Opinion of the European Committee of the Regions — Indicators for territorial development — GDP and beyond
Date: 2016-02-11
Institutions: Commission for Territorial Cohesion Policy and EU Budget, European Committee of the Regions
Subjects: EU policy, EU programme, EU statistics, Eurostat, economic and social cohesion, gross domestic product, quality of life, regional development, regional statistics, social development








C_2016120EN.01001601.xml










5.4.2016   


EN


Official Journal of the European Union


C 120/16





Opinion of the European Committee of the Regions — Indicators for territorial development — GDP and beyond
(2016/C 120/05)











Rapporteur:


Catiuscia MARINI (IT/PES), President of the Umbria Region









POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS,

A political debate on GDP and beyond









1.


acknowledges the relevance of a strategic approach in policymaking that defines common goals based on shared values and identifies actions to achieve the targets collectively set. In this way the opportunities created by the mid-term reviews of the Europe 2020 strategy and the 2014-2020 financial framework will not be missed and the revisions could lead to a substantially improved governance structure involving all tiers of government;












2.


believes that an evidence-based approach to public policy — anticipating and measuring the impact of policy options — is crucial to public acceptance of consistent policy decisions;












3.


stresses, with regard to the debate on measuring progress in our societies, the close links between measurement, perception and action; emphasising that measures have to be chosen on the basis of widely shared societal values in a forward-looking manner;












4.


points out that measures or targets expressed with indicators can never be substitutes for a proper and clearly expressed political strategy; they remain, therefore, a means to an end, i.e. tools for implementing strategic goals;












5.


notes that the debate on Indicators for territorial development — GDP and beyond is, therefore, political in nature, and should start with a shared and democratic definition of the strategic objectives for current and future generations chosen by any given authority in terms of its political action;












6.


believes, in this context, that it is necessary to further improve the current methodologies used for policy-steering at EU level in order to obtain more up-to-date, comprehensive information that better matches reality, and to define an appropriate, uniform method for including economic, social and environmental aspects in the analysis of the situation;












7.


underlines that all levels of government in the European Union should be included in this debate on the future benchmarks for achieving sustainable development and cohesion in the European Union, going beyond GDP;












8.


underlines the importance of carefully assessing the need for, and the feasibility and consequences of, additional benchmarks, indicators and methods already tested or used at territorial level; believes that there is sufficient time to carry out an in-depth analysis here to feed into the debates on the next programming period;












9.


underlines the challenge of a growing territorial divide in Europe with regard, inter alia, to public and private investment, innovation, digital services, productivity, employment, poverty, social welfare, population trends and the territorial distribution of population, and asks the European Commission to take this into account when assessing EU policies and designing new policy instruments;












10.


emphasises in this respect that the CoR could be part of this debate, promoting the position of local and regional authorities and substantially contributing to defining a method which balances economic, social and environmental information and which would, as a reference for financing decisions, eventually be of utmost importance to regional and local authorities;












11.


suggests, with a view to the next programming period beyond 2020, that the European Commission starts as early as possible an in-depth discussion with local and regional authorities about the future goals of these policies and the necessary indicators to measure this progress; following on from its 2009 Communication, and considering the latest evolutions, invites the Commission to put forward a roadmap on GDP and beyond;





Towards a method complementing GDP for targeting EU policy









12.


acknowledges the merits of Gross Domestic Product (GDP) as a simple, straightforward and linear indicator based on a clear methodology that allows comparison of many relevant macroeconomic measures over time and between countries and regions, therefore representing a useful tool for allocating resources;












13.


points out, however, that GDP is not an accurate measure of the ability of a society to tackle issues such as climate change, resource efficiency and regions’ competitiveness, quality of life, the ageing population, social inclusion, particular geographical features, income distribution or the geographical distribution of resources or economic growth factors; and adds that these aspects are of key concern to citizens, as observed by regional and local representatives;












14.


welcomes, therefore, the numerous initiatives at international, national, regional and local level for establishing indices for measuring progress beyond GDP, that can help to develop EU-wide indicators reflecting the situation in the Member States, also at local and regional levels;












15.


points as one approach to the use of the alternative Human Development Index, which can make a methodological contribution adapted to the European Union framework, with indicators on a long and healthy life, education and a decent standard of living, following the example of the UN and the United Nations Development Programme;












16.


acknowledges the remarkable progress achieved by Eurostat in the context of measuring progress beyond GDP in the areas of ‘quality of life’, ‘household economy’ and ‘sustainable environment’;












17.


notes that not all regions and cities have the necessary competences, resources and administrative capacity to engage in target-setting and proposes that solutions be adopted, including a more qualitative ‘path-to-change’ approach, where the direction of change — i.e. whether regions and cities make positive contributions to national and European targets — would be more important than reaching certain fixed targets. This would allow local and regional authorities to progress at a pace which corresponds to their own potential and capabilities;












18.


points out, however, that the indices chosen to be used by local, regional, national and European authorities for drafting and implementing EU policies and measuring progress towards common goals must be uniform and consistent;












19.


reminds that not all kind of methodological approaches, usually grouped by the research community into GDP-replacing, GDP-adjusting and GDP-complementing methods, are equally appropriate for an EU-wide ‘GDP and beyond’ method to measure status and progress on national, regional and local level;












20.


reiterates, with regard to EU regional policy, that territorial cohesion is complementary to economic and social cohesion and cannot therefore be measured solely by an economic indicator, but agrees with the European Commission that any method that aims to replace GDP by excluding economic indicators from its scope of observation is not appropriate for the purpose of measuring progress towards common goals in a uniform manner;












21.


suggests that the CoR maintain close cooperation, particularly with the OECD, on initiatives such as ‘How is life in your region?’, which represent an easy-to-understand instrument and a more holistic approach to measuring progress at local and regional level, but, in the context of a multi-annual strategy for Europe, opposes an approach to measuring progress based on a ranking using one single measure; notes in this respect that various regions have also expressed an interest in the OECD’s Better Life Index and, above all, in the indicators it uses; although it does not provide a way to measure regional development, its results give an indication of the quality of life of the population, which can serve as the basis for the future definition of objectives and strategies at local and regional level;












22.


believes that further analysis could be carried out on methods that attempt to adjust GDP by extending traditional economic performance measures with monetised environmental and social factors with a view to modelling or simulating the economic, social and environmental effects of different policy measures, bearing in mind here the significance of the ‘Social Progress Index’ that is already used in 40 countries;












23.


believes that it is urgent to develop comparable statistical data at the local and sub-local level as well as translating the existing OECD and Commission urban-rural classification into Eurostat categories that can, drawing from reliable information from the ground, assist both EU policymaking and evaluation;












24.


points out the lack of quantitative information on the various regions with particular territorial features in the EU — namely geographical, environmental, economic and social features — which have an influence on development; outermost regions are singular examples thereof. It also suggests that Eurostat adopt the territorial categories identified by the Treaty, such as that of outermost regions, on the basis of which statistics could be produced contributing to the proper adjustment and alignment of EU policies and measures in keeping with territorial considerations;












25.


welcomes the relevant work carried out by the European Commission in the field of adjusting GDP, using the particularly successful approach of extending national accounts to include the environmental and social domains, but draws attention to the theoretical difficulties involved and the extensive resources needed for expressing social aspects in monetary terms, especially when it comes to regional and municipal accounts, and also doubts whether the results of such a complicated approach can be easily communicated to the public;












26.


supports, therefore, methods that complement GDP when measuring progress towards common strategic goals, because such methods acknowledge the multi-dimensional reality by covering different aspects of well-being in economic, social and environmental domains with the help of a limited number of indices;












27.


believes, in this context, that the most suitable methodology for policymaking at any governance level is one that comprehensively measures well-being, including economic issues (inter alia productivity, innovation, exports), labour (inter alia indicators on employment and the quality of employment), environmental issues (inter alia energy intensity and efficiency of the economy, protected natural spaces and biodiversity, share of renewable energy, CO2 emissions), demographic issues (including indicators on the current demographic situation and any movements), social inclusion (inter alia people at risk of poverty or social exclusion, distribution of income) and territorial issues (including accessibility and carrying capacity);












28.


suggests, moreover, that the choice of indicators should be oriented mainly towards those that measure the possible effects of the policies implemented, especially by measuring the results and impacts as well as the costs; points out that in the case of outlying regions there is a particular need for data on certain shortcomings and adverse conditions, which should be considered before policies are devised and implemented;












29.


proposes, therefore, monitoring EU trends within all EU institutions, following up the valuable work done by the European Strategy and Policy Analysis System (ESPAS), and cooperating in this process. This would provide an early warning system for all government levels concerning economic, social or environmental trends of European relevance that might have an effect on strategic goals or require an adjustment of strategic priorities;





Review of Europe 2020 and future of cohesion policy









30.


emphasises that the Europe 2020 strategy has established a set of targets with associated key indicators and acknowledged the importance of complementing data on economic growth (GDP) with further economic, social, environmental and demographic indicators to measure sustainable progress; adds that this finding is equally valid at subnational levels;












31.


underlines that the process of setting the Europe 2020 targets and selecting the indicators to measure its progress was very much top-down, without taking into account the specific situation at local and regional level. By contrast, territorially differentiated needs and objectives are acknowledged by cohesion policy, because the pursuit of overall EU targets should not limit the development potential of a specific region or municipality on the basis of region-specific knowledge and competences; this is why, in the context of the Europe 2020 strategy, the CoR is calling for regionalised targets;












32.


appreciates the current cohesion policy system, which provides a huge contribution and added value to the regions and noticeably assists the development of the regions affected. It calls upon the European Commission to devise a strategy for the functioning of cohesion policy for the programming period starting in 2021, preserving the current method of implementation, in which GDP, appropriately flanked by other indicators, plays a vital role in assessment and implementation;












33.


highlights in this context the different focus of cohesion policy’s European Territorial Cooperation objective. In particular, the development of cross-border collaboration aims to support the integration of border regions in all areas of people’s lives — thus going above and beyond the goals of the Europe 2020 strategy. Methods and indicators need to be worked out in this area that would map and evaluate this kind of progress better;












34.


points out the close alignment of the cohesion policy with the Europe 2020 strategy but criticises the mismatch between the measurement and intervention methods of the Europe 2020 strategy on the one hand and the cohesion policy on the other;












35.


reminds the European Commission that the territorial dimension should be better highlighted in a revised Europe 2020 strategy, especially in the context of territorial cohesion, where the development of relevant economic, environmental and social indicators could enhance the quality of local and regional policies; such strategies should make use of methods that are based on a multi-dimensional approach, where GDP or other economic indicators are complemented by measures of social and environmental aspects that have been politically endorsed at all governance levels;












36.


points out that, in context of the strong incentives for thematic concentration of financial resources from the Structural Funds on a limited number of policy areas that contribute to the pursuit of Europe 2020 strategy, it is reasonable to assume that the success of cohesion policy will be measured by progress towards meeting the Europe 2020 targets;












37.


strongly suggests that the new headline targets of Europe 2020 and its post 2020 successor are built from the bottom up so that future national reform programmes can report on the contribution of regions and local authorities towards the national headline targets. This would also lead national governments to involve local and regional authorities in the preparations of national reform programmes which is currently not the case in most Member States;












38.


hopes that cohesion policy can return to its original function of reducing development disparities between regions and be the main policy for EU-wide investment. To this end, the link between cohesion policy and the future EU 2020 strategy should also be reviewed in the period after 2020;












39.


underlines, nonetheless, that a number of EU instruments are still based on an excessively narrow economic measure. This also concerns cohesion policy, where funds are distributed between Member States according to per capita GDP and unemployment, whereas the classification of NUTS level 2 regions under one of the three development categories determining the allocation of appropriations is based solely on per capita GDP;












40.


points out that, consequently, eligibility decisions are basically blind to social and environmental and territorial aspects across European regions, while the logical step would be to base future instruments on a more comprehensive, uniform method, making increased use of social, environmental and territorial indicators, which would in particular reveal the specific regional features set out in the Treaty, which have to be considered in the regions’ eligibility;












41.


questions what is the ability of NUTS level 2 to reflect real communities and real geographies when in many Member States NUTS areas are purely statistical geographies based on population rather than reflecting real boundaries or functional geographical areas. While noting that NUTS are also used to date to allocate EU Structural Funds, their use to formulate and evaluate the territorial impact of EU cohesion, transport, environment and other policies has a pervasive effect which results in EU policies being out of step with the situation on the ground. In this respect, for the sake of a fairer allocation of the funds it is crucial that decisive shortcomings of GDP, such as the territorial bias caused by commuting over NUTS borders, need to be counterbalanced by taking into account the social and environmental situation in the regions when decisions on eligibility are made;












42.


stresses in this respect that the application of the Structural Funds, including the Cohesion Fund, should open up to include measures to complement GDP in the next multiannual financial period as far as they are politically acceptable at all levels of governance;





Next steps for enabling a strategy based on GDP and beyond









43.


acknowledges, at the same time, the legitimacy of headline targets for achieving comprehensive strategic goals and points out that, for monitoring progress, target-relevant, harmonised and comparable regional data have to be available in a timely manner;












44.


underlines, in this context, that the availability of indicators and of frequently updated data at a regional level is essential to improving the accountability of the technical proposal and making good political decisions. Therefore, although the data system for well-being indicators is already effective and well-structured at Eurostat level, the major challenge for regional and local policymakers, including with regard to the multi-level implementation of Europe 2020 and cohesion policy, should be urgently addressed by the European Commission and by Eurostat, with the aim of improving the data system and making it more effective while, at the same time, developing and using policy impact assessment methodologies;












45.


welcomes, in this respect, the progress made by the Commission concerning its 2009 Roadmap for ‘Measuring progress in a changing world’ but regrets that little improvement has been achieved in the production and dissemination of regional and local data;












46.


points out that often those countries where the availability of regionally and, crucially, local data is less complete are the ones that, under EU Structural Funds, can devote a significant amount of their allocation to the so-called Thematic Objective 11 (institutional capacity building). Considering that we are at the start of the programming period, there is a unique opportunity to build pan European comparable data at regional and local level that can be used to inform the shaping and evaluation EU policies post 2020;












47.


urges the European Statistical System to further enhance the quality of administrative data as well as to accelerate the implementation of geo-referencing statistics in order to increase the value of data collections and to lower the respondents’ burden;












48.


welcomes the fact that, since the last CoR Opinion on ‘GDP and beyond’, the data available at EU level, particularly with regard to the local and regional level, has steadily grown, but regrets that it still contains significant gaps; therefore suggests that the European Commission provide — as early as possible — an analysis of the current and future gaps in the provision of a comprehensive set of economic, social, environmental and demographic data in Europe, going beyond GDP;












49.


particularly regrets, in this regard, that currently the regionalisation of Europe 2020 indicators is not satisfactory, because only some of the indicators needed to track the Europe 2020 headline targets at regional level (NUTS level 2 and 3) are available, and sometimes with a considerable time lag. The same applies to the alternative indicators that regions and cities might deem necessary in their territories as a pre-condition for progress towards the EU goals and targets. Updated regional statistics would make it possible to build a synthetic Regional Progress Indicator, as proposed by the Committee of the Regions;












50.


requests the European Commission/Eurostat to set out a timeline to engage the local and regional authorities in the process of (realistic) target-setting and to deliver the regional statistics needed to design, implement, monitor and evaluate the renewed Europe 2020 strategy by setting territorially differentiated targets;












51.


highlights the need to go beyond the current system of statistics and indicators (based on the NUTS regulation) when measuring progress at local and regional level, particularly with regard to the concept of ‘functional regions’ and cross-border areas, and suggests that the European Commission further develop the concepts and indicators which go along with this, as well as take account of areas that form part of macro-regional strategies;












52.


reiterates that urban and rural dimensions should be better highlighted across a broad range of EU policies, especially in the context of territorial cohesion, where the development of relevant economic, environmental and social indicators could enhance the quality of local and regional policies;












53.


urges the European Commission to include in the European statistical programme the measures needed for dealing with shortcomings in statistical information on territorial diversity and specific features in the EU, namely measures for compiling data and building up indicators on regions’ remoteness and isolation, so as to improve the process of devising and implementing European policies better adapted to regions affected by these phenomena, in keeping with the principle of territorial cohesion;












54.


considers it necessary to establish a decision-making support model that sets out a ranking system for local well-being priorities in order to set out specific local needs in a common framework for all EU regions, and to use this ranking system to carry out ex ante and ex post assessments of policy effectiveness, not least during negotiations between the European Commission and local authorities or consultations with local stakeholders;





Brussels, 11 February 2016.


The President of the European Committee of the Regions

Markku MARKKULA