadsregionen (DK) 
Mittelfranken (D) 
Luxembourg (L) 
Gronlngen (NL) 
Emilia-Romagna (I) 
Valle d'Aosta (I) 
Lombardia (I) 
Stuttgart (D) 
Oberbayern (D) 
Bremen (D) 
Greater London (UK) 
Darmstadt (D) 
Ile de France (F) 
179 [..Hamburg „..,. (D) .J.. 103.3 
103.9 
104.0 
104.2 
104.2 
104.6 
104.7 
106.0 
106.3 
106.3 
106.6 
107.1 
107.4 
107.6 
108.4 
108.7 
109.4 
109.7 
110.0 
110.7 
110.8 
110.9 
111.1 
112.3 
112.8 
112.9 
113.7 
113.8 
115.8 
116.3 
116.6 
116.6 
116.6 
116.8 
117.3 
119.6 
121.6 
122.0 
122.8 
124.2 
125.6 
126.7 
126.7 
127.2 
127.4 
127.5 
129.6 
134.7 
137.6 
148.1 
149.7 
151.2 
162.9 
166.8 
194.5 120.3 
39.1 
84.6 
66.4 
84.3 
79.7 
66.7 
49.8 
47.2 
75.1 
85.7 
68.7 
53.3 
68.4 
124.8 
75.1 
80.7 
99.5 
34.2 
100.6 
63.6 
44.9 
29.4 
71.0 
59.5 
30.4 
59.1 
81.4 
94.9 
90.1 
59.1 
74.4 
47.5 
108.8 
55.1 
76.4 
57.5 
32.7 
67.9 
36.3 
71.5 
93.9 
36.4 
20.1 
1126 
46.2 
82.8 
41.8 
30.8 
27.1 
85.8 
131.2 
35.0 
86.3 
59.4 2.8 
1.1 
1.0 
3.7 
1.1 
1.5 
1.4 
1.9 
l.i 
3.2 
2.0 
1.0 
1.2 
1.1 
1.7 
0.4 
3.6 
5.4 
2.0 
1.3 
2.0 
1.9 
1.6 
1.6 
4.0 
1.6 
1.6 
2.4 
1.7 
3.4 
2.0 
2.2 
4.4 
5.2 
0.5 
4.4 
1.2 
0.9 
5.2 
2.5 
1.6 
1.7 
1.6 
0.4 
0.6 
3.9 
0.1 
8.9 
3.6 
3.8 
0.7 
6.8 
3.5 
10.7 
1.6 60.7 
61.0 
61.3 
624 
627 
63.1 
63.5 
64.1 
64.4 
65.3 
65.9 
66.2 
66.6 
66.9 
67.4 
67.5 
68.5 
70.1 
70.7 
71.0 
71.6 
72.2 
72.6 
73.1 
74.3 
74.7 
75.2 
75.9 
76.4 
77.4 
78.0 
78.6 
79.9 
81.4 
81.5 
82.8 
83.2 
83.4 
84.9 
85.6 
86.1 
86.6 
87.1 
87.2 
87.3 
88.5 
88.5 
91.1 
92.2 
93.2 
93.4 
95.4 
96.4 
99.5 
100.0 
Excludes Azores and Madeira far which no GDP/head figures are available. 
NUTS2 regions, except new German lander (levell)for whkh GDP is 1991 only. EVR12 excludes new Lander. 
Denmark is divided into 3 regions for statistical purposes. 
Fur the D.O. M. (F) figures come from national sources (INSEE). 
Source : Eurostat 
194 
"^^Z'^f mmmwMWmm®mM - :-;'>;*-¥^r-fCvC/ Statistical annex 
Table A.26 
Regions of the Community ranked according to their level of unemployment 
Rank i Region Unemployment rate 
average (91-92-93) 
Rate Index 
EUR12=100 GDP/head in 
PPS average 
(89-90-91) 
EUR12=100 Population 1991 
Total 
(in millions) cumulative 
share (in %) 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 -
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
60 
.6J_ Réunion (F) 
Andalucia (E) 
Extremadura (E) 
Ceuta Y Melilla (E) 
Canarias (E) 
Guadeloupe (F) 
Martinique (F) 
Guyane (F) 
Sicilia (I) 
Campania (I) 
Basilica ta (I) 
Pais Vasco (E) 
Murcia (E) 
Calabria (I) 
Comunidad Valenciana (E) 
Sardegna (I) 
Asturias (E) 
Ireland (IRL) 
Castilla - Leén (E) 
Cantabria (E) 
Castilla - La Mancha (E) 
Northern Ireland (UK) 
Galicia (E) 
Mecklenburg-Vorpommern (D) 
Puglia (I) 
Moiise (I) 
Merseyside (UK) 
Cataluna (E) 
Sachsen - Anhalt (D) 
Madrid (E) 
Hainaut (B) 
Languedoc-Roussillon (F) 
Thûringen (D) 
West Midlands (County) (UK) 
Provence-Alpes-Côte d'Azur (F) 
Nord - Pas-de-Calais (F) 
Greater London (UK) 
Brandenburg (D) 
Northumberland, Tyne, Wear (UK) 
Sachsen (D) 
Rioja (E) 
Aragon (E) 
Dumfries-Gall,, Strathclyde (UK) 
Haute-Normandie (F) 
South Yorkshire (UK) 
Cleveland, Durham (UK) 
Baléares (E) 
Poitou-Charentes (F) 
Humberside (UK) 
Aquitaine (F) 
Navarra (E) 
Liège (B) 
Abruzzi (I) 
Corse (F) 
Highlands, islands (UK) 
Attiki (GR) 
Groningen (NL) 
0st for Storebaelt (DK) 
Ipeiros (GR) 
Greater Manchester (UK) 
y^9 , »),, 37.0 
27.4 
26.3 
25.6 
25.1 
24.0 
24.0 
16.0 
21.7 
21.1 
21.0 
20.0 
19.7 
19.4 
19.0 
18.5 
17.7 
17.3 
16.9 
16.9 
15.7 
15.6 
15.1 
14.9 
14.8 
14.7 
14.4 
14.2 
13.7 
13.5 
13.3 
13.3 
13.1 
12.6 
12.6 
12.5 
12.3 
12.2 
11.9 
11.9 
11.8 
11.8 
11.8 
11.7 
11.7 
11.7 
11.6 
11.4 
11.3 
11.3 
11.1 
10.9 
10.9 
10.8 
10.7 
10.6 
10.6 
10.5 
10.5 
10.3 
J02 304.2 
290.5 
279.9 
271.7 
267.0 
250.5 
239.9 
231.3 
230.4 
224.0 
223.5 
212.5 
208.8 
206.4 
202.2 
196.2 
188.4 
183.3 
179.6 
179.3 
167.2 
165.8 
160.3 
158.8 
157.5 
156.5 
152.5 
150.8 
145.3 
143.6 
141.8 
141.6 
139.3 
133.6 
133.6 
132.4 
131.2 
129.4 
126.7 
125.9 
125.8 
125.4 
125.0 
124.8 
124.5 
124.5 
123.3 
121.0 
120.5 
120.3 
118.0 
116.2 
116.1 
114.7 
114.1 
112.6 
112.6 
111.7 
111.1 
109.9 
108.8 45.0 
57.8 
49.5 
63.6 
74.5 
39.0 
53.0 
54.0 
67.5 
70.2 
64.5 
89.1 
71.3 
57.9 
76.0 
74.2 
71.5 
68.0 
66.7 
74.4 
63.1 
75.1 
58.3 
33.0 
74.1 
78.8 
76.7 
92.7 
35.0 
94.4 
77.6 
85.1 
30.0 
95.0 
101.5 
89.8 
151.2 
36.0 
80.4 
33.0 
84.6 
84.8 
88.4 
108.4 
77.5 
83.8 
98.3 
90.5 
95.4 
103.3 
95.9 
95.8 
90.2 
79.8 
76.9 
52.3 
127.4 
90.0 
36.2 
91.7 
116.8 0.6 
6.9 
1.1 
0.1 
1.5 
0.4 
0.3 
0.1 
5.2 
5.8 
0.6 
2.1 
1.0 
2.2 
3.8 
1.7 
1.1 
3.5 
26 
0.5 
1.7 
1.6 
2.8 
1.9 
4.1 
0.3 
1.4 
6.0 
2.9 
4.9 
1.3 
2.1 
2.6 
2.6 
4.3 
4.0 
6.8 
2.6 
1.4 
4.8 
0.3 
1.2 
2.5 
1.7 
1.3 
1.2 
0.7 
1.6 
0.9 
2.8 
0.5 
1.0 
1.3 
0.3 
0.3 
3.5 
0.6 
0.6 
0.3 
2.6 
5.2 0.2 
2.2 
25 
25 
3.0 
3.1 
3.2 
3.2 
4.7 
6.4 
6.6 
7.2 
7.5 
8.1 
9.2 
9.7 
10.0 
11.0 
11.8 
11.9 
12.4 
12.9 
13.7 
14.3 
15.4 
15.5 
16.0 
17.7 
18.5 
20.0 
20.3 
20.9 
21.7 
22.5 
23.7 
24.8 
26.8 
27.6 
28.0 
29.4 
29.4 
29.8 
30.5 
31.0 
31.4 
31.7 
31.9 
32.4 
32.6 
33.4 
33.6 
33.9 
34.2 
34.3 
34.4 
35.4 
35.6 
35.7 
35.8 
36.6 
38.1 
195 
Statistical annex *WW»*£VsJS3Su '*»/J«rtS*%»a^. ^ ^*K-V 
Table A.26 
Regions of the Community ranked according to their level of unemployment 
Rank Region Unemployment rate 
average (91-92-93) 
Rate Index 
\ EUR12=100 GDP/head in 
PPS average 
(89-90-91) 
EUR12=100 Population 1991 
Total 
(in millions) cumulative 
share (in %) 
62 
63 
64 
66 
65 
67 
68 
69 
70 
72 
71 
73 
74 
75 
76 
77 
78 
79 
80 
81 
82 
83 
84 
85 
86 
87 
88 
89 
90 
91 
92 
93 
94 
95 
96 
97 
98 
99 
100 
101 
102 
103 
104 
105 
106 
107 
108 
109 
110 
111 
112 
113 
114 
115 
116 
117 
118 
119 
120 
121 
122 Namur (B) 
Picardie (F) 
Gwent, Mid Glamorgan (UK) 
Cornwall, Devon (UK) 
Vest for Storebaelt (DK) 
Auvergne (F) 
Friesland (NL) 
Pays de la Loire (F) 
Voreio Aigaio (GR) 
Bourgogne (F) 
Champagne-Ardenne (F) 
West Yorkshire (UK) 
Rhône-Alpes (F) 
Centre (F) 
Dytiki Ellada (GR) 
Derbyshire, Nottingham (UK) 
Bord-Centr-Fife-Lothian-Tay (UK) 
Lorraine (F) 
Uguria (I) 
Umbria (I) 
Hovedstadsregionen (DK) 
Bretagne (F) 
Clwyd, Dyfed, Gwynedd, Powys (UK) 
Drenthe (NL) 
Midi-Pyrénées (F) 
Basse-Normandie (F) 
Dytiki Makedonia (GR) 
Berlin (D) 
Kent (UK) 
Essex (UK) 
Limousin (F) 
Lancashire (UK) 
Dorset, Somerset (UK) 
Ile de France (F) 
Bremen (D) 
Avon,Gloucester, Wiltshire (UK) 
Uncolnshire (UK) 
Alentejo (P) 
Limburg (B) 
Cheshire (UK) 
Franche-Comté (F) 
Hampshire, Isle of Wight (UK) 
Valle d'Aosta (I) 
Salop, Staffordshire (UK) 
Noord-Holland (NL) 
Cumbria (UK) 
Toscana (I) 
Hereford, Worcs, Warwick (UK) 
Leicester, Northampton (UK) 
Sterea Ellada (GR) 
East Anglia (UK) 
Thessalia (GR) 
Hevoland (NL) 
Overijssel (NL) 
Bedford, Hertfordshire (UK) 
Piemonte (I) 
Umburg (NL) 
Gelderland (NL) 
Zuid-Holland (NL) 
Zeeland (NL) 
NffftfflnfiffltaMffiflMU „• m-n, 10.1 
10.1 
10.0 
10.0 
10.0 
9.9 
9.9 
9.7 
9.5 
9.5 
9.5 
9.4 
9.4 
9.3 
9.3 
9.3 
9.1 
9.0 
8.9 
8.9 
8.8 
8.8 
8.7 
8.7 
8.6 
8.5 
8.5 
8.5 
8.4 
8.4 
8.3 
8.3 
8.2 
8.1 
8.1 
8.1 
8.1 
8.0 
8.0 
8.0 
7.9 
7.8 
7.8 
7.7 
7.7 
7.7 
7.6 
7.5 
7.5 
7.5 
7.4 
7.4 
7.4 
7.3 
7.2 
7.2 
7.2 
7.1 
7.1 
7.1 
7.0. 107.5 
107.1 
106.0 
105.7 
105.7 
105.6 
105.5 
103.2 
100.8 
100.6 
100.6 
99.9 
99.5 
98.9 
98.8 
98.6 
96.3 
95.6 
94.9 
94.7 
93.9 
93.0 
92.7 
92.1 
91.1 
90.7 
90.5 
90.1 
89.3 
89.0 
88.4 
88.2 
87.2 
86.3 
85.8 
85.7 
85.7 
85.1 
84.8 
84.6 
84.3 
83.1 
82.8 
82.3 
81.4 
81.3 
80.7 
80.0 
79.7 
79.5 
78.9 
78.6 
78.3 
77.2 
76.7 
76.4 
76.1 
75.8 
75.1 
75.1 
74.7... 82.6 
95.2 
84.5 
80.2 
99.4 
91.7 
83.6 
97.6 
35.2 
98.9 
110.7 
92.2 
109.7 
103.0 
40.8 
90.3 
94.3 
93.1 
115.8 
98.9 
126.7 
91.4 
81.1 
88.5 
95.3 
95.2 
50.2 
116.3 
90.2 
86.8 
86.8 
91.1 
92.5 
166.8 
149.7 
106.6 
83.1 
33.9 
103.3 
104.0 
104.2 
97.9 
129.6 
84.8 
113.8 
103.3 
109.4 
87.5 
104.6 
58.0 
99.8 
43.7 
78.1 
89.7 
102.6 
119.6 
94.8 
88.9 
106.3 
108.7 0.4 
1.8 
1.8 
1.5 
2.8 
1.3 
0.6 
3.1 
0.2 
1.6 
1.3 
2.1 
5.4 
2.4 
0.7 
2.0 
1.9 
2.3 
1.7 
0.8 
1.7 
2.8 
1.1 
0.4 
2.4 
1.4 
0.3 
3.4 
1.5 
1.5 
0.7 
1.4 
1.1 
10.7 
0.7 
2.0 
0.6 
0.5 
0.7 
1.0 
1.1 
1.7 
0.1 
1.4 
2.4 
0.5 
3.6 
1.2 
1.5 
0.6 
2.1 
0.7 
0.2 
1.0 
1.5 
4.4 
1.1 
1.8 
3.2 
0.4 38.2 
38.7 
39.2 
40.5 
40.1 
40.9 
41.0 
41.9 
42.0 
42.8 
42.4 
43.4 
45.0 
45.7 
45.9 
46.4 
47.0 
47.7 
48.2 
48.4 
48.9 
49.7 
50.0 
50.2 
50.9 
51.3 
51.3 
52.3 
52.8 
53.2 
53.4 
53.8 
54.2 
57.2 
57.4 
58.0 
58.2 
58.4 
58.6 
58.9 
59.2 
59.7 
59.7 
60.1 
60.8 
60.9 
62.0 
62.3 
62.7 
62.9 
63.5 
63.7 
63.8 
64.1 
64.5 
65.8 
66.1 
66.6 
67.6 
67.7 
196 
yÈÊ£t"&t£<k''&& i'Tb^»?'^}*^- >" "'"'" **$^?i?£***~*\- s'*i^ai^f \ l annex 
Table A.26 
Regions of the Community ranked according to their level of unemployment 
Rank Region Unemployment rate 
average (91-92-93) 
Rate I Index 
EU R12=100 GDP/head in 
PPS average 
(89-90-91) 
EU R12=100 Population 1991 
Total 
(in millions) cumulative 
share (in %) 
123 
124 
125 
126 
127 
128 
129 
130 
131 
132 
133 
134 
135 
136 
137 
138 
139 
140 
141 
142 
143 
144 
145 
146 
147 
148 
149 
150 
151 
152 
153 
154 
155 
156 
157 
158 
159 
160 
161 
162 
163 
164 
165 
166 
167 
168 
169 
170 
171 
172 
173 
174 
175 
176 
177 
178 
179 
180 
181 Brabant 
Antwerpen 
Surrey, East-West Sussex 
Braunschweig 
Kentriki Makedonia 
Utrecht 
Saarland 
Dûsseldorf 
Marche 
Arnsberg 
Peloponnisos 
Berks, Bucks, Oxfordshire 
Luxembourg 
North Yorkshire 
Anatolikl Make, Thraki 
Munster 
Weser-Ems 
Kôln 
Hamburg 
Alsace 
Hannover 
Oost-Vlaanderen 
Friuli-Venezia Giulia 
Grampian 
Lisboa e vale do Tejo 
Kassel 
Schleswig-Holstein 
LGneburg 
Detmold 
Veneto 
West-Vlaanderen 
GieBen 
Emilia-Romagna 
Kriti 
Rheinhessen-Pfalz 
Oberpfalz 
Ionia Nisia 
Lombardia 
Notio Aigaio 
Trier 
Acores 
Algarve 
Oberfranken 
Unterfranken 
Koblenz 
Mittelfranken 
Karlsruhe 
Darmstadt 
Norte 
Niederbayern 
Freiburg 
Madeira 
Trentino-Alto Adige 
Stuttgart 
Tubingen 
Schwa ben 
Centro 
Oberbayern 
Luxembourg 
NUTS 2 regions, except new German Lander (level I) 
Source: Eurostat (B) 7.0 ! 74.4 | 116.6 
(B) 6.7 71.5 125.6 
(UK) 6.7 71.4 j 99.4 
(D) 6.7 71.0 j 1123 
(GR) 6.6 70.0 i 46.8 
(NL) 6.5 68.7 j 107.1 
(D) 6.4 68.4 | 107.6 
(D) 6.4 67.9 ! 1228 
(I) 6.3 66.7 | 104.7 
(D) 6.3 66.4 j 104.2 
(GR) 6.0 63.7 I 47.3 
(UK) 6.0 63.6 110.8 
(B) 6.0 63.4 84.7 
(UK) 5.9 j 625 92.6 
(GR) 5.8 61.1 43.3 
(D) 5.7 60.3 95.4 
(D) 5.6 59.9 94.0 
(D) 5.6 59.5 1128 
(D) 5.6 59.4 194.5 
(F) 5.6 59.1 113.7 
(D) 5.6 j 59.1 116.6 
(B) 5.5 58.6 99.7 
(I) 5.4 57.5 j 121.6 
(UK) 5.2 55.1 117.3 
(P) 5.0 53.5 76.6 
(D) 5.0 I 53.3 107.4 
(D) 4.8 51.3 96.9 
(D) 4.7 49.9 81.9 
(D) 4.7 49.8 106.0 
(I) 4.5 47.5 116.6 
(B) 4.4 47.2 106.3 
(D) 4.4 47.1 97.9 
(I) 4.4 46.2 127.5 
(GR) 4.3 45.3 | 45.5 
(D) * 4.2 44.9 j 110.9 
(D) 4.2 44.7 95.6 
(GR) 4.2 44.7 43.7 
(I) 3.9 ! 41.8 134.7 
(GR) 3.8 i 40.7 52.2 
(D) 3.8 40.7 86.5 
(P) 3.8 ! 40.4 1 0.0 
(P) 3.7 39.8 i 47.9 
(D) 3.7 39.1 103.9 
(D) 3.5 37.2 99.6 
(D) 3.5 36.8 92.4 
(D) 3.4 36.4 126.7 
(D) 3.4 36.3 124.2 
(D) 3.3 35.0 1629 
(P) 3.3 35.0 50.2 
(D) 3.3 34.6 96.5 
(D) 3.2 34.2 110.0 
(P) 3.2 33.7 j 0.0 
(I) 3.1 327 j 1220 
(D) 2.9 30.8 I 137.6 
(D) 2.9 30.4 1129 
(D) 2.8 29.4 111.1 
(P) 2.7 28.3 39.6 
(D) 2.5 27.1 j 148.1 
(L) 1 1,9 „.. ] 20,1 j ... 1.27,2 
Denmark is divided into 3 regions for statistical purposes. 
For the D.O.M. (F) figures come from national sources (INSEE). 22 
1.6 
2.4 
1.6 
1.7 
1.0 
1.1 
5.2 
1.4 
3.7 
0.6 
2.0 
0.2 
0.7 
0.6 
2.5 
2.2 
4.0 
1.6 
1.6 
2.0 
1.3 
1.2 
0.5 
3.3 
1.2 
2.6 
1.5 
1.9 
4.4 
1.1 
1.0 
3.9 
0.5 
1.9 
1.0 
0.2 
8.9 
0.3 
0.5 
0.2 
0.3 
1.1 
1.2 
1.4 
1.6 
2.5 
3.5 
3.5 
1.1 
2.0 
0.3 
0.9 
3.6 
1.6 
1.6 
1.7 
3.8 
0.4 68.9 
69.4 
70.1 
70.6 
71.1 
71.4 
71.7 
73.2 
73.6 
74.7 
74.9 
75.4 
75.5 
75.7 
75.9 
76.6 
77.2 
78.4 
78.8 
79.3 
79.9 
80.3 
80.6 
80.8 
81.7 
82.1 
82.8 
83.3 
83.8 
85.1 
85.4 
85.7 
86.8 
87.0 
87.5 
87.8 
87.9 
90.5 
90.5 
90.7 
90.7 
90.8 
91.1 
91.5 
91.9 
92.4 
93.1 
94.1 
95.1 
95.4 
96.0 
96.1 
96.3 
97.4 
97.8 
98.3 
98.8 
99.9 
100.0 
197 
Statistical annex 
Table A.27 
Principal indicators for the regions in the Community (NUTS 2) 
Region Population Labour market1 
| Unemployment 
I rate 
a 
> 
< CO 
O) 
o o 
O) (0 
I-a > 
< CO 
CO 
o> 
a> 
OJ 
c 
2 oT 
O Ç 
S CL 
E ® 
ïT CO 9- c c * c o 
CO *-
si Economy 
Share of sectors j GDP three-year 
in total ] average 1989-91 
employment (1991); EUR12=100 
! I 
en 
< en Q. 
JQ 
a 
& 3 
O 
ui 
•a s -o & I & O j o a. E o c o m 
i a. 
E o c o 
40 
& 
Belgique-Belgie 
Vlaams Gewest 
Région Wallonne 
Bruxelles-Brussel 
Antwerpen 
Brabant 
Hainaut 
Liège 
Limburg 
Luxembourg 
Namur 
Oost-Vlaanderen 
West-y!aanderen 
Denmark 
Hovedstadsregionen 
0st for Storebaelt, Ex, Hovedst 
Vector Storebaelt 
Deutschland 
Baden-Wûrttemberg 
Stuttgart 
Karlsruhe 
Freiburg 
Tubingen 
Bayern 
Oberbayern 
Niederbayern 
Oberpfaiz 
Oberfranken 
Mittelfranken 
Unterfranken 
Schwaben 
Berlin 
Brandenburg 
Bremen 
Hamburg 
Hessen 
Darmstadt 
Gieflen 
Kassel 
Mecklenburg-Vorpommern 
Niedersachsen 
Braunschweig 
Hannover 
LOneburg 
Weser-Ems 
Nordrhein-Westfalen 
Dusseldorf 
Koln 67,1 
67,8 
66,3 
65,3 
67,6 
66,9 
66,1 
66,7 
69,8 
64,6 
65,8 
67,5 
66,8 
67,3 
69,0 
65,7 
66,6 
69,6 
69,8 
70,1 
70,3 
69,3 
69,2 
69,3 
70,7 
68,4 
68,9 
68,3 
69,4 
68,6 
67,9 
70,0 
0,0 
69,4 
69,8 
69,9 
70,8 
69,3 
67,9 
0,0 
69,0 
69,0 
69,2 
68,9 
68,9 
69,9 
70,2 
70,8 
•69J7. -1,4 
-1,6 
-1.2 
-0,8 
-1,5 
-1,0 
-0,8 
-1.1 
-4,1 
-2,7 
-1.3 
-1,2 
-0,7 
4,5 
4.8 
3.8 
4,3 
0,6 
0,5 
0,8 
0,0 
0,6 
0,5 
-0,5 
-1,1 
-0,3 
-0,4 
0,0 
-0,5 
0,2 
-0,2 
1,6 
0,0 
-2,5 
-4,7 
-0,2 
-0,4 
0,3 
0,0 
0,0 
-1,5 
-0,4 
-1,8 
-1,3 
-2,0 
-1,7 
-1,7 
-1,7 
ML 2.7 
2,9 
3,1 
0,2 
1,6 
1,6 
2,8 
2,3 
2,9 
8,0 
2,8 
2,7 
5,3 
5,7 
0,0 
0,0 
0,0 
4,2 
3,4 
3,3 
1,2 
4,2 
6,2 
5,9 
3,9 
10,5 
7,9 
6,0 
4,5 
6,3 
7,4 
0,7 
8,7 
1,1 
1,0 
2,6 
1,3 
2,9 
6,3 
13,2 
4,8 
2,2 
3,2 
6,3 
7,4 
2,0 
1,7 
1,7 
3.8 30,5 
33,3 
28,1 
20,2 
35,7 
22,9 
30,5 
29,4 
37,9 
24,4 
20,8 
33,6 
35,6 
27,4 
0,0 
0,0 
0,0 
40,3 
46,2 
47,9 
43,6 
45,8 
47,1 
41,4 
35,7 
42,5 
43,6 
48,6 
44,7 
44,5 
43,1 
31,0 
3'6,4 
29,2 
26,2 
37,3 
36,0 
41,2 
38,3 
28,4 
36,9 
42,3 
35,7 
33,8 
36,4 
42,4 
42,5 
38,3 66,8 
63,8 
68,8 
79,6 
62,7 
75,5 
66,7 
683 
59.2 
67.6 
763 
63,7 
I 59,1 
" 66,3 
0,0 
0,0 
Q.0 
55,5 
503 
48,9 
55,2 
50,0 
46,7 
52.7 
60,5 
47,0 
I 48,4 
45,4 
50,8 
I 49,2 
I 49,5 
I 68,3 
i 54,9 
! 69,7 
I 72,8 
; 60,1 
| 62,7 
i 55,9 
i 55,3 
58,3 
58,2 
55,5 
j 61,1 
I 59,9 
! 56,2 
i 55,6 
! 55,7 
I 60,1 
j 54.5 , 104,4 
105,7 
84,2 
164,4 
125,6 
116,6 
77,6 
95,8 
103.3 
84,7 
82,6 
99,7 
106,3 
106,3 
126,7 
90.0 
99,4 
iÏ7,9 
124,5 
137,6 
124,2 
110,0 
112,9 
120,9 
148,1 
96,5 
95,6 
103,9 
126,7 
99,6 
111,1 
116,3 
36,0 
149,7 
194,5 
140,0 
162,9 
97,9 
107,4 
33,0 
101,9 
112,3 
116,6 
81,9 
94,0 
110,8 
122,8 
112,8 
^5.4 116,6 
112,6 
100,2 
201,2 
139,8 
128,4 
97.5 
110,7 
119,6 
94,2 
100,3 
103,5 
109,5 
84,1 "| 
93.6 ! 
73.0 \ 
80,0 j 
105,2 ! 
105.6 ! 
114,5 ! 
107.7 1 
92,4 \ 
97.7 ! 
98,0 | 
117,9 I 
77,6 ! 
79,6 ! 
83.8 i 
102.8 ! 
83,8 | 
91.0 ! 
97,6 ! 
0,0 | 
144.0 ) 
163.9 I 
118.7 I 
134.1 ! 
87.1 ! 
96,0 | 
ao ! 
94,6 ! 
105,5 j 
105,9 j 
74.2 I 
89,6 ! 
108.8 j 
120,8 I 
108,5 ! 
97.0 .1 i 116,2 
I 112,1 
! 99.8 
l 20a5 
\ 139,3 
I 127,9 
\ 97,1 
! 1103 
; 119.1 
I 93,9 
I 99,9 
! 103,1 
I 109,1 
*"Ï09,i 
121,5 
94,7 
103,9 
ÏÏ6.Ô 
116,5 
126,3 
118,9 
101,9 
107,7 
108,1 
130,1 
85,6 
87.8 
92,4 
113,3 
92,5 
100,4 
107,7 
0,0 
158,9 
180,8 
130,9 
147,9 
96,1 
105,9 
0,0 
104,3 
116,4 
116,9 
81,8 
98,9 
120,1 
133,2 
119,7 
IflLO 
198 
t^v^s^ - '<*: iîf^I^flïé t^w^|;3^«statiètlcal annex 
TableA.27 
Principal indicators for the regions in the Community (NUTS 2) 
Population 
Region 
3 
CL 
O 
CL CO 
Q. 
© 
c 
CO sz o c o 
3 a o a. E 
? © 
CO 
I-
> 
o 
< Labour market I Economy 
Unemployment j Share of sectors f 
rate j in total 
^employment (1991); 
O ] 00 
oc i °> 
o IOC 
OJ : *S 
CO 
O) 
O) 
T-
© 
4-* 
CO 
OC o> 
4) 
OJ 
CO 
l. 
0) > < 5 §.; 
C © i 
>. o»; 
E o ! o CO ! «-
C ! © 
•s o 
c s. < 3 
c GDP three-year 
average 1989-91 
EUR12=100 
a. 
CL 
xi 
CO 
© 
o. to 
CL 
0-, 
© 
o 
Q. 
E © 
c o 
V) 
& 3 O IU 
© >» O 
Q. 
E © 
c o 
CO ii © 
Q. 
Detmold 
Arnsberg 
Rheinland-Pfalz 
Koblenz 
Trier 
Rheinhessen-Pfalz 
Saarland 
Sachsen 
Sachsen - Anhalt 
Schleswig-Holstein 
Tûhringen 
Êïiada 
Voreia Ellada 
Anatoliki Makedonia, Thraki 
Kentriki Makedonia 
Dytiki Makedonia 
Thessalia 
Kentriki Ellada 
Ipeiros 
Ionia Nisia 
Dytiki Ellada 
Sterea Ellada 
Peloponnisos 
Attiki 
Nisia 
Voreio Aigaio 
Notio Aigaio 
Krit.i 
Espana 
Noroeste 
Galteia 
Asturias 
Cantabria 
Noreste 
Pais Vasco 
Navarra 
Rioja 
Aragon 
Madrid 
Centro 
Castilla - Leôn 
Castilla - La Mancha 
Extremadura 
Fste 
Cataluna 
Comunidad Valenciana 
Baléares 
Sur 
Andalucia 0,6 
1.1 
1,1 
0.4 
0,1 
0,6 
0,3 
1,4 
0,8 
0.8 
0,7 
3.6 
1,0 
0,2 
0,5 
0,1 
0.2 
0,7 
0,1 
0,1 
0,2 
0.2 
0,2 
1,0 
0,3 
0,1 
0,1 
..M.. 
11,3 
1.3 
0,8 
0,3 
0,2 
1,2 
0,6 
0,2 
0,1 
0,4 
1,4 
1,6 
0,8 
0,5 
0,3 
3,0 
1,7 
1,1 
0,2 
2.4 
ML 0,3 
0,1 
0,3 
0,2 
0.2 
0,3 
0,0 
0,0 
0,0 
0,0 
0,0 
0,6 
0,6 
0,0 
0,9 
0,2 
0,5 
0,6 
0,4 
0,4 
0,7 
0,7 
0.4 
0,6 
0,6 
0,1 
1,0 
.0,7 
6.4 
0,1 
0,0 
0,0 
0,4 
0,0 
-0,2 
0,4 
0,5 
0,3 
0,3 
0,6 
0,4 
0,6 
0,9 
0,2 
0,0 
0,4 
0,5 
1,0 
-LQ... 295 
470 
193 
176 
99 
280 
419 
255 
137 
168 
158 
77 
58 
40 
90 
31 
52 
45 
37 
84 
62 
37 
39 
910 
57 
52 
49 
64 
77 
98 
95 
106 
99 
59 
293 
50 
52 
25 
612 
25 
28 
22 
27 
174 
188 
163 
136 
82 m i 68,2 
69,5 
68,9 
68,0 
67.9 
69,7 
7a 1 
0,0 
0,0 
69,4 
0,0 
6,6 
0,0 
0,0 
0.0 
0.0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
66,7 
66,6 
66,3 
67,3 
66,3 
68,4 
70,2 
67,3 
66,3 
66,1 
68,0 
65,4 
66,1 
64,6 
65,2 
67,0 
67,7 
66,4 
65,0 
65,4 
65-4..I. 46,6 
45,1 
47,6 
47,7 
45.8 
48,0 
44,8 
0,0 
0,0 
50,5 
0,0 
40,6 
41,9 
45.1 
40,9 
43,5 
41.2 
43,1 
42,5 
45,0 
43.4 
40,9 
44,5 
38,0 
41,6 
35,0 
37,7 
46,5 
38,9 
40,8 
41.9 
38,8 
38.9 
39.5 
40,6 
39,2 
37,6 
38,1 
38,5 
37,0 
38.7 
35,4 
35,7 
41.5 
42,5 
39.9 
41,0 
36,0 5,6 
7,1 
4,7 
4,1 
4,3 
5,3 
7,4 
11,5 
13,6 
5,3 49.8 ! 
66,4 1 
41.3 j 
36.8 1 
40.7 | 
44.9 i 
68.4 j 
125,9 I 
145,3 I 
51,3 j -0,9 
-1.9 
-0,7 
-1,1 
-1.8 
-0.1 
-2,0 
0,0 
0,0 
-2,0 2,1 
1.6 
4.2 
3,3 
8,8 
3.9 
1.0 
4.1 
8,1 
4.8 
..12I8...|..13?,3J....P,0. !..„6,6 
7,8 
6.4 
5,5 
6,2 
8,1 
7,0 
7,3 
9,9 
4,0 
8,8 
7,1 
5,7 
10.0 
4,9 
9,0 
3.6 
. 4,0... 
21,3 
17,8 87,5 
71.8 
61.1 
70,0 
90,5 
78.6 
81,7 
111,1 
44,7 
98,8 
79.5 
63.7 
112,6 
54,7 
100,8 
40,7 
...453... 
194,4 
169,1 
17,0 j 160,3 
19,6 
19,2 
18,6 
22,3 
12,5 
13,6 188,4 
179,3 
171,0 
212,5 
118,0 
125,8 
15,3 ! 125,4 
16,5 | 143,6 
21,0 
19,2 
18,6 
28,9 
19.6 
18,0 
22,8 
15,7 
29,7 196.0 
179,6 
167,2 
279,9 
167,3 
150,8 
202,2 
123,3 
279,4 0.1 
-0,8 
-3,5 
-0,6 
2,1 
0.1 
1.1 
4,9 
0.6 
1.6 
0,2 
-0,1 
0,0 
0,6 
3,6 
-1,5 
...P..5... 
1.2 
2,0 
3,8 
-0,5 
-2,7 
0,6 
0,6 
-1,6 
0,3 
13 
-0,7 
1,7 
1,4 
2.0 
1,8 
0,6 
-2,1 
4,5 
3,7 
1.9 
i jjiffil^lfr^nih ffrjifjltflflfi it ;,|.i;,r ifi|| t • Hijil'il 1 ill f 'ill TI ! M fffliiii 22,2 
31,2 
43,0 
25.1 
29,5 
36,1 
39,8 
34,8 
35,7 
39,0 
38,3 
45.5 
13 
31,6 
20.7 
8.4 
...45,0.. 
Ï6.9 
25.0 
30,2 
16.1 
12,2 
6.7 
2,9 
7.0 
12,0 
12.0 
1,0 
18,0 
18,2 
16.0 
21,0 
5,4 
3.5 
9,1 
3,7 
15,7 46,5 
45,3 
41,0 
40,9 
34,6 
42,7 
38,3 
47,2 
42,5 
29,1 
47,0 
'25,7 ' 
26,3 
20,3 
28,4 
32,2 
24,5 
21,4 
22,5 
17,7 
19,4 
27,2 
19,5 
29,6 
18,1 
17,3 
23,7 
..1.5.?... 
33,0 
28,3 
25,8 
33,6 
32,3 
39,8 
42,0 
41,1 
41,0 
35,3 
28,6 
31,4 
30,0 
37,2 
25,1 
40,0 
42,8 
37.1 
29,8 
273 
i4&MHriUpM 51,4 
53.1 
54,7 
55,8 
56,7 
53,4 
60,7 
48.6 
49.4 
66.1 
46,4 
""52. Ï 
42,5 
36.7 
46.5 
38.4 
39.4 
38,8 
42,7 
46,6 
41.7 
34,5 
35.0 
69.2 
50,4 
61.9 
68,0 
...39,1 
56,1 
46,7 
44,0 
50.4 
55,5 
53.4 
55.1 
51,8 
47,0 
52,7 
70,4 
50,6 
51.8 
46,8 
53,9 
54,6 
53.7 
53,8 
66,5 
56,7 
-57.Q.. 106,0 
104,2 
100,9 
92,4 
86,5 
110,9 
107.6 
33,0 
35,0 
96,9 
30,0 
48.1 
45,8 
43,3 
46,8 
50,2 
43,7 
46,1 
36,2 
43.7 
40,8 
58,0 
47,3 
52,3 
45,2 
35,2 
52,2 
.45,5.. 
75.7 
63,5 
58,3 
71,5 
74,4 
88,4 
89,1 
95,9 
84,6 
84,8 
94,4 
62,0 
66,7 
63,1 
49,5 
87,0 
92,7 
76,0 
98,3 
59,6 
37,8....! 102.0 
103,7 
94.0 
86.0 
87.5 
101,5 
109.8 
0,0 
0,0 
88,1 
0,0 
52^8 
50,9 
42,2 
53,1 
62,3 
49,2 
50,8 
41,1 
41,3 
42,1 
73,0 
51.2 
56,2 
51,9 
42,3 
67,2 
.48,8... 
95,8 
72,9 
63,0 
91,1 
96.0 
108,5 
113,2 
114,8 
97,3 
100,2 
117,3 
84,2 
87,1 
83,8 
76,8 
99,8 
104,4 
90,6 
108,0 
89,4 
88.7 112,5 
114,4 
103.7 
94,8 
96,6 
111.9 
121,1 
0,0 
0,0 
97,3 
0,0 
393 
37,9 
31,4 
39,5 
46,4 
36,6 
37,8 
30,6 
30,7 
31,3 
54,4 
38.1 
41.8 
38,6 
31,5 
50.0 
....3.6,3... 
83,4 
63,5 
55,0 
79,3 
83,5 
94,5 
98,6 
100,1 
84,7 
87,3 
102,2 
73,4 
75.9 
73,1 
66,9 
86,9 
90,9 
78,9 
94,0 
77,9 
21L, 
199 
^ïfâSsssssf^j ^^SïSSï*i«* 
TableA.27 
Principal indicators for the regions in the Community (NUTS 2) 
Labour market 
Region 
Murcia 
Ceuta Y Melilla 
Canarias 
France 
Ile de France 
Bassin parisien 
Champagne-Ardenne 
Picardie 
Haute-Normandie 
Centre 
Basse-Normandie 
Bourgogne 
Nord - Pas-de-Calais 
Est 
Lorraine 
' Alsace 
Franche-Comté 
Ouest 
Pays de la Loire 
Bretagne 
Poitou-Charentes 
Sud-Ouest 
Aquitaine 
Midi-Pyrénées 
Limousin 
Centre-Est 
Rhône-Alpes 
Auvergne 
Méditerranée 
Languedoc-Roussillon 
Provence-Alpes-Côte d'Azur 
Corse 
Départements d'Outre-Mer 
Guadeloupe 
Martinique 
Guyane 
Réunion 
Ireland 
ttaiiia 
Nord Ouest 
Piemonte 
Valle d'Aosta 
Liguria 
Lombardia 
Nord Est 
Trentino-Alto Adige 
Veneto 
Friuli-Venezia Giulia 
Emilla-Romaana Economy 
Share of sectorsf \ GDP three-year 
in total j average 1989-91 
employment (1991)! EUR12=100 
200 
•ir-^ ~ 
i:<'l^j.g§£&&. »~fc. &*~z •ftfgx ' îsfMtMS3piïgA*xb annex 
TableA.27 
Principal indicators for the regions in the Community (NUTS 2) 
Region 
Centro 
Toscana 
Umbria 
Marche 
Lazio 
Campania 
Abruzzi-Molise 
Abruzzi 
Molise 
Sud 
Puglia 
Basilica ta 
Calabria 
Sicilia 
„.Sardeg.na 
Luxembourg (Grand-DuçMj 
Nederland 
Noord-Nederland 
Groningen 
Friesland 
Drenthe 
Oost-Nederland 
Overijssel 
Gelderland 
Flevoland 
West-Nederland 
Utrecht 
Noord-Holland 
Zuid-Holland 
Zeeland 
Zuid-Nederland 
Noord-Brabant 
Limburg 
Portugal 
Continente 
Norte 
Centro 
Lisboa e vale do Tejo 
Alentejo 
Algarve 
Acores 
Madeira 
United Kingdom 
North 
Cleveland, Durham 
Cumbria 
Northumberland, Tyne and Wear 
Yorkshire and Humberside 
Humberside 
,,„„ nNorthYorKshife,,,,, ,,,„, nvmn.v... Population J Labour market1 
n 
CM 
cc 
=5 
UI 
3 
CL o a. 
1.7 
1.0 
0.2 
0,4 
1.5 
1.6 
0,5 
0,4 
0,1 
1.9 
1,2 
0,2 
0,6 
1.4 
0,5. 
4,4 
0,5 
0,2 
0,2 
0.1 
0,9 
0,3 
0,5 
0,1 
2,0 
0,3 
0.7 
0,9 
0,1 
1,0 
0.6 
A3.. 
2.9 
2.7 
1.0 
0,5 
1.0 
0,2 
0,1 
0,1 
0,1 
Ï 6,7 
0,9 
0,3 
0,1 
0,4 
1,4 
0,3 
, 0.2 o 
CO 
a. 
© 
O) c 
CO 
JZ 
CJ 
c o 
3 a. o a E 
JZ 
C 
CO c © 
0,0 
-0,1 
0.2 
0,2 
0,4 
0,7 
0,4 
0.4 
0.2 
0,5 
0,6 
0,2 
03 
0,6 
.0,5... 
J>,4_ 
0.6 
0.2 
0,0 
02 
0,5 
0,9 
0,0 
0.6 
11.9 
03 
13 
0,3 
0.4 
02 
03 
0,6 
0,3 
6,i 
0,1 
02 
-0,1 
0,2 
-0,5 
0,5 
-0,2 
..OJ.... 
0,2 
-0,2 
-03 
0.2 
-0,2 
0,1 
0,0 
JUL. 140 
154 
96 
147 
299 
414 
104 
116 
75 
151 
208 
61 
137 
193 
...68.... 
-.1.50,.. 
367 
140 
187 
104 
166 
281 
301 
354 
94 
623 
719 
685 
978 
118 
457 
436 
..504... 
107 
105 
163 
73 
275 
20 
68 
106 
318.. 
237 
201 
386 
72 
258 
323 
250 o a> a> 
a. o a. 
CO o 
8 
o 
< 
9,0~\ 
7.6 j 68,3 
68,6 
67,9 
68.0 
70,5 
66,9 
67,2 
67,4 
66,2 
66,6 
67,1 
66,3 
65,9 
66,3 
69,0 
_6?3 
69,i 
67, 
68,8 
66,4 j 
67.7 j 
68,3 
67,9 I 
68,8 
66,0 
68,8 
69,4 
69,7 
68,3 
65.8 I 
70,7 I 
70,6 
70,7 
66,6 
66,3 
66,1 
64,5 
68,2 
63,3 
62,9 
57,3 
.62,0... 
65,4 
65,5 
65,9 
65,5 
65,3 
65,3 
64,7 
Jj.rU,-43.5 
43,3 
41.2 
45,3 
42,3 
37,8 
41,7 
42,0 
40,7 
37.9 
37,8 
39,4 
37.8 
36,4 
40,} 
.42,1. 
46,4 
42,9 
43,7 
42,2 
42,9 
45.8 
44,1 
46.9 
45,6 
47,4 
49,4 
48,9 
45,9 
45,8 
46,3 
46,6 
45,7 
47,4 
47,6 
47,8 
46,7 
48.9 
43,4 
43.9 
38,0 
47,4 
50,9 
48,2 
0,0 
0,0 
0,0 
49,9 
0,0 
*&9_ Unemployment 
rate Share of sectors 
in total 
employment (1991) 
7.9 
8,1 
9,2 
6,6 
11,0 
22,8 
13,1 
12,4 
15,6 
17,6 
15,6 
23,0 
19.6 
23.1 
.1.9,8. 
2À 
8,2 
10,6 
10,9 
11.1 
9,6 
7,9 
8,3 
7,7 
7.6 
7,9 
6.6 
8.7 
7.7 
9,1 
8,0 
8,0 
8,0 
4.9 
4,9 
4i2 
3,4 
6,0 
8,1 
4,8 
4.6 
3,4 
io.3 
11,4 
12,0 
8,3 
12,1 
10,2 
11.7 II 
CM 
T-
a. 
UI 
Q> 
O) 
CO 
> 
< CD 
O) 
c 
79,1 
80,7 
94.7 
66,7 
108,8 
224,0 
124,8 
116,1 
156,5 
178,9 
157,5 
223,5 
206,4 
230,4 
1.96,2..! 
20J 
79,0 
104,5 
112,6 
105,5 
92,1 
76,5 
77,2 
75,8 
78,3 
76,1 
68,7 
81,4 
75,1 
75,1 
75,1 
74,7 
76,1 
42,8 
43,2 
35,0 
28,3 
53.5 
85,1 
39,8 
40,4 
.33,7 
102,5 
118,5 
124,5 
81.3 
126,7 
104,2 
120,5 
62.5 i 4 3.5 -0.3 
-0,4 
•0,6 
-0,2 
0.3 
-0,2 
3,1 
3,1 
3,2 
-0,9 
-0,1 
1,5 
-3,0 
4,5 
1,4 
6,4 
-1.6 
-1.1 
-2.8 
0.2 
•03 
-1.6 
-1.8 
-1.6 
-0.6 
-0,7 
-13 
-0.6 
-0,6 
1,2 
-13 
-1.2 
-1,4 
-i.i 
-1.2 
0,5 
-0,3 
-2,8 
-6.4 
-0,7 
2,4 
-1,4 
Ï.5 
-1.1 
-1.4 
0,6 
-1.4 
-0,2 
0,4 Economy 
< 
7.3 
5.5 
9.6 
10,1 
5,0 
12,0 
14,1 
12.4 
21,0 
17,0 
15,6 
20,3 
18,9 
14,4 
1.3,8.. 
,5_. 
4.3 
5.0 
3.9 
6,8 
3,9 
6.1 
6,3 
5,8 
8,0 
33 
2,1 
2,6 
3,9 
7,1 
4.7 
4,8 
4.5 
17,4 
17,2 
18,4 
313 
7.6 
22,0 
17,0 
21,9 
21,8 
2.3 
1.7 
0,0 
0,0 
0,0 
2,5 
0,0 
.0.0-34.7 
33.6 
33,4 
38,0 
19.8 
24,8 
27,3 
28,3 
23,3 
22,9 
23,8 
24,1 
20,4 
21,8 
...2.5.2 
-28,9 
25.4 
26,8 
25.7 
26,8 
28,3 
27,9 
30,9 
26,9 
22,9 
20,5 
17,1 
20,0 
21,2 
28,0 
33,4 
33.5 
...33,3. 
34,6 
34,2 
43,0 
33,3 
27.1 
28,5 
20.8 
24,0 
...3.2,?. 
30,9 
34,9 
0,0 
0,0 
0,0 
34,8 
0,0 58,1 
60,9 
57,0 
51,8 
75.3 
63,2 
58,6 
59,3 
55,7 
60,1 
60.5 
55,6 
60,7 
63.8 
6!,0 
69,6 
67,6 
69,8 
65,7 
67,4 
65,5 
62,4 
66,7 
68,9 
75,5 
79,8 
76.9 
74.1 
64.6 
61,4 
61.2 
61,8 
48,5 
48,5 
38,5 
35.3 
65.1 
49,5 
62,0 
54,0 
45,3 
65,9 
62.0 
0,0 
0,0 
0,0 
61,7 
0,0 GDP three-year 
average 1989-91 
EUR12=100 
(0 
Q. 
CL 
CO 
JZ c 
0 
a. 
iiiiWffrtW*'***'**. 106,7 
109,4 
98,9 
104,7 
116,8 
70,2 
87,8 
90,2 
78,8 
68,1 
74.1 
64,5 
57,9 
67,5 
..7.4,2... 
J2ZJL 
101.3 
100,2 
127.4 
83.6 
88,5 
88,4 
89,7 
88,9 
78,1 
109,1 
107,1 
113,8 
106,3 
108,7 
97,3 
98,6 
94,8 
56,5 
56,5 
50,2 
39,6 
76,6 
33.9 
47.9 
0,0 
0,0. 
99,1 
85,3 
83.8 
103,3 
80,4 
89,0 
95,4 
S>2.6.,-0. 
Ï >. o 
Q. 
E 
CD 
C 
o 
2 
2. 
i. 
o 
a 
109,9 
114,4 
106,6 
101,1 
127,2 
93,0 
95,6 
97,4 
88,7 
91,9 
97,4 
83.5 
83.4 
94,6 
94,2 I 
121,9 
98,4 
111,3 
146,1 
91,3 
94,2 
85,8 
91,7 
85,2 
63,4 
103.8 
86,2 
108,2 
105.7 
111.0 
92,2 
91,6 
93,6 
45,5 
47.8 
40,2 
34,6 
64,9 
35,0 
49,0 
0,0 
...M. 89, i 
83,7 
82,1 
96,4 
79,4 
83,4 
93.1 3 
O 
ju 
"O 
« >» o a. E o c o m t-cl ». 
0 a 
107,9 
112,4 
104,7 
99.3 
125,0 
91,4 
94,0 
95,8 
87,3 
903 
95,7 
82,1 
82,0 
93,0 
...92,5... 
_L2_2,L 
100,6 
113,8 
149,3 
93,3 
96,4 
87,7 
93,7 
87,0 
64.8 
106.1 
88,1 
110,6 
108,0 
113,6 
94,3 
93,6 
95,6 
26,8 
28,2 
23.7 
20.4 
38,2 
20,6 
28,8 
0.0 
0,0 
83.9 
78,8 
77,3 
90,8 
74,7 
78,5 
87,6 
201 
Table A.27 
Principal indicators for the regions In the Community (NUTS 2) 
Region 
South Yorkshire > 
West Yorkshire 
East Midlands 
Derbyshire, Nottinghamshire 
Leicestershire, Northampton 
Lincolnshire 
East Anglia 
South East 
Bedford, Hertfordshire 
Berks, Bucks, Oxfordshire 
Surrey, East-West Sussex 
Essex 
Greater London 
Hampshire, Isle of Wight 
Kent 
SouthWest 
Avon, Gloucester, Wiltshire 
Cornwall, Devon 
Dorset, Somerset 
West Midlands 
Hereford, Worcs, Warwick 
Salop, Staffordshire 
West Midlands (County) 
North West 
Cheshire 
Greater Manchester 
Lancashire 
Meraeyside 
Wales 
Clwyd, Dyfed, Gwynedd, Powys 
Gwent, Mld-S-W Glamorgan 
Scotland 
Bord-Centr-Fife-Lothian-Tay 
Dumfries-Galloway, Strathclyde 
Highlands, Islands 
Grampian 
N.Qjrthernlrelao.d. 
EUR12 
MfÀsïi^^^ià'il^itUiSlim 
Alt employment and unemployment 
Source: Eurostat Population 
| I S 
M CO 
s s. 
UI 
p i g» E 
o l £ 
2 i JE i i? 
a o Q. 
O 
a. CO c o 
Q 
0,4 
0,6 
1.2 
0,6 
0,4 
0,2 
0,6 
5,1 
0,4 
0,6 
0,7 
0,4 
2,0 
0,5 
0,4 
1.4 
0,6 
0,4 
0.3 
1.5 
0,3 
0,4 
0,8 
1.9 
0.3 
0.7 
0,4 
0,4 
0,8 
0,3 
0,5 
1.5 
0,5 
0,7 
0,1 
0,1 
...Q,5... 
100,0 
I M.. \ -0,2 
I 0,0 
! 0,5 
! 0,2 
0,7 
I 0,7 
0,9 
0,3 
0,4 
1.0 
0,3 
0,4 
-0,1 
0,5 
0.3 
0,7 
0,5 
0,8 
1.0 
0.1 
0,4 
0,4 
-0,3 
-0.1 
0,3 
-0,1 
0.1 
-0,6 
0,2 
0,5 
0,1 
-0,1 
0,0 
-0,4 
0,6 
0,7 
0,2 
6,8 
6,8 j 835 
| 1022 
j 258 
| 410 
1 301 
j 100 
| 165 
648 
530 
344 
450 
422 
4360 
411 
412 
198 
278 
147 
185 
405 
199 
235 
2924 
872 
414 
1996 
460 
2222 
139 
65 
488 
65 
103 
122 
9 
58 
113 
! 153 
154 a. o a Labour market 
] Unemployment 
; rate 
o o> 
co 
CO 
> 
< 
65,8 
65,0 
65,8 
66,0 
65,8 
65,6 
64,4 
65.8 
66.5 
67.5 
63,3 
65,2 
66,5 
65,7 
65,0 
64,0 
65,3 
63,1 
62,8 
65,8 
66,3 
66,7 
65,1 
65,1 
66,5 
65.4 
64,3 
64,6 
64.4 
63,8 
64,7 
66,3 
66,4 
66,3 
64,6 
66,9 
62,8 
65,3 
2,0 0,0 
0,0 
51,9 
0.0 
0,0 
0,0 
53,0 
52,9 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
50,8 
0,0 
0,0 
0,0 
51,6 
0.0 
0,0 
0,0 
49.6 
0,0 
0,0 
0,0 
0,0 
47,3 
0,0 
0,0 
50,1 
0,0 
0,0 
0,0 
0,0 
44,1 
453 
4,7 DC 
UI 
o o> 
O» • <p 
2 oi 
^ CO 
£ \ « 
CO ! > 
CC < 11,9 
9.8 
9,0 
9.9 
8.2 
8,4 
8.4 
10.5 
8,3 
6,9 
8,0 
9,8 
13,9 
%9 
9.6 
9,6 
8,9 
10,9 
9,1 
10,9 
8,5 
8,4 
13,3 
10,5 
8,4 
10,5 
8,6 
14.0 
9,7 
9,0 
10,1 
10,1 
9,1 
11,4 
13.4 
5,6 
.1.5,0.., 
10,4 
...5,3 • O» c 
(0 *£• 
iz B o c n 
c o 
CD *-H Economy 
Share of sectors 1 GDP three-year 
in total 1 average 1989-91 
employment (1991) EUR12=100 
o> 
< CO 
3 
•o 
C 
124.5 
99,9 
89,6 
98,6 
79,7 
85,7 
78,9 
97,9 
76,7 
63,6 
71.4 
89,0 
131,2 
83,1 
89,3 
92,1 
85.7 
105,7 
87,2 
107,1 
80,0 
82,3 
133,6 
110,8 
84,6 
109,9 
88,2 
152,5 
101,0 
92,7 
106,0 
106,6 
96,3 
125,0 
114,1 
55,1 
.1.65,8 
100,0 
50,4 -1.6 
0,4 
1.1 
0,5 
2.3 
0.1 
2.7 
4,4 
4,2 
3.6 
4,4 
43 
5.1 
3,4 
3,7 
2,9 
3,1 
2,2 
3,7 
1.1 I 
1,7 I 
0,6 ! 
1.2 ! 
-0,6 ! 
-0.1 ! 
-0,2 I 
•0,4 ! 
-1,8 1 
-1,0 ! 
-13 ! 
-0,8 I 
-2,3 ! 
-1,8 I 
-2,9 i 
0,6 ! 
-2,1 ! 
.-2.1....! 
.0,5....! 
...1,6.1 0,0 
0,0 
2,7 
0,0 
0,0 
0,0 
4,0 
1.2 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
4,6 
0,0 0,0 
0,0 
38,0 
0,0 
0,0 
0.0 
29,2 
25,4 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
29,0 
0,0 
0,0 j 0,0 
0,0 i 0,0 
2,1 
0,0 
0,0 
0,0 
1.5 
0,0 
0,0 
0,0 
0,0 
3,1 
0,0 
0,0 
3,0 
0,0 
0,0 
0,0 
0,0 39,1 
0,0 
0,0 
0,0 
33,3 
0,0 
0,0 
0,0 
0,0 
32,7 
0,0 
0,0 
30,2 
0,0 
0,0 
0,0 
0,0 
.4,5 i 28.0 
6,4 i 33,2 
6,6 ! 6,6 8 
0,0 
0,0 
583 
0,0 
0,0 
0,0 
66,3 
72,5 
0,0 
0,0 
0,0 
0,0 
0,0 
0,0 
ao 
65,6 
0,0 
ao 
0,0 
57,7 
0.0 
0,0 
0,0 
64,4 ao ao ao ao 
62,9 ao ao 
65,9 ao ao ao ao 
..66,4. 
60,2 
7.3 i tf> 
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11 i 
k. •_ 
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92^ ! 
94.5 \ 
9a3 ! 
104,6 ! 
83,1 ! 
99,8 ! 
119,0 | 
102,6 I 
110,8 : 
99.4 | 
86,8 ! 
151.2 ! 
97,9 
90,2 
94,8 
106,6 
8a2 
92,5 
90,5 
87,5 
84,8 
95,0 
90,0 
104,0 
91,7 
91,1 
76,7 
83,2 
81,1 ! 
84.5 ! 
92.8 ! 
94.3 ! 
88.4 \ 
76.9 | 
117.3 ! 
75.1 ] 
ioao i 
24.2 : 74,8 
84,4 
82,5 
79,7 
87,2 
76.4 
84,3 ! 
101,4 ! 
82.2 i 
88,2 j 
84,8 i 
74,2 ! 
131,2 i 
83.2 ! 
78.5 ! 
82.8 1 
87.9 ! 
75.3 ! 
81,9 ! 
80.6 ! 
75,8 ! 
74,2 I 
86,8 ! 
84,2 ; 
95,0 ! 
84.6 ; 
83.7 i 
77,0 ! 
82.4 ! 
82,0 ! 
81,7 | 
86.5 ! 
ao I o,o i o,o ! 
ao \ 
81,7 i 
Ï66J3! 
19.6 j 3 
U 
u 
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a. 
E 
CD 
C 
O 
CO 
i 
70,4 
79,5 
77,7 
75,0 
82,1 
71,9 
79,3 
95,5 
77,4 
83,0 
79,9 
69,8 
123,5 
78,3 
73,9 
77,9 
82,7 
70,9 
77,1 
75,9 
71,4 
69,9 
81,7 
79,3 
89,4 
79,7 
78,8 
72,5 
77,6 
77,2 
76,9 
81,4 
0,0 
0,0 
0,0 
0,0 
.76,9 
ioo,6 
25,3 
data based on the Labour Force Survey. 
202 
EN ISSN 0254-1475 
COM(94) 322 final 
DOCUMENTS 
01 05 13 
Catalogue number : CB-CO-94-366-EN-C 
ISBN 92-77-72102-2 
Office for Official Publications ol die European Cbmnninities 
Lr2985 Luxembourg 
/ci