Source: EURLEX
Language: en
Format: md

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COMMISSION OF THE EUROPEAN COMMUNITIES

                          C0M(94) 322 final
                          Brussels, 19.07.1994

```

Fifth Periodic Report on the Social and Economic Situatio n

and Development of the Regions of the Community

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             (presented by the Commission)

```

**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 unemployment. Also included are the results of a major reexamination of demographic trends in the regions
which focuses on the prospective changes in population 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 database on national and regional endowments is examined. 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 investors) 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 oppor

**Introduction**

tunity to consider the next generation of regional
policies effective from 1994 where there is both
continuity with the past as well as important innovations. 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 regional 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 regional situation of the countries in the East undergoing 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 Development 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 Commission 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 unemployment 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 economic difficulties, and although signs of improvement
are visible, they have not provided the ideal circumstances 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 population), 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 especially 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 immigration into some parts of the Community which
have been a feature of recent years. More importantly, 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.**

**10**

**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**

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**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 em-**

**body 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**

**12**

**encouraging. Here, annual economic growth has**
**averaged** **[ 3]** **A%** **to** **l** **[3]** **/** **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**

**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**

Member States' own policies to promote development 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 conditions 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 process leading to economic and monetary union (EMU)
has already been reached while the final stage, a
single currency, will help regional development insofar 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 imbalances but this will also create the conditions for faster

growth and help the weaker Member States, in particular, 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 compe

14

**J**"** **V»**

titiveness. 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 positive 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 reductions in public expenditure necessary to meet the macroeconomic 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 developments, towards a deepening of the Community,
have been accompanied by a process of widening, or
enlargement which has taken place at irregular intervals 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 1315%. 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 productivity 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 Structural Funds over the period 1994-99. The challenge is

_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 countries are already well integrated into the Single Market under the EEA agreement.

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 unemployment 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 Structural 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 agreement to the creation of a new Objective 6 under the
Structural Funds to accommodate the particular difficulties in the sparsely populated, climatically extreme regions of Northern Scandinavia. Total population 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 population 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

Hungary with 3.5% of national population). The
other regions of the four countries will also be considered by the Commission for assistance under Objectives 2 and 5b on a comparable basis to the exercise 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.

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 distance 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 investment 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. Overall, however, adjustments entailed by this competition 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**

HP' w

inhabitants

per square km

<50
### **•**

50-100

100-200

200 - 500

500-1000

    - 1000

### **•**

No data

**-F**

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 Report [1] . 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.

**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%

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 increasing 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 extent to which such trends will persist into the
next century in different countries and regions is
important for economic prospects and potential labour 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 (%)**

**1985-1990** **1990-1995** **1995-2000**

**Low** **High** **Low** **High**

**Average annual population growth**

**2000-2020**

**Low** **High**

**Total**

**of which**

**persons aged** **0-14**

**persons aged** **15-64**

**persons aged** **65+**

**Total**

**of which**

**men**

**women**

0.5

1.9

**0.3**

-1.2

0.5

**0.3**

-0.4

0.2

0.5

0.2

0.2

1.6

**1.0**

0.5

1.6

0.6

0.3

0.4

0.1

-0.5

0.1

**-0.2**

-1.0

-0.2

0.9

**-0.4**

-0.5

-0.3

1.8 1.5 1.7 1.1

**Average annual labour forcegrowth**

0.5

0.8

0.3

1.5

1.1

0.5

2.0

1.8

1.5

1.7

1.1 0.3 0.9 0

-0.1

1.0

0.4

1.5

**-0.2**

**0.4**

**Table 2**

**Major demographic and labour force trends in** **EUR12**

**Absolute growth (million)**

- 13.3

-18.3

5.0

- 12.8

11.2

-3.3

1.7

**2000-2020**

**Low** **High**

**Total**

**of which**

**natural increase**

**net international**

**migration**

**Total**

**of which**

**due** **to** **demographic**
**changes**

**changes** **in**
**male activity**

**changes** **in**
**female activity**

_Source_ _:_ _Eurostat,_ _NEI,_ _Ifo_

**22**

**1985-1990** **1990-1995** **1995-2000**

**Low** **High** **Low** **High**

**Total** **population** **growth**

5.0   - 5.1 9.5 2.1 9.7

33.1

18.1

15.0

**32.8**

3.8

6.3

22.8

4.5

4.9

0.9

1.3

2.9

2.2

2.5

2.6

**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

**,** **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 continuing 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 migration. These scenarios set the expected upper and
lower limits for population change over the coming

years.

By the year 2000, they foresee a Community population 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 concentrated in the first half of the decade. This would be

accompanied by changes in the demographic structure 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 population, 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 decline s in 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 replacement rate of 2.05 children for every woman, and
continuing high outward migration.

At the regional level, the differences are more pronounced 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

% change p. a.
**"** **[a5 ]**

**•** **[ <]**

**I** **I -0.5-0.0**

I f ! 0.0-0.5

| | j 0.5-1.0

1.0-1.5

>1.5

% share of total population, 1991
58.4

% **share of** **total** **population,** **1991**

63.3

**•**

No data

EUR12-0.1

s = 0.4

ft £>

**Map 2 Growth of** **population,** 1995 - 2000

**High growth scenario.**

_**^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 experiencing a fall in working-age-population would be
concentrated in some of the most prosperous, urbanised 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 indicate 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 workingage 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 particularly 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 number 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 population 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**

**Map 4** **Growth of labour force,** **1995** **- 2000**

**High growth scenario**

% **change p. a**

-0.5    - 0.0

**III** 0.0-0.5

| j | 0.5-1.0

1.0-1.5

>1.5

No **data**

**D**

EUR12 = 1.1

**s** = 0.6

o ^

ft _Ù_

% share of active population, 1991

39.1

*** e * ^**

**% share of active population,** **1991**

_**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 approach 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 importance, are that the potential economic pressure imposed by an ageing population is offset by increasing
participation among older people, effectively reversing 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.

**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. r this decline, however,

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, Southem Italy and parts of the South of France.

**A high scenario**

Under the high scenario, by the year 2000,16 million
people would be added to the labour force as compared 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 convergence 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**

% female population

<40

40-45

45-55

55-65

>65

% share of active female population, 1990

### **•**

No data

EUR12 = 54.6

s = 10.4

O ^

**|è^qfe^^Hfe7^v** ***$•#*:** **^ é ^ ^** **[i r]** **-** **^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** **also** **[s]** **makes** **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)**

**k** **Ô3^!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** _**[ l]**_ _**U%**_ **compared to 1** _**[ l]**_ _**k%**_ **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 expenditure 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 _[ x]_ _li%_ in
1993 although the beginnings of a recovery are evident in 1994.

**Trends and differences**

**in the Member States**
**and their regions** **[1 ]**

These general trends were accompanied by considerable 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** **-**

**34**

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 factors 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 appears to have provided an element of stability encouraging 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 percentage points, respectively, in relation to the
Community average, between 1986 and 1993. As in
Ireland, this appears to have been based on the com

**Chapter 2** **- Trends** **in output In the regions**

**Table 3**
**Trends and differences in GDP and GDP per head,** **1986-** **1993**

**EUR8**

**2.9**

**2.6**

**3.3**

**2.9**

**1.4**

1.0

**-0.5**

**-0.5**

**2.2**

**0.5**

109

107

**3.2**

**5.6**

**5.2**

**4.7**

**3.6**

**2.2**

**0.8**

**-1.0**

**3.0**

0.2

**71**

**76**

**GR**

**1.6**

**-0.5**

**4.4**

**3.5**

**-1.1**

**3.3**

**0.9**

**-0.2**

**1.5**

**0.6**

**51**

**49**

**EUR4**

**2.9**

**4.7**

**4.9**

**4.7**

**3.4**

**2.3**

1.1

**-0.7**

**2.9**

0.2

**64**

**70**

**IRL**

**-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**

**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

_Source :DG % calculations DGXVI_

**3** **Regional variations in GDP per head (PPS) by Member**
**State,** **1991**

m Above national average^

EUR12=100
240

**Hamburg**

200 I f

160

-120

80 H

40 f

average

_M_ Below national average

*'* [ v] -/:s: New German Lander

**Grooingen** **:**

**Usboae** **Vale**

**doTejo ;**

**Alentejo**

**Northern**

**.•** **[:]** **Ireland** **«**

240

200

**160**

120

80

40

0

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

EUR12

**2.9**

**2.9**

**4.3**

**3.5**

**3.0**

**1.5**

1.0

**-0.5**

**2.3**

0.4

100

100

35

**Map 8** **GDP per head (PPS), 1991**

% share of total population, 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_

_**$**_

**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 contribution 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 average 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

###### **7**

Disparity in GDP per person
employed (by country)

_**J**_

**y*-**

Disparity in GDP per head
(by region) Disparity in GDP per
head (by country)

n 30

25

20

15

10 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

% share of total population, 1991

29.9 29.5

#### **•**

No data

DK - level 1 data only.

UK - level 1 data only for 1 985

EUR12 = 100.0

s = 8.9

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 unification) 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 influence 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 productivity, 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

**j** **5** **GDP** **in PPS per person employed in the Member**
**!** **States,** **1984,1987,1990** **and** **1993**
**Index (EUR12.** **100)** **O** **1984** **S 1987** **•** **1990**

**!** **100**

**GR** **P** **OK** **IRL** **UK** **E** **I** **L**

**EUR12-100.1984,1987,** **1990 and** **1993**

**Chapter 2** **- Trends in** **output** **In** **the regions**

the Community (Graphs 5 and 6 and Annex,
Table A.3). These Member States experienced vigorous economic growth over this period which was
accompanied by a significant increase in employment towards the end of the business cycle upturn.

After 1990, disparities in productivity began to narrow again reflecting the continuation of strong performances 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

**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 disparities 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.

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).

**40**

With average GDP per head in the four EFTA countries relatively close to the average of the Community
as at present constituted, there would be no significant change to average GDP per head in the
Community after enlargement. In addition, the clustering 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 differences in economic circumstances and performance. A more complete understanding of these differences 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 analysis is presented in Chapter 12 below).

**Concluding remarks**

In summary, there is evidence of real economic convergence 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 structural adjustment in the former GDR, are those which
present the biggest challenge to national and
Community cohesion policies (see also Chapters 8
and 9).

**•** ;-** 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 towards 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 unemployment to decrease. As the following chapter demonstrates this challenge has proved to be an extremely 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 regions 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 _9_ _[l]_ _h_ 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 aboveaverage 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 favour

iyx-*^^**^»*'»****^^

able 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 _[ X]_ _U%_ a year between 1981
and 1991) was associated with a contraction of employment in many regions such as the rural areas of
Limousin and Champagne-Ardenne and the traditional 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

**43**

**Map** **10** **Change in total employment by region, 1981** **-1991**

% change

**H I < -2.5**

-2.5-1.9

1.9-6.3

6.3-10.7

10.7-15.1

    - 15.1

% share of labour force, 1991

20.5

### **•**

No data

GR, P - national data only

UK - level 1 data only

EUR12 = 6.3

s = 8.7

ft £>

_*zg?_ **0tëp*er-3~£mpk^^** _7_ _v_ _s_ ^ _*'•X&_ -"'-; !f _**ttëi&i&g**_ _**[1]**_ _*****_ **'** **"** **"réglons?**

growth in employment). Declining employment in
the regions of North Western Spain reflects the difficulties 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 accompanied 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 agriculture. 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, employment 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 opportunities. 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 prevent 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 progress 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 circumstances, 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, unemployment 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 unemployment 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 region 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 between 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**

% share of total unemployment, 1992

## **•**

**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 | £>

**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 employment. The Spanish regions concerned started from a
position of having some of the highest rates of unemployment 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 af-**

fected 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 percentage 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 widespread 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 prospects appear to be relatively unfavourable. For the
Community as a whole, estimates suggest that economic growth needs to exceed 2^2% a year to keep
unemployment from rising and this it has consistently failed to do **in** the initial years of the 1990s.

**8** **Regional** **variations** **in unemployment rates by Member**
**State,** **1993**

**o c** **[ %]** **[ 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

**Map 12 Change in unemployment** **rate,** **1986 -1993**

Difference

(percentage points)

<-2.9

-2.9--1.6

-1.6--0.3

-0.3-1.0

1.0-2.3

>2.3

% share of labour force, 1991

23.3

### **•**

No data

GR - level 1 data only,

1992 data used.

EURl2 = -0.3

s = 2.5
ft I £>

**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 perform better than the rest This is a task which is made

all the more difficult for some of the regions concerned by their above average growth of workingage 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. Complementary 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 opportunities 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 discussion on Objective 2 in chapter 9). Many sectors
are concerned by this process but this chapter concentrates on the structure, geographical distribution
and outlook for three industrial sectors which are

often discussed in this context : automobiles, aerospace, textiles and clothing as well as the defence
sector which combines production, and service activities. 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

**50**

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 economies. Both sectors are subject to fierce international
competition which, especially in the case of automobiles, has resulted in large gains in productivity in
a short period of time with significant shedding of
labour. The aerospace industry tends to be concentrated 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 declining 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 employment 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.

**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 exceptions 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 incomes 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 chains [1] .

In non-market services such as healthcare and education, 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 head [2] . 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 assistance under the Structural Funds in the new programming 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 electrical equipment needed to assemble automobiles.
There are six major manufacturers of private cars,
representing 75% of the market, and a few specialized manufacturers. For the most part these
manufacturers are also present on the commercial
vehicle market, where there is a similar rate of concentration, although one manufacturer accounts for
35% of the market. Although their activity is integrated to varying degrees, both upstream and down

stream, all the automobile manufacturers use the
services of a large range of specialist and nonspecialist suppliers, including SMEs. In certain cases
the components manufactured by these suppliers account 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 manufactured 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 industry employed some 1.71 million people, one million of these jobs being with automobile manufacturers, accounting for 5% of industrial manufacturing
jobs [3] .

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

^ ^ f l Manufacture of other vehicles

% share of employment in the automobile
Industry, 1990

16.4

i»-A^—^V^

90

80

- -70

**• 60**

**• 50**

**• 40**

**30**

**20**

**10**

**0**

**a f e r ^ S ^ ° y Œ t ^ r > d** **unemployment** **>yirie** **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.**

**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**

**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.**

**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 undertaken by the manufacturers could lead to a significant
loss of jobs in specialized suppliers. Because of the
heterogenous nature and high geographical dispersion 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.

**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, although this was down from around 70% a decade
earlier. Within each sector there are a number of
products : airframes, aero-engines, equipment (electronic 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 producers involved in cooperative agreements with the
major global players.

**54**

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 furniture 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 reflecting a strong cyclical downturn in civil aerospace
demand and the depressing effects on military production of the reduction in national defence expenditure (see below). Between 1991 and 1993 employment declined by 12% to 372 000 employees (Annex,
Table A.8).

**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 employment [4] are in England (32% of Community employment), the Paris area (12%), Hamburg and the
Netherlands (10%) and South-West France and
Bavaria (8%) (Map 14). In Italy, production is located 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 aerospace industry employing up to 17,000 workers (depending on data source [5] ), concentrated in the Madrid
region and Andalucia. There are also important installations 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 concludes that for the future 'the sure prediction is that
the EC aerospace industry overall will not be much
larger in employment terms' [6] .

**Map** **14** **Employment in the aerospace industry,** **1992**

**50**

**1** **40**

**30**

**20**

**50**

**% share ot emptoyment In the aerospace**
**Industry, 1992**

**47.5**

**i** **10**

**4.1**

Total employment

Engines/equipment/testing

Aircraft/missiles/space vehicles

Combined activities

Unknown

**^**
**^**

**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. Production will, however, be at least partly sustained by
sales to third countries. Community military aerospace 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 (involving BAe, Alenia and Dasa) and the Eurofighter
project (the same companies plus CASA of Spain).
Missile production is being carried out by a consortium 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 production levels of only 170 units in 1995, while the outturn
for 1994 may be only 120 units.

Nevertheless, over the longer term, demand for civilian air transport is likely to expand. Improvements in

**56**

air traffic control systems will increase capacity on
the more congested routes; Structural Funds are assisting investment in airports, especially in the less
accessible parts of the Community; and increasing
regulations on noise and other environmental impacts 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 countries. The employment effects of expanding production are, therefore, unlikely to be positive.

**Textiles and Clothing**

**Structure of the industry**

The textile industry is relatively heterogeneous. Differentiated according to end-use, it is made up as
follows : clothing and knitwear (45% of EC fibre
use), home furnishings (17%), carpets (13%), technical textiles (25%) among the largest users of which
is the automobile industry discussed above. Technical textiles (filters, webbing, etc) represent the fastest
growing sub-sector over recent years and demand
continues to grow rapidly [7] .

Industry estimates suggest that there were nearly
77,000 textile firms in the Community in 1990, with
size ranging from giant, vertically integrated multinational 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.

**Map** **15 Employment** **in the textiles and clothing industries, 1991**

. **1** dot = 2000 people

DK, UK - level 1 data only

I                                                              - latest data available is for 1989

ft I £>

**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 accounting 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 explains the growth of large firms integrating both
manufacturing and distribution.

In employment terms, the textile and clothing industries 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 representing 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).

**58**

**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 employment. 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 industry while very important in terms of employment,
produces mainly low value-added garments.

Within Member States production tends to be concentrated 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 industries and so having a cumulative effect on regional 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 clothing 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

**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 :**

**• 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-**

**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.**

**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 expenditure. About one fifth of the defence budgets of
the EC Member States is spent on military equipment, the mainstay of the defence industrial establishment. 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 personnel 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 potential 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 employment is located in other regions with an above average 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 implications.

A recent Commission study [9] 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.

**60**

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. Respondents 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 related, 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 defensive 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 industry 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 (excluding 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*^^

**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 eligible [1] 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 infrastructure in such areas is likely to be highly specialised and may pose serious environmental problems of site decontamination. There are very few
examples in the Community of complete industrial
conversion from defence to civil applications, although many companies are pursuing strategies of
diversification. Much of the labour force involved is
not likely to be readily re-employed without retraining.

The impact of military base closures, particularly if
they occur in comparatively small communities or
rural areas, can do great damage to the local economic fabric. Often tourism, agriculture or fishing
provide the only alternative means of employment.
Strategies for the diversification of the local economy should include the commercialisation of the
land and buildings abandoned by the military.

policy measures directed to environmental improvement, site decontamination and clearance, and a reskilling of the work-force. This, in turn, implies a
need for local coordination, given the relative isolation 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 affected by structural change.

**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 economically 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 promotion of harmonious and balanced development
and the strengthening of economic and social cohesion. 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 regions 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 regions, the Structural Funds devoted some 16 bil

lion 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 billion ECU in loan finance for investment in basic
infrastructure in these regions in the period
1989-1991.

This chapter examines the 'development gap' between the lagging regions and the rest of the
Community in terms of the major disparities which
persist in regard to endowments in basic infrastructure 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 treatment and water supply). In this chapter, new information on transport, telecommunications and environmental infrastructures is considered. Energy
infrastructures are also important for regional development. 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 Commission** **[1]** **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 debate** **[2]** **.**
**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**

**66**

**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.**

The type of infrastructure provision in a given region
will have typically developed to suit existing needs,
but may constrain new kinds of development. Regions 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 environment, lower labour costs, and so on. While improved
infrastructure may be a desirable part of regional
development, .it may be neither necessary nor sufficient _per se_ to generate that development.

One of the basic factors in a region's economic
development lies in trade with other regions. Connections to markets and sources of supply (not just
the movement of goods but also the transfer of information) 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 networks 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 problem 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 network 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.

**Regional infrastructural**
**endowments in transport**

A good transport system is generally recognised as a
prerequisite for national or regional economic development. 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

substitute, though substitution is possible between
different modes of transport.

Transport systems particularly have a major role in
promoting the integration and cohesion, in improving the accessibility of peripheral regions and in
relieving the pressure of transit traffic in the more
central areas [3] .

As noted above, transport systems have to be considered in relation to regional needs. The aim is not
simply to equalise endowments. More geographically 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 intraregional needs [4] . In the most congested central regions of Europe, the combination of transit and regional 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 located [5] . 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.

**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** **O** **F** **I** **L** **NL** **UK** **GR** **E** **IRL** **P**

**11** **Number of people killed in road accidents,** **1990**

**per** **100,000** **motor-vehicles**

**B"** **OK** **O** **F** **I** **L** **NL** **UK** **GR** **E** **«L** **P**

**68**

**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**

**112** **Gross investment in roads,** **1975-1989**

**%GOP**
_**I**_ **1,2**

**'EUR8**

**EUR4**

**I**:**

**X.**

**H** **0.8** **i**

**0.4**

**0.2** **!**

_**0,6**_

**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**

**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 inhabitant 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 provision 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 average 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 giving equal weighting to land area and population has
been constructed. This confirms the poor endowment
of Greece, Spain and Portugal (Graph 9).

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

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 suggests 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.

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 countries 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 metropolitan 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 proportion 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)**

**70**

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

Chapter 4 - Infrastructure and human resource endowments

71

**-Infrastriictur©*** **rce endowments**

**Table** **5**
**Intensity of use of rail** **infrastructure**

**Tonne-km**
**per km of rail line**

**million**

**1991**

**Train-km**
**per** **km** **of rail line**

**million**

**1990**

**EUR12**

**EUR8**

**EUR4**

_**EUR8**_ _**:**_ _**B,**_ _**DK. D,**_ _**F,IL,NU**_ _**VK**_
_**Source : Eurostat**_

**Passeng.-km**
**per km of rail line**

**million**

**1991**

_**ËUR4**_ _**;**_ _**EL**_ _**ESP,**_ _**IRL,**_ _**P**_

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 transport 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 States [6] .
Such a rapid expansion of traffic is likely to result in
increasing congestion, particularly in the more urbanised regions.

To prevent deficiencies in transport infrastructure
imposing serious constraints on economic development, the least prosperous Member States and regions 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 increase. 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

**72**

Community average, which should enable them to
make some progress towards reducing disparities in
transport relative to the rest of the Community.

**Telecommunications** **[7 ]**

Telecommunications are important, both in providing key support to regional economic development
and as a complement to other infrastructure. Telecommunications are often seen as a modern substitute 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 prerequisite for the growth of modern industries and services, which require efficient telephone, fax and data
transmission systems. The precise relationship between investment in telecommunications and regional development is, however, like that of most
infrastructure, not easy to establish. Improved telecommunications can have both centralising and
decentralising effects. On the one hand, they make it
easier for firms to service branches and clients outside a region from central points and hence can serve
to inhibit development. On the other hand, they make

**;** **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**

**120** **Number of faults per** **main** **telephone line, 1992**

**Number per** **year**

**Chapter4-** **Infrastructure** **and** **human** **resource endowments** ^ . - > « - • < .

**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**

**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 maintaining good links with core regions.

The quality of the telecommunications system depends 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 access to networks which are an essential part of modern data transmission systems.

Despite rapid growth in telephone networks, major
variations between Member States and regions remain. 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 considerable 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 exchanges), 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

**74**

Portugal, for example, the digitalisation rate increased 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 weakest 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 highest fault rate being in the Attiki region (0.71), because of the old and congested network in Athens.

During the period 1987 to 1991, investment in telecommunications in the Community averaged between 0.5% and 0.6% of GDP, though in the four
poorest Member States taken together it was significantly 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 countries was due almost entirely to a trebling of investment 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, albeit 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 relatively 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

_>•'-/"'_ _^"Tflrfyr*_ _^_

j * » « l -                                                                - «"                                                                **Chapter** **4 -** **Infrastructure** **and human resource endowments**

**Table** **6**
**Main telecommunication indicators** **(1987-1992)**

**Number of lines**
**per** **100 inhabitants**

**1987** **1992**

**% of subscribers connected**
**to digital exchanges**

**1987** **1992**

0 8

4 33

49 63

0 50

5 32

26 66

**GR**

**E**

**IRL**

**P**

**GR, E,** **IRL,** **P**

**B, F, UK**

33

25

21

16

25

40

**40**

**34**

**30**

**27**

**34**

**48**

_**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 standard 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 increased 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 exchanges^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 implications 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**

**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**

**76**

                               - ^•• [:] 5ft*$rf. H;**-- _%ré *_ i<^%-^>#i X^WXK* _**SttfH**_

**were not in operation, often because they were not**
**connected to the sewer or power system** **[8]** **.**

**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 Algarve** **[10]** **. In the poorest regions**
**of Spain** **38%** **of waste was disposed of** **in** **such sites**
**in 1990 and** **71%** **in Castilla La Mancha** **[11]** **, in Italy an**
**estimated 70% of the waste generated in the**
**Mezzogiorno is disposed of in unauthorised sites** **[12]** **.**

**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 year** **[13]** **but has no treatment**
**or disposal facilities, and it is estimated that Portugal**

V _'&•"***$?_ _f^^K^ï^ts_ v f r - . i ^ y t y ^ o f f l M ^ - i y - 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 uncontrolled landfill [14] 

**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, seasonal fluctuations in both supply and demand and
potentialcontamination. There are permanent supply
problems - 'water stress' - in the South and Southwest 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 relatively extensive, the amount of water lost from the

system can be high - as much as 34% in Spain and
30% in the Mezzogiorno in 1987 [15] .

_**\**_ **23 Public water supply and disposal in the Member**
**States,** **1989/1991**

**%** **population**

**1**
**j**

100 I

**;**

90 j

**80** **I**

**70** **I**

**i**

**«o** **!**

**50**

**40**

**30**

**20**

**10**

**I** **Waste water disposal,**
**1990/1991**

**I** **Water** **distribution.**

**1989/1990**

**O n r S K E** **I** **[F D U K L M . D K](http://FDUKLM.DK)** **[r M . O A 1 0 K C S D F t . U K M .](http://rM.OA10KCSDFt.UKM)** **0**

**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 million ECU a year will be needed in waste water management 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 expenditure.

In the case of urban waste water, investment is required for the provision and renewal of sewers and
treatment facilities. The Urban Waste Water Directive (91/271) sets out precise standards to be

achieved by all waste water discharges and a time
schedule with final completion by 31 December 2005, by which date all treatment facilities required by the Directive must be installed. Investment
alone, however, is not enough to ensure that standards 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 generated. 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 standards) 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

**s*'*£** **^**
_**&£c-"**_ _**[y]**_ _**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 problems are important in restricting investment

Investment in water supply tends to be directed towards three aims : collection, purification and distribution. Important problems to be addressed include 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.

Planned investment will make considerable progress
towards improving waste water and solid waste treatment 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 1993 [16] .

**Regional differences**
**in human capital**
**endowments**

The competitiveness of the Community and regions
depends not only on physical infrastructures endowments but, to an increasing extent, on those of human
resources. Effective educational and training systems
can therefore be important in strengthening comparative advantage. Despite the efforts made over
recent years, however, disparities are still very wide.

Adjusting educational and training systems to profound 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 number of people entering the labour market.

**Disparities in** **educational** **levels**

The educational level (or attainment) of the workingage 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 existing educational systems.

Patterns are more varied in regard to post-compulsory 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 progressively 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)**

**40**

**35**

**H 30**

**25**

**20**

**15**

**10**

**5**

**0**

**Post-compulsory**
**education**

**H** **Objective** **1** **average**

**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

80

Itl^P^T*

ably throughout the Community in recent years.
There has been substantial progress in the least developed 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%.

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 unemployment 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. Although important, enrolment rates give no indication
of the quality of the content of courses or the educational 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 secondary education and 24.5% in technical and vocational
training) [18] .

**A** **'-l>J'l** **â** **/^^X^** **1** **V*''*'&** **,** **'** **rt** **' '2** ***4^^*** **•^•^^««ft^''^** _**'?/*?%**_

**Disparities in continuous**
**education and training**

Data on continuous education and training are difficult 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 working 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 opportunities available, through, for example, better links
between initial and continuous education and training systems.

**81**

_**9**_

**10**

**11**

**12**

**13**

**14**

**15**

**16**

**17**

**18**

**82**

_**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.**_

**./^^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 diminished 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.

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. Nevertheless, outside the multinational sector, small and
medium-sized companies continuously make loca

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 magnitude 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 multinationals 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 :

 - proximity to the market

 - the quality and availability of labour

 - suitable infrastructure (transport, telecommunications, 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 identification 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 manufactured. Component suppliers also preferred to be located 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 geographically. 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.

**84**

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 characteristics 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 importance of their large market. In the case of Germany
and France, physical location on the European mainland 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 advantages, 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

**^** _**'\^^^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 headquarters 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 elsewhere.

**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 perception 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 expanding 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 relationships 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 language, 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 electronics 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 infrastructure, low quality of labour and the lack of
particular skills. Some companies expressed difficulties of 'doing business' in countries with a small
industrial base and a lack of industrial tradition compared with countries such as Germany.

In some cases, specific business-related reasons,
such as a lack of service facilities for machine maintenance, 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 economic centres of the Community will continue to
benefit from this. Other regions might be able to
counteract such an advantage through lower congestion, better quality of life, lower costs, financial
incentives, and so on. This applies especially to regions 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 continue 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 infrastructure.

In the future, the cost advantage of 'peripheral' regions may become smaller as further economic integration leads to the harmonisation of macro-economic 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 improving their accessibility and the conditions they
offer for knowledge-based activities.

The survey also has important implications for regional development agencies trying to attract investment 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 activities 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**
**Investment** **[2 ]**

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) :

**ftvw«fWivi«wgifttfB**

**86**

 - an injection of capital, which increases investment in its productive capacity and hence its
growth rate;

 - access to advantages which multinationals can
bring; examples often cited are technical knowhow, the opportunity for the local workforce to
learn new skills and management techniques.

These benefits will be greater where there is a spinoff 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 difficulties. 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 concluded 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.

**Chapter** **5|-** **New** **in** **ward** **Investment** **and** **the** **régions**
**g^^^|g|Sfe^^|è?K^**

**FDI** **:**
**The major global players**

There are three major sources of foreign investment :
the US, Japan and the European Community. According 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 (especially 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 suggests that Japanese investors are increasingly targeting 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 Association (EFTA). Japanese investment in the
Community tends to be dispersed across a wide range
of economic activities taking in not only manufacturing but also commercial activities such as property
and financial services where joint-ventures and partnerships 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 bil

lion 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 countries, 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** **• G r o s s i n f l o w** **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)**

**%** **total**

**GDP**

**%** **total**

**external**

**FDI**

**%** **total**

**Internal**

**FDI**

**Table 9**
**Foreign Direct** **Investment,** **1986-1991**

**(thousand million** **ECU)**

```
  NET

per head of
population

  440

  160

  740

  2190

  610

  170

```

**INTRA-Communtty**

**IN** **OUT**

**+**

**EXTERNAL**

**IN** **OUT**

**B/L**

**DK**

**D**

**GR**

**E**

**F**

**IRL**

**I**

**NL**

**P**

**UK**

**TOTAL**

_Source : Eurostat_

**88**

**NET**

**NET**

```
 4636

 -3212

-56164

 1670

29012

-40054

 7669

 -2643

-18613

 6028

 9560

```

```
 5679

 2553

31151

  81

 3155

31823

 2059

 7656

20346

  113

58818

163434

```

```
 7123

 2586

 3805

 652

10364

14905

 3565

 8951

10989

 1828

53017

117785

```

20216

1197

7093

1121

26991

```
22777

 7897

 9434

 13303

 4835

28018

142882

```

```
 17024

 4442

36011

  22

 5188

45943

 1735

 13372

22558

 522

 12657

159474

```

**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**

_**'**_ _**I'KXL****_ _**W-**_
**New Inward investment and the regions**

**- 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** **B/L** **DK** **O** **F** **I** **NL UK** **GR** **E** **IRL** **P**
Current prices and exchange rates

**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

ERDF receipts

**6** **I-**

**5**

**4**

**3**

Structural Funds
receipts

FDI, gross inflow

EUR12 Spain Greece

Current prices and exchange rates

Ireland Portiigitl

**90**

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 magnitudes 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 companies 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 between 1986 and 1991. FDI has led to the estab
lishment of a modern productive base in industries
such as electronics and pharmaceutics. The capitalintensive nature of much of this investment, however, 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 in

**; Chapter** **5 ;-New inward** **— ^ T ^ t end the** **regions**

vestment 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 changing 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 wholesaling. The broad base of FDI in Spain has probably
contributed to general efforts to raise skills, especially 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 nonEnglish-speaking countries such as those in EFTA.
While English is often the preferred second language, 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, lagging 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 ^ _<_ _m_ M ^ — » — — 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 M o s t l m P ° r t a n t 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**

_$i0MÊÊÊÈÎ^]Ê$ÊÊM_ **r** **:** **SB :^^-!ft:-ï^5^^S?:?^:?i^S^^^'^^y:^^:^'S?**

lllpivi

**UK**

**FR of Germany**

**France**

**Spain**

**Netherlands**

**Italy**

**Ireland**

**Belgium**

**Luxembourg**

**Total**

_Source_ _:_ _BCL_

**92**

**Japanese investment in** **greentleld** **manufacturing**
**sites in Europe,** **1986-1989**

**Number** **Number**
**Most Important** **investment** **regions**
**of plants** **of jobs**

**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

**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.**

**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**

**m^Sy**
**^DrWtirSpNéwJnwâfdl** _**&nd**_ **thejegîôtfe** _**'•**_

**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**

**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 established** **[3]** **.**

**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 development 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 - organisational, 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 economic 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 international 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 Spain [1] and Ireland [2 ]

**95**

_**mm**_

**i** **•;**

**30** **Expenditure on research** **an<J development** **in the Member**
**States,** **1990** **; ^v**

**%GDP**

**T** **3**
**Private** **H** **Public**

**2,5**

**1*5**

Q|6 **h**

GR P E IRL J OK B

P 1981 data; DK, GR 1989 data; E, F 1991 data

**2,5**

**1*5**

**0,5**

EUR12 NL UK

**have a** higher propensity to conduct research activities 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 innovation. In such regions, therefore, further investment
in **RTD,** or its extended application, is a wider issue
than it might initially appear.

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

96

ronment, including entrepreneurial culture and degree 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.

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

**r** **Table 12**
**RTD indicators for the European** **Community**

**m** **Q** **û** **o** _**m**_ **"•** **£**

**GDP per head**
**1990**

**Index**

**Gross expenditure**
**on** **R** **and D**

**(GERD)** **[1 ]**

**%** **GDP 1990**

**index**

**Business**
**expenditure**
**on** **R** **and D**

**(BERD)** **[1 ]**

**CM**

**cc**

**UJ**

```
100

2.00

100

1.30

100

 65

13.24

```

**% GDP** **1990**

**index**

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

```

**Share of BERD in GERD**
**(%** **GERD)** **[1]** **1990**

**Govn.RTD**

**financing**
**(% total budget)**

**1988**

**Total RTD**
**scientists and**
**engineers per** **1000**

**labour force 1989** **[2 ]**

**Private RTD**
**scientists and**
**engineers per** **1000**

**labour force 1989** **[2 ]**

```
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**

**31 Scientists and engineers in the Member** **States,** **1989**

**per** **1000** **labour force**

€ r

5 r

**4** _**h**_

**3 h**

**2** **f**

_**m^Mi^'îSSS^~~~Z^~^**_

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.

98

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 personnel 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] .

**Map 17 R&D personnel, 1989**

% labour force

0.00 - 0.25

0.25 - 0.50

0.50    - 0.75

0.75- 1.00

   - 1.00

% share of total R&D personnel, 1989

#### **•**

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 outside 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 number of people [4] .

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 accession 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 times [5] .

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 venture capital and other forms of finance for innovation.

**Islands of innovation**

Recent Studies [6] have examined the geographical patterns 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>"'"** **^ 4 Ï 1 E ' — -** **>--???-** **~v?<** **—** **°*** **[ r e s e a r c h a n d]** **technological** **deyeîppment in thé** **réglcals\**

which are involved in RTD projects are highly concentrated in comparatively few 'Islands of Innovation' . These islands are relatively small, mostly urban
areas, with a dense network of enterprises and research 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.

Up to three quarters of all public research contracts,
including those funded by the Community, are estimated 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 sciencebased innovative activities in the Community, therefore, 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 concerns 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 regions, normally around capital cities. In Spain, only
around a quarter of the national RTD effort,
measured in terms of both GERD and RTD personnel, takes place in the weakest regions which account
for 60% of the population. In Greece, Athens dominates RTD, accounting for nearly 60% of government 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

taken by the private sector takes place in the South [7 ]

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 universities, it is still necessary to ensure that results and
know-how are transferred to enterprises in weaker
regions.

**Structural factors**
**underlying disparities**

Small firms are often regarded as a major source of
innovation. At the same time, their capacity to innovate has limits and they tend not to possess the
resources required to respond to rapid technological
change in increasingly global markets and the development 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 developed countries which are gradually gaining markets 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 difficulty 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 research 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 technology take-up by firms. The design and management
of these RTD-related actions is assigned principally 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, qualitatively 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 technological 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 ac

tions, 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, expenditure is highest in Objective 1 regions in view of
the way that assistance is concentrated on these areas.
The Community contribution, including the Framework 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 training at Masters and Ph.D levels, while the PEDIP
Programme, focused on industry needs, has supported 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 RTD** **[1]** **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 regions based on innovation and the incorporation of
new technology, as opposed to a strategy of comparative 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 receptivity 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 benefiting from synergies with other policies and actors at
the national and European level. This is particularly
true of technology, which is, by definition, an international process not constrained by national borders
and one of the driving forces behind the ever increasing 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 regions. It seems that natural resilience, which allows
regions to deal with adverse developments, is much
greater in central regions. There, both private business and public authorities appear to have more
connections and contacts with counterparts elsewhere, 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.

From the point of view of the Member State, border
and coastal areas can be considered peripheral. Border areas suffer from peripherality because the neighbouring country has different social, economic, legal
and political systems. This tends to limit the economic 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 separated from their neighbours by the sea. The
Community's border and coastal regions are described below, focusing on what they have in common as well as their great diversity.

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 improvements in the Community road, rail and air networks
in reducing the time required to reach these economic
centres is then examined.

**Coastal and border areas**

The Community's coastline stretches for more than
60,000 km. Areas around the coast gain some important benefits from their location, being generally regarded 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, however, 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 peripheral 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 features 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. Similarly, 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 populated (with population densities in the range 30-60 inhabitants 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**

**Border regions**

**120** **H**

**Rest of country**

**100**

**80**

**60**

**40**

**20**

**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**

**(0**

**-** **[1]**
**I**

**CO** **Q**

**C** _**O**_ **-** **©** **"O**
**(0** **O** **£** **o** **C**
**C** **O** **CO** **C** **03**
_**S**_ **E** **«>**
o o **w** **i** **£**
**—** **o** **J=**
**x** **"S**
**_i** **z**

**(Q**
**?** *****

**•C** **D**
**O**
**Q.**

**Coast lines**

**I** **Total**
**Land i**
**borders !** **[, n t e r n a l ]**

**j** **External**

**Coast lines**

**| Total**
**Land** **I**
**borders** **1** **Internal**

**i External**

**CO** **co** **(0**
**(0**

**_** **©**

**E** **A**

**o** **CM**

**o** **"g**
**E** **"J**

**3**

**64013**

**14863** **9955**

**9814** **4907**

**5048** **5048**

**100**

**100**

**100**

**100**

**184**

**507236**

**52865**

**CO**

**O**

**LU**

**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**

**Border** **j**
**regions !**
**NUTS** **[1]** **I**

**No.** **of**
**regions**

**Area**
**km** **[2 ]**

**Population**
**1000s**

_**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 neighbouring 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**

4 « i . _*'^Zgrf%L&r_

s r . m » _M&s&P»a •&_

**Table** **15**
**Key indicators of land border regions**

**CD**
**" O**

**o**

**75**

**c**

**CD**

**LU**

**25.2**

**5.7**

**25.5**

**4.1**

**CO**
**c**
**o**
**CO**
**0)**

_**a**_
_**n**_

**o**

**^** **0)** **c'**
**E * ^ £ ^ o ) ^ « j > < \,** **2**
**s c o D î - ' o c S ' p ^ p**
s I - Ê 8 i s i n
fi I s I S [ M] £ « " s

**E** **v.** **3**

**CO**

_**•a**_ _**—**_

**c** **co**

**CO** **CD**
f £

**z**

_**y—**_

**LU**

**CD**
**CD**

**CD**

_**•a**_

**v.**

o

_n_

**15**
**c**
_**+•***_ **i -** **0)**

**c**

**74.8**

**16.8**

**74.5**

**12.1**

**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**

**100.0** **—**

**22.4 100.0**

**100.0**

**16.3** **100.0**

**105** **153**

**99.8** **100**

**8.1** **9.4**

**58** **—**

**Area**
**1990**

**% country**

**area**

**I** **% all border**
**regions**

**! %EUR12**

**| % country**
**i I** **Vea**
**Population ' }**

**1990** **•** **%** **[a]** **M°** **[o r d e r ]**
**I** **regions**

**|** **%EUR12**

**Population density** **[1 ]**

**1990**
**(hab/km** **[2]** **)**

**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** **(%)**

**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 difficulties which such regions encounter if the people
living there wish to cooperate. Regions with different

**108**

economic characteristics would normally seek to
identify cooperative measures which are complementary : 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.

**Border regions**
**and the Structural Funds**

Differences in economic performance of border regions 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 increased from 109 to 140, mostly under Objective 5b.
Total population coverage has risen by over onesixth (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

**Chapter** **7?** **Peripherality** **reconsidered**

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 Objective 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 km [2] 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** **[,]** **G D P**

**Index** **(EUR12** **=** **100)**
`140` **Bordering regions GDP** **-j 140**

```
120

100

80:

60

40

20

```

**B F** **B L** **D B** **D D K D L** **D N L E F** **F D** **F L** **NLB**

NUTS 3 regions; L is a single region

**120**

**100**

**80**

**60**

**40**

**20**

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**

**Mean time (hours)**

**<4.0**

**4.0** **-** **4.5**

**4.5 - 5.0**

**5.0** **-** **5.5**

**5.5 - 6.0**

**>6.0**

**% share of total population.** **1990**

### **•**

**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 air** **[1]** **.**

**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**

**112**

**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 interest** **[2]** **. 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.**

**Map** **21** **Estimated improvement in average travel time to**

**194** **economic centres by the year 2010**

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

_%_ share of total population, 1990

#### **•**

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

% share of total population, 1990

30 r 28.1

##### **•**

No data

  - Economic centre

Based on 1989 population

**Chapter** **7** **- Peripherality reconsidered**

**116**

**"** ***f** **[f]** **^~** **•"** **"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 1989 [1], 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 pursued 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 implemented. 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 adjustment 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 opportunities often associated with low GDP per
head;

 - trends in productivity which are important in
relation to improving competitiveness and, therefore, 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 developments. The third objective, Objective 5b, is aimed at
rural areas affected by problems of structural adjustment 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 considered 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 unemployment 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 principal aim of Objective 2 assistance.

**120**

Part of the explanation for this is probably related to
labour supply developments. Most Objective 2 regions 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 improvement 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 unemployment in rural areas cannot be attributed to ongoing 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 restructuring led to an increase in the share of total
employment in sectors with relatively low productivity 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.

**Chapter^-** **Regions assisted by the Community** **1989-1993**

VJ&

_T7H_

**Table 16**
**Demographic and economic indicators in regions**

**assisted by the Community,** **1989-1993**

**Unemployment rate**

**1986** **1991** **1993**

**GDP per head (PPS)**
**(EUR12=100)**

**1986** **1989** **1990** **1991**

**Regions**

**Objective 1**

**Objective 2** **[1 ]**

**Objective 5b**

**Other regions**

**EUR12** **[3 ]**

**Employment**
**(1986=100)**

**1993** **I**

_**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 former 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 Objective 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 unemployment is likely to represent something of a moving 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 numbers 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 productivity 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 substantial 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 developments 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 employment 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 Objective 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 Structural Funds, for example, experienced a rise in employment 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 interior (Extremadura, Castilla - Leon and Castilla - La
Mancha) and also include the Western Mediterranean 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 geographically 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

122

around 5% over the five-year period, although employment 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 employment 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, generally 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 unemployment rates is often a complex one. For example,
when new jobs are created some of the new employment 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 Mediterranean islands, however, with lower rates of employment growth than the regions in the South of Spain
but still slightly above the Community average, the

**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 respectively). 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 comparatively-small fall in the unemployment rate, of 1 to
2 percentage points, over the period.

The preceding analysis focused on the period 19861991 for which regional employment data are available. In 1991, the Community entered a period of
recession with the first firm signs of recovery emerging 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 depart

ments 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 accompanies 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 variations 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]** **¥'**

**i 8 B l i l l l l B ^ i l t e i l** **[: ;]** **P** **[o m m t, n f t]** **y** **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 significance for regional policy, the new Treaty recognised the need for increased solidarity and cohesion
within the Community as a basic condition for further
economic and social progress.

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 unification, including the adoption of a single currency by
the end of the decade, the Commission's mediumterm budgetary proposals covering the period 1993
to 1999 [1] - the Delors II package [2] - called for another
significant increase in structural expenditure to promote economic and social cohesion. This was generally accepted by Member States, even though the
Maastricht Treaty had not yet been ratified. In consequence, 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

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 increased share of the Budget. In 1993, the last year of
the old programming period, expenditure in structural 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 agriculture will have declined to 46% (Table 17).

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 Objectives [3] (Table 18).

The original recommendations in the Delors II package were based on four key principles underlying the
1988 reform -concentration, programming, partnership and additionality. These principles were discussed in the previous Periodic Report and in the
Commission's mid-term review of the Structural
Funds [4] .The principle of concentration of assistance
on the worst-affected areas is key to the analysis of

125

****?T** _***"*$%£,**_ **' C Ê ^ - 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**

_Source!_ _DGXVI_

**126**

**B** **DK** **GR** **IRL** **I** **NL** **UK** **EUR12**

**26**

**23**

**37**

**5**

**9**

**74**

**6**

11

**4**

**5**

100

100

**19** 100

**16**

**28**

**17**

**20**

**78**

**4**

**9**

**4**

**5**

**87**

**4**

**6**

**1**

**2**

**45**

10

**29**

**12**

**5**

**8** 100

**16**

**59**

**9**

**8**

**9**

**45**

**39**

**73** 100

**4**

10

**6**

**7**

**9**

**31**

**52**

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**

**v^**

REGIONS ELIGIBLE FOR

THE STRUCTURAL FUNDS

1994-96/99

**•T**

_**m**_ ***** **»**

**.1**

**S**

**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**

**128**

**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-**_
_**ployment**_ _**[5]**_ _**.**_

**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**

_***$•'**_ _**'X'**_ **'** _**-'"**_ _**[:]**_ _**%"^'"-'•**_ **;-X'-fy>'^<•':-•-,-,'•$** _**^P0'fi-'**_ _**K**_ **^Ct-^i'** _**\**_ _**'[**_ **^IfÇvX** **Chapter** **9\Ck>mrriffî^** _**'pot\cfëj9&i**_ **999.**

**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 established 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 (Northern 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 increased 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 Council [6] 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 assistance. 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 population. 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 Objective 1 regions has risen and the geographical concentration 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 list [7] 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 pro

**130**

visions. Four areas - Hainaut (part), Cantabria, Nord
(part) and Merseyside - which used to qualify for
support under Objective 2 now fall under Objective 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 policy 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 Denmark [8] .

**The** **macroeconomic**
**weight of Community**
**regional policies**

Community regional expenditure influences the development of Member States and regions in two
principal ways :

 - through the co-financing of investment in physical 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 investment under the Structural Funds - to total gross
fixed capital formation (GFCF) in the economies
concerned. In 1989, the ERDF financed 0.4% of

**Chapter 9 - Community** **regional** **policies** **1994-1999**

**Table 20**
**Commitment of the ERDF and the other Structural Funds**

**in Objective** **1** **regions**

**ERDF commitments as a percentage of**

**The Structural Funds**

**and Cohesion Fund**

**as a percentage**

**of** **GDP**

**Objective 1**
**regions in**

**investment (GFCF)**

**1989** **1993** **1999**

**GDP**

```
1989 1993 1999 ! 1989 1993 1999

```

**Greece**

**Spain** **[1 ]**

**Ireland**

```
1.4

0.7

0.9

```

11.0

4.0

9.3

7.0

12.6

6.6

7.8

```
2.5

1.0

2.1

```

```
4.0

2.3

2.7

```

```
1.9

0.9

1.5

```

```
2.2

1.5

1.2

```

```
3.3

1.5

3.1

```

**Portugal**

7.3

2.6

5.2

5.3

8.0

```
2.7

```

```
1.4

```

```
1.8

```

```
2.1

```

```
3.3

```

**Portugal** 5.3 7.0 8.0 **`1.4`** **`1.8`** **`2.1`** **`2.7`** **`3.3`** **`3.8`**

**`EUR4`** 3.9 6.0 **7.8** 0.9 1.3 1.7 1.6 **2.3** 2.9
**(of which Cohesion Fund)** **(0.4)** (0.6)

3.9 6.0 **7.8** 0.9 1.3 1.7 1.6 **2.3**
**(0.4)**

2.9
(0.6)

**New German Lander** **[2 ]**

**Italy** **[3 ]**

**Other Community Member**
**States** **[4 ]**

n.a.

0.6

1.0

1.7

1.2

1.1

1.8

4.0

2.5

n.a.

1.7

**2.0**

(0.9)

3.6

**3.3**

n.a.

0.4

**0.4**

**(0.4)**

**0.7**

0.6

**0.8**

**0.8**

0.5

(0.8)

1.1

1.4

**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 Objective 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 contribution 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 involved 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 concerned, which is why the additionality principle is
considered to be important and why it has been
strengthened under the revised regulations, especially in relation to the provision, in the regional plan, of
adequate financial information on the extent of national 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 billion 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 continuity. This is true of INTERREG, the largest one
which is mainly for cooperation across internal borders but which is intended to cover cooperation on
external and certain coastal borders to a greater extent 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,

**132**

ADAPT, financed from the Social Fund, has been
introduced to help workers threatened with unemployment because of industrial change and to help
enterprises improve their competitiveness.

Another initiative directed at small and mediumsized 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 longterm 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 assistance has been agreed and a new category of aid,
Objective 6, has been created.

Only Austria has a region which qualifies for Objective 1 assistance, Burgenland with a population of
269,000, 3% of the total population of Austria. According 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).

**Table** **21**
**The Structural Funds and the new Member** **States** **:** **1995-1999**

**EUR8**

**(exd.** **GR,** **E,** **IRL,** **P)**

**283365**

**45036**

**15,90%**

**67247**

**32247**

**35000**

**237**

**Norway** **Sweden** **Finland**

**4241**

**587**

**13,80%**

**1137**

**384**

**769**

**268**

**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)**

**Austria**

**7699**

**269**

**3,50%**

**1623**

**184**

**1439**

**211**

**4998**

**837**

**16,70%**

**1704**

**511**

**1193**

**341**

**8559**

**450**

**5,25%**

**1420**

**230**

**1190**

**166**

_**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**

_**K*****.**_ _**[1]**_ _****?)**_ **unitnmwwwwww**

**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**

**133**

**Chapter** **9** _**'a-**_ **Community** **regional** **policies** **1994^1999**

Sweden. In Finland, as a result of high unemployment since 1990, the population covered by Objective 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 billion ECU.

The total available for the four candidate countries
from the Structural Funds amounts to 5,884 million ECU (at 1995 prices), which represents an additional 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 combined is slightly below the average for the existing
8 Member States excluding the four Cohesion countries.

_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** _**$?*%**_ _**[r]**_ _**J~"**_ _**[x]**_ **^ f ChapfefylO -f^Regional ooilcîésih Jtërrt&ef^âtes :** **-** **..-s-** **-tftï&vt.*** **rfC"** **[1]** ***** ***** **recent trends**

**Chapter** **10** **Regional policies** **in**
**IVIember States** **:** **recent trends** **[1 ]**

The past five years have been a period of considerable uncertainty and upheaval in the regional policies
of Member States. Major geo-political developments, 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 environment (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 relation to GDP. These countries have maintained relatively extensive geographical coverage in their regional 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 expressed per head of population. The major exception
is Italy where expenditure per head remains substantially ahead of the rest of the Community.

**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

ture to aid business expansion. Where major infrastructure investment is concerned (transport, telecommunications and energy networks) Member
States tend not to distinguish systematically between
that of a general nature and that undertaken specifically to promote regional development. For this reason, 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 infrastructure. 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 regional incentives since 1980, focusing, in particular,
on developments during the late 1980s.

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 employment 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 dependent on traditional industries. Problems of structural
adjustment, however, have affected a much wider
range of regions throughout the Community, especially those containing single activity towns or
cities dependent on industries such as defence, which
has experienced plant closure or conversion of production to non-military goods, or fishing or agricultural 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 restrictions 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 agglomerations. (In the UK, the social, economic and
environmental problems of inner city areas prompted
a growing range of urban policy measures which

**136**

gradually supplanted regional policy in terms of political priority and expenditure.) The spatial concentration of growth also brought problems for some
developed regions : over-heating and congestion encouraged renewed interest in measures to decentralise economic activity from cities such as Paris,
Athens and London.

Other aspects of structural adjustment are attributable 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 productivity of industries and firms. The impact of political and economic transformation in Eastern
Europe has had greatest impact in Germany where
unification has required major restructuring programmes 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 incentives are still the main instrument for the promotion of new productive investment in the regions,
policy makers are moving away from their former
reliance on subsidies for investment and employment, and measures are being oriented more towards
improving competitiveness and the regional business
environment through business-related infrastructure
development (notably in die Netherlands), technology transfer and consultancy services, especially for
marketing and exports. The nature of
business-related infrastructure provision is also
changing : the traditional provision of industrial estates, 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 productive activity in problem regions is also reflected in
the administration of regional policy which is becoming more integrated with other areas of policy (eg
urban/regional policy coordination in the UK) and is

**Chapter 10- Regional** **poilcles In** **Member** **States** **; recent trends**
_***K-K^\i**_

the subject of more coordination between central and
regional government (as in Belgium and Spain).

The reorientation of policy is, however, being undertaken within a context of tightening budgetary constraints and varying degrees of political commitment
to regional policy. In addition, the monitoring of aids
under Community competition policy - in the interests 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 development; in the Netherlands, regional assistance has
been confined to the North of the country (although
there are some other areas with temporary designation); 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 generally 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 policy. 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 regional agencies and programmes, in both Spain and
Portugal reductions in national expenditure on aid is
expected to occur over the next few years. As indicated in Chapter 11, however, it is important for the
weaker Member States and regions that overall regional 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 increasingly limited resources in many Member States, is
evident in the design of incentives to attract new
productive activity. A common theme in the composition 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, common 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 allowances in the Netherlands (terminated in 1983), regional 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 environment 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 countries, 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 support 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 conditions 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 assistance.

**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**

**138**

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 problem regions they have not received assistance so far,
the most notable reductions have occurred in the

Netherlands (a decline of two-fifths), the UK (onefifth) 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 accession 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 development 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 selectivity 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 reduced from 25% to 20% (15% for subsequent extensions), 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

**Chapter** **10 -** **Regional policies in Member** **States ;** **recent trends**

**Table 22**
**Regional Incentive Expenditure indicators**

**1980** **1985**

**Population coverage**

**in assisted regions**
**(% national population)**

**1980** **1986** **1992**

**RIE per head**
**of population**
**in assisted regions**

**(ECU** **1990 prices)**

**1980** **1985** **1990**

**RIE**

**(% national GDP)**

49.67

10.62

11.73

28.38

36.28

57.46

238.72

23.72

42.10

62.27

**Belgium**

**Denmark**

**France**

**Germany**

**Greece** **[1 ]**

**Ireland**

**Italy**

**Luxembourg**

**Netherlands**

**Portugal**

**Spain**

**UK**

**EUR9**

**EUR12**

37.90 35.50

41.00

33.10

19.90

40.00

27.00

58.00

28.00

35.60

79.70

19.90

100.00

58.60

36.80

33.40

39.10

38.15

9.82

16.85

30.07

7.13

117.00

185.19

63.97

58.45

70.61

44.71

5.40

7.57

33.15

52.47

58.14

404.63

70.91

33.09

27.35

31.93

36.92

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

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

_**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 expenditure 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 allowances (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 downwards, in Southern Member States regional incentive

139

**récent trends**

**•^-s£** **"•"•** **J?*~-"^-*^5JC-MÎN** **[W ]**

**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**

spending has increased significantly since the mid1980s. Current budgetary pressures, however, suggest 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 spending in 1990 (in previous years, expenditure generally
being around 0.7% of GDP - still more than elsewhere 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,

_**wtmm.wm9mm*»Mmmfiflfmtmii**_

**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**

differences between countries in terms of expenditure 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 regions, 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.

_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 devolved 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 incentives 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 business 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 decentralised more. Designated areas reduced from three
grades to two
7957: Regional component of the PAT abolished. Scheme
changed from semi-automatic grant to being discretionary aimed at influencing location decisions.
7955 : Special depreciation allowances on the construction of
new buildings abolished.
_1990 :_ With Commission agreement a number of areas designated as permanent problem regions instead of receiving 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 population to 30% by 1993. Special investment grants for
high-grade jobs introduced.
7952 ; Special Steel Location Programme introduced (1982-85).

*aap**#&S3*^«M*<ï^^*tt^^

_1984 :_ Under Commission pressure, areas with 1.4% of population 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.

7955. 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.

7997 - Designation of the Zonal Border Area withdrawn,

though certain measures continued until 1994. Assisted population in the Western Lander reduced to
27% with maximum aid of 18% (as against 23% in the
East). ;

7992. 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 reequipment grants scheme suspended and the scheme
subsequently abolished.
7956': Selectivity increased. Reduced emphasis on job creation _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

7955.

7997

7992.

**141**

in Member States ; recent trencte

**Italy**
7956* : New legislation for the Mezzogiorno introduced. Eligibility iForaid extended. Three-year rolling programmes
implemented. Mezzogiorno divided into three grades
'of area and discrimination in rate of support introduced 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 between 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 adjustments 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 environment 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, employment 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 intangible investments. SIFTT introduced to support tourism. 70% of aid budget provided by the Community
Structural Funds.

7959 : Amendme nts made to the SIBR to ensure its consistency with new industrial incentive system (SENPEDIP)
introduced under the PEDIP (specific industrial development programme for Portugal) to support innovation

142

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 specified 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 withdrawn 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%. Industrial 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 regional 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 improving 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.

'*  - _>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»..«..i l ii Mll, w,i a ^ 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 elimination 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 expansion of trade is likely to be beneficial for economic growth which provides in turn favourable conditions for lagging regions to catch up. Finally,
increased capital mobility encouraged by fixed exchange 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 integration of the Community under EMU is, however,
not without costs or risks for the lagging regions.
These arise both from the macroeconomic adjustments 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 Mechanism (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 benchmark 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 exchange rate fluctuations.

**i«^W*WW*Wi*ot*^^

**145**

**37 inflation rates In** **the** **Member** **States,** **1993**

**10 -**

**Maastricht**

**convergence**

**3d** **Budget deicfc In** **the** **Member** **States. 1993**

**;i:%QDPj:**

**14**

**12**

**10***

**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**

**8 •**

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**criterion**

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## **.llllllllllll**

**OK** **IRL** **NL** **F** **B** **UK,** **L** **£ t (** **0** **-** **t** **E** **P** **O R**

**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

**Table 23**

**The Maastricht convergence criteria,** **1993**

Budget
deficit [1 ]

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

Public Finance

Total

score

**—H**

Exchange
rate4

Yes

Yes

Yes

No

No

Yes

No

No

Yes

Yes

No

No

Debt
ratio [2 ]

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
rate [3 ]

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

10.7

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Portugal

UK

EUR12 average

Convergence criteria

Inflation

rate

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

_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 interlinked. 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 temporary or possibly more permanent contraction of domestic 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 unemployment rate would increase, at least in the mediumterm, by 4 percentage points in Greece, by 2 percentage points in Portugal and by 1 percentage point in
Spain and Italy [1] .

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 consolidation 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 investment. Finally, fiscal restraint is also likely to reduce
the balance of payment deficits of the four countries
concerned to levels compatible with sustainable capital inflows and transfers from other countries.

However, the positive effects of sustained fiscal constraint 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 re

148

quired to achieve the Maastricht targets is substantial. 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 strengthening of cohesion in the long-term, it is essential
that the required fiscal consolidation is pursued selectively in a manner which does not jeopardise the
competitive position and, therefore, the growth prospects of these countries concerned. The Fourth Periodic 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 qualified manpower and the availability and quality of
basic infrastructure. Every effort should be made to
avoid fiscal consolidation reducing developmentrelated 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 accompanied by a restructuring of expenditure which avoids
cuts in capital formation in lagging regions. The same
holds for public expenditure on education and training. Only if the least developed Member States and
regions step up their investment in basic infrastructure 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

**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 expenditure 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 strengthened 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 important effect on economic and social cohesion.

Exchange rate flexibility is important in that, in principle, 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 exposed 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 similar 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 potential adjustment mechanism though for these to occur
wages and labour costs need to respond to employment conditions. Evidence relating regional and national 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 operate 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 unemployment benefit tend to be higher than in the US.

This mechanism is, however, much more effective
_within_ Community countries than _between_ them because there is no central mechanism which plays the
role of the Federal Budget.

**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 criteria laid down in the Maastricht Treaty. Anti-inflation
policies, fiscal consolidation and the loss of the ex

**150**

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 support 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 modernise their economies (see Chapter 9).

In the longer term, Member States which have traditionally relied on periodic devaluation to maintain
national and regional competitiveness and whose
capacity to absorb adverse economic shocks is relatively limited give potential cause for concern. Relatively low labour mobility and lack of wage flexibility tend to inhibit adjustment in these economies.
The Structural and Cohesion Funds' support for
measures aimed at improving underlying competitiveness and increasing diversification should help to
reduce dependency on exchange rates and vulnerability 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 challenges faced by these regions in the transition 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 competitiveness. Community efforts cannot, however, replace behavioural changes and government policy,
as the example of German unification demonstrates.

**"ïf** **.Chapter 11** **-** **Curïent** **issues and problems**

**The previous enlargement :**
**the situation of, and**

**new**
**prospects for, the**
**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 commercial 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 efforts have been made over the 3 years since unification 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 declining, 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 accelerated 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 between 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 occurred in suburban areas of larger towns, where
economic performance has been stronger and unemployment 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 continue, however, depends on improvements in economic 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**

**Gross fixed capital**
**formation per**
**person employed**
**(1000 ECUs)**

**1991** **1992** **1993**

**Domestic**
**demand/GDP**

**(% GDP)**

**1991** **1992** **1993**

**Area**

**New** **Lander**

**Old Lander**

**Germany**

**EUR12**

**EUR12+** **[1 ]**

**Gross fixed capital**
**formation (% GDP)**

**1991** **1992** **1993**

184.7

93.0

100.1

98.1

100.0 100.0

177.1

92.1

99.6

98.2

**GDP per head in**
**new Lander**

**(% GDP**
**in other area)**

**1991**

28.7

33.4

34.1

35.1

50.5

20

22.7

19.6

20.3

5.9

9.4

8.7

7.8

7.7

9.0

10.0

9.8

8.0

7.8

48.2

21.4

23.2

20.3

20.8

49.5

21.2

23.4

19.8

20.4

11.7

10.1

10.4

8.2

8.3

194.8

93.6

100.1

98.6

99.9

**1** _**BUR12+ includes**_ _**the new German Lander**_

_**Source :**_ _**Eurostat,**_ _**national**_ _**statistics, calculations DG**_ _**XVI**_

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 estimates 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 implying 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

**152**

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 especially 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

medium-sized firms in these industries have performed 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 enterprises 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 concentrated 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.

**'** **Chapter** **11** **- Current** **issues and** 3lï- >~#4 _%_ **problems** _"*%_ **» T W**

**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 unification 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 manufacturing, 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 throughout the region, there was still an overall fall of just
over 3 %, while «he share of employment in manufacturing 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**

**1 0** **[ population]** **[ (millions) ]**

_**m**_

**o**

Other job losses = early retirement
0 and participants in further education

measures.

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**

**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) unemployment 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 unemployment than men, their share of employment fall

**154**

ing 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%. Shorttime working, further training and public work programmes 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 singleindustry 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 especially 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.

Jf*/V •*« -fry,-•»£•. y v rt **«-^^#«^^-**

**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 billion ECU;

  - for cleaning up the environment, 100-250 billion ECU;

  - for transport infrastructure, 100-250 billion 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 inhabitant 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. Nevertheless, 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 particular 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 pro

**Chapter** **^Current** **issues** **arid** **problems**

duction, 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 economy, 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 reducing the concentration of production in certain
regions in single sectors of activity which are not
competitive.

At the same time, the restructuring of regional economies needs to be based more on specific endowments, 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 arrangements with the Community in the form of the formation 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 concluded with the Community provide for closer cooperation on a wide range of matters (including trade
liberalisation in their favour and consultation on regional 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.

**The EFTA countries**

For purposes of analysis, the three Scandinavian
countries - Sweden, Finland and Norway - can be

grouped together, while Austria is somewhat different geographically and economically.

**Demography**

The population of the EFTA countries totals 25 million 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 migration, population growth could begin to accelerate
gently.

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**

**Sweden**

**(Ian)**

**c** **i** **c** **c** **c**
**5** **? o** **o** _**2.**_
**5?** _**[ ]]**_ _**-**_ **£>** **"Ob** **5?**
**£** **! £** **£** **£**

**2»** i **«** **~** **2.**
**S** **1** **5** **|** **S**
**<** **!** **i** **-J** **<**

**Austria**
**(litutor)**

**Finland**

**(maakunta)**

**Norway**
**(filke)**

**c**
**o**

**2**

**(0**
**I**

```
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

```

_**C**_

_**o**_

**8»** **™** **o>** **g>** **O)**

***-** **«** _**+***_ **to** **O)** _**o**_ **«** _**o**_
**2** **o** **<o** **5**
**O)** **£** **o>** **£>**
**-='** **o** **>**

**x**

**X** **- I** **<**

**Indicator**

**Population**

**Population change**

**Area**

**Density**

**GDP per head**

**Unemployment rate**

**Agr.** **empl/Total** **empl.**

**bid.** **empl/Total** **empl.**

Ind. **employment**
**change**

**Period** **Unit**

**1990** **1000 inhab**

**1980-90** **%**

**1000** **ha**

**1990** **inhab/km** **[2 ]**

**c**
**o**

**(0**
**0)**

**o>**

**8»** **™** **o>** **g>**

_**o**_
**O)** **l"** **r**
_**o**_

**«** **-** **SI**
**5** **1** **S**
**£>** **S** **§>**
**x** **-J** **<**

```
      PPS
1990-92 (EUR12=100) 153 67 107 131 73 95 210 75 103 128 81 103

1991-93 % 5.1 2.5 3.9 15.1 3.1 12 6.8 3.9 5.7 7.2 3.6 4.7

```

`1989` _%_ `15` `0.4 7.6 21.3 1.9 8.7 18.1 0.1 6.7 11.6 0.5 3.3`

```
 1990 % 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 hori

**158**

zontal 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

**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**

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 markets.

**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 resources include metals, large stocks of fish off the
coast in the case of Norway and access to hydroelectric power.

Until recently, the four countries had slightly higher
levels of income per head than the present

**Map 26 Regional unemployment in the**
**EFTA countries, 1993**

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 employment 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

240 r (PPS). 1991

**200** _**m**_

ISO!

120;

60

_ME_

**Unemployment** **rate**
{%).1993„ 2 8

_**mi**_

20

EUR12 average

_M:_

112:;

**SognegFjoitton»**

**Osb**

- Below nat average

Above nat. average

Below nat. average

**Katniw**

**SF** **N** **:** **;** **;** **si:** _**m**_

160

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 significantly higher than the average for the
Community.

Since 1990, however, Nordic countries have experienced substantial increases in unemployment. In Finland, 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, unemployment is linked to the decline of traditional industries

affecting many urban centres including Vienna
(Graph 44).

The incidence of unemployment in the Nordic countries 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, however, to what extent recent developments are structural as opposed to cyclical in nature.

**stru**
**r i** **[A||^gfi^^^^jog;|^%^ ]**

**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 Councils, which are responsible within the framework of
national policy for areas such as education (secondary
schools), social services, health care, land management, 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 population (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 created in addition, grouping together municipalities
with new responsibility for regional policy and spatial
planning. At a lower level there are 88 joint intermunicipal 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 administrative 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 extensive as those in Germany. They account for only 27%
of government expenditure. For administrative purposes 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 Conference 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 international context has altered. They included a land**use** and spatial planning dimension. The present aims

**are:**

 - **spatial planning and protection** of **the** environment, mainly in the Alpine regions;

 - transfrontier cooperation in border regions, especially those where agriculture and declining industries are important;

reorientation of international transport networks,
especially rail, towards Central and Eastern
European countries.

**162**

**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 accompanied 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 employment - 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 unequal between social groups.

**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

**i n**
**«Chaptef^2BR«gïonal** **structures and problems** **m neighbouring countries**

**Table 27**
**Demographic and economic indicators**
**in the Visegrad countries and the Community**

**££**

**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

163

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

**N** **Q.** **5** **Q.**

 - o
c
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38250

122

0.7

29.5

13.0

41.5

15861

13.6

122.8

29.5

25.4

23.8

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-2.9

0.5

**(0**

**c**
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**X**

10340

111

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19.4

19.2

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4527

10.1

443.8

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26.1

na

na

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**UJ**

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146

1.0

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44.8

146300

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13.5

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31.5

62.4

-5.0

-0.6

0.8

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

**Total Population**

**Active Population**

**Unemployment**

**Employment**
**%** **total 1991**

**Employment change**
**1989-1991**
**(% point)**

**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**

**Industry**

**Services**

_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)_

**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.**

**164**

**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-**

_**^^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 concentrations of private business and foreign investment;

 - 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 industrial 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 countries.

As noted earlier, the small enterprise privatisation
process - covering small retail shops, restaurants,
workshops and so on - is virtually complete in the

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 capital. 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 disproportionate concentrations of new enterprises and entrepreneurs in relation to population. These areas have
the benefit of well-developed infrastructure, a relatively diversified industrial structure, good international 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 contradictory. By mid-1993, Hungary had been the recipient
of foreign investment worth around $5.3 billion,
while the former Czechoslovakia received $2.2 billion 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 billion planned in respect of activities already established.

The main recipient sectors of foreign investment are
automobiles and transport, finance and insurance,
and import-export services. The main source of investment 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 locations.

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**

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.

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-SzatmarBereg). 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 bordering 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 industrialised, especially those with a diversified industrial
structure and well-developed infrastructure, appear
less vulnerable to the costs and difficulties of economic transformation. Privatisation has proceeded
more rapidly, new enterprises established more easily and foreign investment attracted more readily.
The adaptation of regions to new economic conditions 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';

**166**

_j$me&£2g&f&_

geographic peripherality and infrastructure, including proximity to larger urban centres, transport networks such as international airports and
sources of capital and innovation.

The 'crisis' and problem regions suffer from a number of overlapping difficulties :

 - declining heavy industry, such as coal and iron
ore mining, steel production and armaments, giving rise to high unemployment and limited opportunities 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 SzabolcsSzatmar-Bereg, Borsod-Abauj-Zemplen in
Hungary and Suwalki, Ciechanow and Ostroleka
in Poland);

 - underdeveloped infrastructure (eg SzabolcsSzatmar-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 SzabolcsSzatmar-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 population (eg Suwalki in Poland and Borsod-AbaujZemplen in Hungary), or the presence of minority 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).

't [î] v^^SSSP^^^Cwmerrj2 r Régional structures and problems in neighbouring countries

**Direct investment in, and**
**trade** **with,** **Central and**
**Eastern Europe** **[2 ]**

In 1990-91, in the immediate aftermath of the collapse 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 Moreover, 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 largescale 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 countries has not up to now been fulfilled. Due to the
serious difficulties that these countries have en
countered in establishing a reasonably well functioning market economy by introducing a new commercial and legal infrastructure, obstacles to Western
companies doing business in Central and Eastern
Europe have been much more numerous than expected. The sharp declines in output, and the difficulties in (re-)creating macro-economic stability and
growth (let alone undertaking large scale privatisation programmes), suggest that the costs and the
economic and political risks associated with investing 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 sub

stantial 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 corporations 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 committed 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 developments in Eastern Europe will lead to lower investment inflows to the economically less developed
regions of the Community. Only 15% of the firms
surveyed said that commitments to Eastern Europe

**167**

**in**
_**m**_

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 comfortable 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 alternative scenarios for prospective economic developments in the countries of Central and Eastern Europe,
which broadly represent the range of plausible out
comes.

In the optimistic scenario, Eastern Europe would
experience rapid growth from the mid-1990s onwards, with the achievement of macroeconomic stability 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 restrictions. The pessimistic scenario is one in which the
reforms fail.

The 'successful reform' case generates a very substantial 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 billion ECU or 7% of EC trade (excluding trade flows
between Community Member States). Within a timeframe 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

**168**

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 Eastem European countries should be expected to increase : 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.

The 'successful reform' case should lead to a new
international division of labour characterised by a
progressive diversification of Eastern Europes exports 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 include large EC trade surpluses in motor vehicles and
other transport, in mechanical and electrical engineering, chemicals and textiles. A number of case
studies in the Communitys lagging regions confirmed 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.

The projected changes in trade in the various industrial 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.

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 optimistic 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 regions. 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 'sensitive' products and the use of anti-dumping actions to

**ghbouring** **countries**

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.

_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 29** **Industrial employment in the**
**Visegrad countries, 1991**

Hungary

1990 data used for Hungary.

**Map 28** **Agricultural employment in the**
**Visegrad countries, 1991**

Czech R

**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"** **[J]** **WHHP**

**• M r -** ***M** *** ï * ^^s^sf^IFf**

**^^M^JBF** Hungary

or Hungary.

**' t e**

**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**
**:** **:** **5** **^**
**:** **"V; ^Corresppndence^b^een'NUtS** **Jëyels^S** **^Ç^?^**
**and national** **administrative** **divisions in the** **Community**

NUTS1 NUTS 2 NUTS 3

B

DK [1 ]

D

GR

IRL

I

L

NL

P

UK

**Régions**

**Lander**

**Groups of**
**development regions** **[2 ]**

**Agrupacion de**
**comunidades autonomas**

**ZEAT**

**+** **DOM**

**Gruppi di regioni** **[2 ]**

**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**

43

15

543

51

**50**

**2**

**96**

**4**

**9**

**95**

**1**

**40**

**30**

**65**

**Arondissements**

**Amter**

**Kreise**

**Nomoi**

**Provincias**

**Départements**

**Planning regions**

**Provincie**

**COROP-Regio's**

**Grupos de Cancelhos**

**Counties/Local**

**authorities areas**

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 )**

**NUTS1** **NUTS** **2**

**Number** **Min** **Max** **Average Number** **Min** **Max**

**NUTS** **3**

**Average Number** **Min** **Max** **Average**

**B**

**DK**

**D**

**GR**

**E**

**F**

**IRL**

**I**

**L**

**NL**

**P**

**UK**

**EUR12**

71 **0.2** 215 j 33.3 | 183 `0.03` `94.2` `12.9`

**|ii|iWMW>ww#)ii*|iV#lj»»wiM!it|.fitn)iii|i»Miini^in.»iT.fi|î.rif.m|[in**

```
0.7

2.9

0.7

2.6

9.7

5.4

7.7

3.2

2.6

1.0

3.1

3.8

```

```
 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

```

2.4

43.1

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

```
43

 15

543

 51

 52

100

 9

 95

 1

 40

 30

 65

```

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

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

```
1044 0.01 83.5 2.3

```

**NUTS1**

**Population of the regions** **-1.1.1990 (1000)**

**NUTS** **2**

**NUTS** **3**

**Min** **Max** **Average**

**Number** **Min** **Max Average Number**

_Source_ . _Eurostat_

**wwwriTWEWtfwwrtWflW**

**174**

**Min** **Max Average Number**

```
232

343

148

200

749

567

389

607

381

374

329

883

330

```

1107

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

```

```
 962

 601

3446

3507

4878

2533

1330

3990

 381

1278

1850

_6794^

6794

```

```
 38

46

 17

 21

 56

 73

198

94

381

 56

 52

 73

 17

```

**^Sv^^r^^^Ç^'-^**

Table A.3
**GDP** (PPS) per person employed in the Member States

**(PPS),** **1984-1993**
**EUR12=100**

**1984** **1987** **1990** **1993**

**EUR12** 100.0 100.0 100.0 100.0

**B** 114.2 111.1 113.7 114.3

**DK** 89.0 86.2 86.2 88.4

**1984**

114.3

88.4

104.6

55.1

96.0

116.7

89.6

101.7

101.2

117.5

111.1

86.2

105.2

51.6

94.0

114.4

79.8

102.0

103.0

120.4

113.7

86.2

106.5

51.2

92.4

116.2

87.6

103.7

104.9

120.1

**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

**P** 50.0 54.6 57.8 58.8

**UK** 89.8 93.5 88.9 88.8

**Disparity** 16.0 14.4 15.1 14.3
**Change** 100.0 105.6 111.5 116.2

54.6

93.5

57.8

88.9

_**Source : Eurostat**_

**1980**

**1981**

**1982**

**1983**

**1984**

**1985**

**1986**

**1987**

**1988**

**1989**

**1990**

**1991**
**1991** **[2 ]**

**regions** **regions** **regions**

44.0 145.8 54.9 135.3

44.0 149.2 53.7 137.7

44.7 149.4 53.8 138.5

43.8 151.0 53.5 138.2

42.6 150.6 52.8 138.5.

43.2 152.1 52.6 139.3

42.6 151.4 51.9 138.3

41.7 151.9 52.1 138.7

41.0 152.4 52.7 137.5

41.1 152.8 53.5 138.0

40.5 150.6 53.1 137.4

41.8 151.6 54.4 137.0

33.4 151.6 42.9 137.0

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

Table A.4
Disparities in GDP per head (PPS) in the Community,

1980-1991 (EUR12=100)

**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

175

**Average**
**10 weakest**

**Average**
**10 strongest**

**Average**
**25 weakest**

**Average**
**25 strongest**

**regions**

**regions**

**regions**

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

_**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**_

**/'Table** **ÀS** **#** _**>t*.à**_ **i ^** **[;]** ***** _**f f j**_ **N S** _**-**_
**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**

**r**
107

106

118

52

72

113

63

103

116

108

53

98

**B**

**DK**

**D**

**D (+ new**
**Lander)**

**GR**

**E**

**F**

**IRL**

**I**

**L**

**NL**

**P**

**UK**

```
AUS

NOR

SWE

FIN

```

**EFTA**

**EUR3** **[1 ]**

**EUR9** **[2 ]**

**EUR16** **[3 ]**

```
112 113 113 113 115

97 98 101 101 102

106 107 107 108 109

54 55 55 54 53

103 104 103 104 104

100 100 100 100 100

```

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

```

```
108 107 108 109 108

```

```
108 107 105 105 106 106 106 107 107

```

```
102 103 102 105 109 111 113 111 106 103 102 103 105 105

```

```
115 114 115 112 111 108 103 98 98

103 102 103 104 106 103 95 86 86

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)

```

```
168

(14-8)

```

```
18.7 19.0 19.0 18.9 18.2 17.9 17.5 17.5

```

```
18.5 19.8 18.6

```

```
175
(148 [4] )

```

```
175

(150)

17.0

(14o)

```

```
18.2 18.5 18.5 18.4 17.7 17.4 17.0 16.9

```

```
17.9 18.2 18.0

```

```
169
(144 [4] )

```

***** _**Greece,**_ _**Ireland,**_ _**Portugal**_
***** _**Outers**_

_**Source**_ _**:**_ _**Eurostat,**_ _**calculations**_ _**DG**_ _**XVI**_

**176**

_**EUR16**_ ***** _**EUR12**_ _**+**_ _**Norway,**_ _**Sweden.**_ _**Austria,**_ _**Finland**_
_**Figures**_ _**in**_ _**brackets include the new German**_ _**Lander**_

_**HâtttMtmnnvtiriviiam**_ **y^rtwiWirittiftliWiîWiffiyfiTiTftWiïiy^Trrn'iYffiiTi**

*** W . i *** **,<Ë£Viv** **k***

_**3?y^È$$(iË$^*v<£y**_ **.** **i'** **:** **Î<** **.<-„*** **•„,.*•$*** **V"«£** **Y** **-• - -•** _***. > -**_ ***i«rtv.î "-** ***'•*** **Statistical annex** **»**

**Table A.6**
**Unemployment** **rates** **[1]** **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

17.0

2.9

14.1

3.4

4.9

2.7

0.9

1.8

1.9

5.4

1.7

2.6

0.7

1.6

2.1

5.3

1.7

**Average 25 highest**

**Average 25 lowest**

**Difference**

**Disparities** **[3]** **:**

**Between Member States**

**Between ail regions**

**Within Member States :**

**B**

**DK**

**D**

**GR**

**E**

**F**

**IRL**

**I**

**L**

**NL**

**P**

**UK**

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

18.5

3.4

15.1

3.6

5.2

2.8

1.0

2.0

1.9

5.4

1.8

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

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

2.3 2.4

1.0 0.7

2.2 2.2

1.8 2.6

5.1 5.0

2.0 1.8

2.7

0.5

1.7

2.5

5.3

1.9

1.7

1.5

1.7

0.7

3.9

1.5

1.9

1.2

2.0

0.9

5.4

1.9

19.9

**4.1**

15.8

4.1

5.4

2.9

0.9

2.2

2.1

5.0

1.8

2.8

0.6

1.5

2.1

5.3

1.8

2.9

0.9

2.2

1.9

5.7

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

**177**

_**NUTS2**_ _**:**_ _**French Overseas**_ _**Departments,**_ _**Azores**_ _**and**_ _**M**_ _adeira_ _not_ _included_
_2_ _Data_ _for_ _1983 to 1991_ _1991_ _**exclude**_ _**the**_ _the new new_ _**German Lander**_ _[i ]_
_Weighted standard deviation_
_Source_ .* _Eurostat,_ _calculations_ _DG_ _XVI_

**Table A!7**
**Employment in the automobile Industry**

**% 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

**B**

**DK**

**D** **[1 ]**

**GR**

**E**

**F**

**IRL**

**I**

**NL**

**P**

**UK**

**EUR12**

**%** **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

_**West**_ _**Germany**_ _only_
_**Definition:**_ _**NACE**_ _**35**_
_**Source:**_ _**Visa**_ _**database,**_ _**Statistical**_ _**Office**_ _**of**_ _**the European**_ _**Communities**_

**Table** **A.8**
**Employment in the aerospace industry**

**%** **change**
**1991-1993**

-5.4

-5.5

-10.2

-5.2

-2

-7

-7.4

-14.3

-5.6

-17

-6.8

-9.8

**% change**
**1991-1993**

**%** **of total**
**employment 1993**

**D** **[1 ]**

**GR**

**E**

F

I

**UK**

**B, DK,** **IRL,** **NL**

**EUR12**

_West Germany only_
_Definition:_ _NACE 364_
_Source: Visa_ _database,_ _Statistical Office of the European Communities_

**178**

**% change**
**1981-1991**

_**-$£~**_ **~_.** **'<** **-*** _****%**_ _**,'*,**_ **^'***
**„** **:'^^#^'l%^v'** **Statistical annex '**

**Table** **A.9**
**Employment in textiles and clothing**

**% 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

**B**

**DK**

**D** **[1 ]**

**GR**

**E**

**F**

**IRL**

**1**

**L**

**NL**

**P**

**UK**

**EUR12**

**%** **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

_**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**

**NUTS** **2**

**GR** **Voreio Aigaio**

**E** **Ceuta Y Melilla**

**P** **Acores**

**GR** **Noto Aigaio**

**GR** **Kriti**

**Table** **A.10**
**Defence-dependent NUTS 2 regions**

**Employment shares (%)**

**Military only** **Total**
**Defence-related**

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

**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**

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

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 km [2] 1000 inhabitants composite motorways kilted in road
indicator composite [1] 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)**

**75** **76** **77** **78** **79 80 81 82 83 84** **85** **86 87** **88 89**

**EUR12**

**EUR8**

**EUR4**

**Greece**

**Spain**

**Ireland**

**Portugal**

**0.8**

_**OS**_

**05**

**0.8**

**0.8**

**05**

**0.7**

**0.7**

**0.6**

**0.7**

**0.7**

**05**

**0.8**

**0.7**

**1.0**

**0.7**

**0.7**

**0.6**

**0.8**

**0.8**

**0.6**

**0.8**

**0,8**

_**0A**_

**0.7**

**0.8**

**0.6**

**0.7**

**0.7**

**0.6**

**0.7**

**0.7**

**0.6**

**0.7**

**0.7**

**0.8**

**1.1**

**1.1**

**0.8**

**1.0**

**1.0**

**0.8**

**0.9**

**0.9**

**0.8**

**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

**Belgium**

**Denmark**

**Germany (W)**

**France**

**Italy**

**Luxembourg**

**Netherlands**

**UK**

**Greece**

**Spain**

**Ireland**

**Portugal**

_**Source ; Eurostat**_

**Table A.13**
**Rail** **transport** **infrastructure,** **1990**

**Length of rail lines**

**per** **km** **[2]** **per 1000** **inh.** **composite**

**indicator**

**Index** **Index** **Index**

**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

205

100

195

113

96

189

123

125

34

51

51

63

91

122

112

157

73

187

49

77

65

97

145

87

65

na

na

35

25

68

na

57

na

13

0

13

**GDP)**

**87** **88** 89

**EUR12**

**EUR8**

**EUR4**

**Greece**

**Spain**

**Ireland**

**Portugal**

**Table** **A.** **14**
**Gross** **investment** **in rail** **Infrastructure,** **1976*1989 (% of**

**76** **77** **78** **79** **80** **81** **82** **83** **84** **85** **86**

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

**22**
**J?-**

**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**

**TableA.15**
**Telecommunication** **infrastructures, 1992**

**_** **r** **J|àt^îcàrannex''**

**Number** **of** **faults**
**per** **line** **per** **year**

**Number** **of**
**telephone lines**
**per 100** **inhabitants**

**Percentage** **of** **subscibers**

**connected** **to**
**digital local exchanges**

**EUR12**

**Belgium**

**Denmark**

**Germany** **(W)**

**France**

**Italy**

**Luxembourg**

**Netherlands**

**UK**

**Greece**

**Spain**

**Ireland**

**Portugal**

_**Source**_ _**:**_ _**Ewbank Preece Lid**_

**.** _**lrJ.'^.L:-.~i**_ **TableA.16 _ ^** **.** **:** **.** **..-**
**Investment** **in** **telecommunication** **infrastructure,** **1987-1992** **(% of GDP)**

**1987**

**1988** **1989** **1990**

0.59 0.65 **0.70**

**1991**

**1992**

**EUR12**

0.59

0.38

0.49

0.76

057

0.46

0.49

0.35

0.55

0.42

0.73

0.68

0.76

**EUR12** 0.59 0.59 0.65 **0.70** **0.70** **na**

**Belgium** 0.38 0.33 0.42 0.43 **0.42** **na**
**Denmark** 0.49 0.56 0.47 0.41 0.34 **na**
**Germany** **(W)** 0.76 0.73 0.73 0.80 **0.87** **na**
**France"** 057 0.49 0.50 0.51 0.51 0.44
**Italy** 0.46 0.45 0.49 0.62 0.68 0.71
**Luxembourg** 0.49 0.54 0.62 0.60 0.67 **na**
**Netherlands** 0.35 0.43 0.62 0.52 0.56 **na**
**UK** 0.55 0.56 0.65 0.65 057 0.49
**Greece** 0.42 0.45 0.56 057 0.77 **na**
**Spain** 0.73 0.93 1.33 1.38 1.10 0.70

**Ireland** 0.68 0.60 0.56 0.63 0.65 0.55

**Portugal** 0.76 1.07 1.12 1.34 1.41 1.16

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

0.70

0.55

1.16

**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**

_**Source**_ _**:**_ _**Ewbank Preece**_ _**Ltd.**_

**183**

**Statistical annex**

**Austria**

**Finland**

**Norway**

**Sweden**

**Sum**

**Total borders** **[2 ]**

**Land borders with** **EUR12**

**Germany** **France** **Italy**

```
             375

              0

              0

              0

```

375

375

**TableA.17**
**Borders of EFTA** **countries,** **1993** **(Kilometres)** **[1 ]**

**Land borders with:**

**other**

**EFTA**

```
 182

1170

2297

2095

```

5744

2872

**Coast**

**lines**

0

11090

23090

9106

43286

**other**

**countries**

```
 1092

 1207

  161

   0

```

2460

2460

**All land**

**borders**

```
 2378

 2377

 2458

 2095

```

9308

6436

_**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]**_ _**''-**_ _**'**_

**Ellada**

Galicia

Asturias

_**.^i^^**_ _**[l]**_ _**i^"„**_ **"ïï'—'j-î^^**

_**i^gt'U^^f**_ **Statistical annex**

**TableA.18**
**Employment** **in** **Objective 1** **regions, 1990**

_t_   - — —   - ~ " " * • ; "

**(%)**

**Serv.**

50,8

45,0

52,3

52,3

49,6

54,5

54,5

60,0

55,9

89,5

71,2

56,9

**Employment**

**Agri** **Indu.**

22,8 26,4

**Region**

**Agri.**

**Employment (1,000)**

**indu.** **Serv.** **Total**

876 1,016 1,952 3,844

31,5

15,2

18,9

18,5

24,3

8,7

14,8

13,1

0,8

8,0

11,0

9,3

6,1

60

14,098

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

85

21,941

249

122

254

165

65

489

477

107

3

90

4,176

17

6,494

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

Corse

**France** 1,349

Corse 17 60 85 9,3 20,4 70,3

**France** 1,349 6,494 14,098 21,941 6,1 29,6 64,3

**Ireland** 165 317 631 1,113 14,8

Campania 289 410 1,205 1,904 15,2

23,5

32,5

28,8

31,9

21,3

36,8

25,2

31,0

9,6

20,8

32,1

20,4

29,6

Campania 289 410 1,205 1,904 15,2

Abruzzi 75 137 303 515 14,6

Molise 27 33 68 127 20,9

Puglia 173 323 852 1,349 12,8

Basilicata 49 56 113 218 22,6

Calabria 169 118 371 658 25,7

**Sicilia** 234 318 1,053 1,604 14,6

Sardegna 80 128 373 581 13,7

**Italia** 2,235 6,915 14,121 23,271 9,6

Norte 281 611 524 1,415 19,9

410

137

33

323

56

118

318

1,205

113

371

1,053

Abruzzi

303

68

852

1,904

515

127

1,349

218

658

1,604

Molise

Puglia

Basilicata

289

75

27

173

49

169

234

Calabria

**Sicilia**

Sardegna

80

2,235

128

6,915

373

14,121

581

23,271

**Italia**

19,9

35,5

10,4

39,8

27,3

25,7

25,1

20,5

5,6

2,2

6,6

17,7

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

**185**

1,415

666

1,358

524

234

849

196

369

30

20

18

32

1,274

176

8,589

43562

6346

611

Centra

Lisboa e vale do Tejo

Alentejô

Algarve

Acores

Madeira

**Portugal**

Northern Ireland

**United Kingdom**

**EUR12**

**Objective** **1**

_**Source**_ _**:**_ _**Eurostat,**_ _**estimates**_ _**DG**_ _**XVI**_

281

236

71

63

38

44

1,821

392

17,430

83,256

13,142

141

66

31

20

25

800

**33**

577

9,016

4,182

167

114

76

101

3,896

602

26,596

135,834

23,669

**Statistical annex**

**TableA.19**
**Unemployment rates** **in** **Objective 1** **regions,** **1986-1993**

**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

**6.2**

**0.7**

8.5

**1.3**

**2.0**

**4.2**

8.0

**-0.5**

0.6

**-2.5**

**-2.2**

**-5.3**

**-6.8**

**-4.0**

**-0.4**

**-2.9**

**-2.7**

_**-JUL**_

**-0.3**

**1.3**

**Region**

**Ellada**

Galicia

Asturias

Castilla-Leon

Castilla-La Mancha

Extremadura

Comunidad Valenciana

Andalucia

Murcia

Ceuta y Meiilla

Canarias

**Espana**

Corse

**France**

**Ireland**

Campania

Abruzzi

Molise

Puglia

Basilicata

Calabria

Sicilia

Sardegna

**Italia**

Norte

Centra

Lisboa e vale do Tejo

Alentejo

Algarve

Acores

Madeira

**Portugal**

Northern Ireland

**United Kingdom**

**EUR12**

**Average Objective 1**

_Source_ _:_ _Eurostat_

**186**

**Change**
**1986 1987 1988 1989 1990 1991 1992 1993**
**1986-91**

**£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

**3.7**

**-2.4**

7.6

0.8

**-1.4**

**5.9**

6.3

**-2.1**

**-0.6**

**-4.0**

**-3.3**

**-6.9**

**-5.9**

**-4.9**

**-1.2**

**-3.2**

**-5£**

**-1.4**

_**âtJL**_

**-2.2**

**-1.0**

7.4 7.4

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

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

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

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

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

18.1 18.1 17.5 16.1

15.8 17.6

20.1

11.0

13.8

13.8

205

17.4

20.5

17.5

9.9

3.1

2.2

4.7

7.0

2.6

3.1

3.0

3.7

15.6

9.9

9.3

.14.8

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

22.8

12.4

15.6

15.6

23.0

19.6

23.1

19.8

11.2

4.2

3.4

6.0

**8.1**

4.8

4.6

3.4

4.9

15.0

10.3

10.4

16.7

_**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

18.6

9.6

11.3

13.6

20.1

21.2

20.4

17.8

9 5

2.6

2.1

5.8

9.7

3.8

3.1

5.0

4.1

17.1

7.0

8.2

13.9

20.4

9.4

14.7

15.1

19.6

21.3

21.4

18.1

10.0

2.7

2.4

4 5

9.0

3.9

3.8

3.1

3.6

16.3

8.8

85

14.3

23.0

9.3

12.4

15.7

215

22.6

18.6

18.4

11.0

3.6

3.7

8.8

14.6

5.5

2.2

4.8

6.0

17.1

8.9

9.9

15.8

16.6

11.7

**7.1**

14.3

21.0

15.4

15.1

20.2

105

6.7

5.6

11.3

14.9

8.8

5.0

6.3

8.6

17.7

11.5

10.7

15.4

21.5

8.6

12.2

13.2

15.9

17.8

16.0

16.2

10.2

4.9

5.5

9.7

11.9

7.2

37

4.5

7.0

18.6

11.0

10.5

155

22.3

10.3

13.1

14.8

20.5

25.1

21.6

18.9

10.9

3.0

3.0

6.9

115

3.1

2.5

5.5

4.8

17.3

7.3

9.0

15.2

**v>;;** **r** **r.** **;** **;r-** **-** **Table** **A.20** ^*^ * _[fi ]_
**GDP per head (PPS) in Objective** **1** **regions,** **1986|l991**

_**'**_ **"'*:^: *** _**'**_ _**[:]**_ _**-- ":.: ''**_ *** EUR12** **=** **100** **r** *** • "->>r :;"^** **:**

**1990**

**1991**

**Region**

**1986** **1987** **1988** **1989**

**Ellada**

51 49 49 49

**Ellada** 51 49 49 49 **47** **47**

Galicia 56 56 57 58 57 59

56

69

67

58

47

73

55

69

65

72

72

81

110

80

110

57

71

67

60

49

73

55

67

65

74

73

**47**

57

70

66

63

50

76

58

71

**64**

73

75

59

73

67

64

51

78

60

74

64

77

78

58

72

66

62

48

74

56

69

63

74

74

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

Corse

Corse 82 81 80 79 80 80

**France** 111 110 110 111 111 110

**Ireland** **60** **61** **62** **65** **69** **70**

Campania `69` `69` `69` `70` `70` `70`

Abruzzi `89` `90` `89` `90` `90` `91`

79

111

80

111

**France**

82

111

```
70

90

```

```
70

91

```

```
69

89

```

```
69

90

```

```
69

89

```

```
70

90

```

Molise

Puglia

Basilicata

Calabria

Sicilia

Sardegna

**Italia**

Norte

Centra

Lisboa **e** vale do Tejo

Alentéjb

Algarve

Acores

Madeira

```
79

74

65

57

68

74

102

```

50

39

76

33

48

```
79

74

65

57

68

74

105

```

52

41

80

35

50

```
78

73

65

60

70

75

103

```

46

38

70

34

39

```
78

74

66

61

71

75

103

```

45

39

75

34

40

```
80

75

66

58

68

75

103

```

47

39

72

34

47

```
79

75

64

61

67

74

103

```

49

39

74

34

46

**Portugal**

**Portugal** 52 54 54 55 56 59

Northern Ireland 79 78 78 77 76 72

**United Kingdom** 102 104 105 103 101 95

**EUR12** 100 100 100 100 100 100

52

54

54

55

56

78

104

100

**62**

77

103

100

**63**

100

**64**

78

105

100

**62**

76

101

100

**63**

**United Kingdom**

**Average Objective 1**

_**Source : Eurostat**_

79

102

100

**61**

**187**

**Statistical** **annex**

**Region**

**Eliada**

**Galicia**

Asturias

Castilla - Leôn

**Table A.21**
_**^WÊ^B^^^W^j^M^jfJ^SiblaJ^^^^^**_

**1986**

56

64

89

85

76

72

95

89

96

114

105

95

101

114

81

83

90

82

87

76

74

89

90

101

53

```
86

ii

100

75

```

**GDP/employed**
**(EUR12 = 100)**

**1991**

55

65

90

82

88

79

91

90

89

92

108

95

117

94

```
88

92

86

92

76

76

90

87

105

61

79

il

100

78

```

Castilla - La Mancha

Extremadura

Comunidad Valenciana

Andalucia

Murcia

Ceuta Y Melilla

Canarias

**Espana**

Corse

**France**

**Ireland**

Campania

Abruzzi

Molise

Puglia

Basilicata

Calabria

Sicilia

Sardegna

**Italia**

**Portugal**

Northern Ireland

**United Kingdom**

**EUR12**

**Average Objective 1**

_Source :_ _Eurostat,_ _estimates DG_ _XVI_

**188**

**Employment change**
**1986-91**

**(%)**

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**

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

**• 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**_

**1000s**

**%p.a.**

**%**

**1000** **km** **[2 ]**

**inhab/km** **[2 ]**

**%p.** **a.**

**%p.** **a.**

**%**

**%**

**%**

**%**

**%**

**EUR12 = 100**

**EUR12=100**

**+**

**CM**
**tx**
**3**
**Hi**

**344149**

**0.3**

**0.1**

**2361.0**

**145.8**

**0.0**

**0.0**

**45.3**

**10.4**

**8.1**

**CO**

**£**

**C**
**<**

**c**
**Û)**
**CO**
**£**

**o**

**CO**
**CO**

**Regions**

**c**
**o**
**CO**
_**JZ**_
**o**
**CO**

**en**

**Û)**
**OQ**

**CO**
**CO**
**UJ**

**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 !**

_**ê**_

_**c**_ **•°** **i**
**c E**

**o** **o**

**.*** **0.**
**II**

**O)**
**1 -**
**3**

**C**
**0>**
**T3**

**C**
**S**

**c**

**<D**
**c**
**I .**
**o**

**c**

**CO**
**E**

**I -**

**o**

**| 79113**

**0.2**

**0.8**

**| 356.9**

**222.0**

**-2.0**

**-8.4**

**48.9**

**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**

**106.5**

**117.0**

**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**

_**8**_

**16434**

**-0.2**

**-2.2**

**108.2**

**148.9**

**-14.0**

**-25.6**

**53.3**

**14.1** **12.0** **13.6** **11.5** **12.8** **10.9 j** **12.5** **7.0**

**I**
**163** **112** **10.0** **6.0** **8.1** **0.8 I** **8.9 j** **4.4**

**44.7**

**46.4**

**38.4**

**42.1**

**36.1**

**39.6**

**40.1** **32.3**

**55.5** **59.7**

**100.0**

**100.0**

**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**

**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**

**.** **,;;.:** **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**

**Germany**

**1990**

4.4

40.1

555

**Old** **Lander**

**1990**

3.7

38.6

57.4

**EUR12**

**1990**

8.1

32.3

59.7

```
 New Lander

```

**`1990`** **`1991`** **1992**

**Agriculture**

**Industry**

**Services**

```
1989

```

10

45

45

8.9

44.7

46.4

4.4

36.6

59

6.2

41.6

52.2

_**Source : National statistics**_

**191**

_**m**_
_**smm**_ **«5F** _**[ %i]**_ _**^mTv,**_ **^ ~ - -** _**-**_ _**-'**_ **-*>*** _**<-J:**_ *****

**Table A-25**
**Regions** **of the** **Community ranked according** **to** **their level** **of GDP per head** **[1 ]**

**Rank** [ Region GDP/heid in PPS

average
(89-90-91)
EUR12=100

**Unemployment**

**rate** average

(91-92-93)

**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.**

Total

(in millions)

**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**

cumulative
share (%)

**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**

Population 1991

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**

**192**

_**%t>Vf,"•**_ _**"JTW**_ _**[,]**_ _**$WX>?p**_ _**il**_ **'j-*,-** _**:'*•,**_

**Statistical** **annex**

**Table** **A.25**
**Regions of the Community ranked according to their level of GDP per head** **[1 ]**

**Rank** **Region** **GDP/head in** **PPS** **Unemployment** **Population 1991**

**Total**

**millions)**

**rate average**

**cumulative**

**share (%)**

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**

**(91-92-93)**
**(in**

**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**

**average**
**(89-90-91)**
**EUR12=100**

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

**iAn** ***rvaç8»**'A** ****** **,** **'Sir!S'**

                                                                                                - s * / y / • «

**Table** **Â.25**
**Regions** **of the** **Community ranked according** **to** **their level** **of** _**<*DP**_ **per head** **[1 ]**

**Rank** **T** **Region** **GDP/head** **in PPS**

**average**
**(89-90-91)**
**EUR12=100**

**Unemployment**

**rate average**

**(91-92-93)**

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

**Total**

**(in** **millions)**

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

**Population** **1991**

**cumulative**

**share** **(%)**

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

**125** **Aquitaine** **(F)**
**126** **Oberfranken** **(D)**
**127** **Cheshire** **(UK)**
**128** **Arnsberg** **(D)**
**129** **Franche-Comté** **(F)**
**130** **Leicester,** **Northampton** **(UK)**
**131** **Marche** **(I)**
**132** **Detmold** **(D)**
**133** **West-Vlaanderen** **(B)**
**134** **Zuid-Holland** **(NL)**
**135** **Avon,Gloucester,Wiltshire** **(UK)**
**136** **Utrecht** **(NL)**
**137** **Kassel** **(D)**
**138** **Saarland** **(D)**
**139** **Haute-Normandie** **(F)**
**140** **Zealand** **(NL)**
**141** **Toscana** **(I)**
**142**

**Rhône-Alpes** **(F)**

**143**

**Freiburg** **(D)**

**144**

**Champagne-Ardenne** **(F)**

**145**

**Berks,** **Bucks,** **Oxfordshire** **(UK)**

**146**

**Rheinhessen-Pfalz** **(D)**

**147**

**Schwaben** **(D)**

**148**

**Braunschweig** **(D)**

**149**

**Kôln** **(D)**

**150**

**Tubingen** **(D)**

**151**

**Alsace** **(F)**

**152**

**Noord-Holland** **(NL)**

**153**

**Uguria** **(I)**

**154**

**Berlin** **(D)**

**155**

**Hannover** **(D)**

**156**

**Brabant** **(B)**

**157**

**Veneto** **(I)**

**158**
**159** **Lazio** **(I)**
**160** **Grampian** **(UK)**
**161** **Piemonte** **(I)**
**162** **Friuli-Venezia Giulia** **(I)**
**163** **Trentino-Alto Adige** **(I)**
**164** **DQsseldorf** **(D)**
**165** **Karlsruhe** **(D)**
**166** **Antwerpen** **(B)**
**167** **Hovedstadsregionen** **(DK)**
**168** **Mittelfranken** **(D)**
**169** **Luxembourg** **(L)**
**170** **Gronlngen** **(NL)**
**171** **Emilia-Romagna** **(I)**
**172** **Valle** **d'Aosta** **(I)**
**173** **Lombardia** **(I)**
**174** **Stuttgart** **(D)**
**175** **Oberbayern** **(D)**
**176** **Bremen** **(D)**
**177** **Greater London** **(UK)**
**178** **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

_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 a n n e x**

**Table** **A.26**
**Regions of the Community ranked according to their level of unemployment**

**GDP/head in**

**PPS average**

(89-90-91)
**EUR12=100**

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

**Total**

**(in millions)**

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

**Population 1991**

**Rank** **i** **Region**

**Unemployment rate**
**average (91-92-93)**

**Rate** **Index**

**EUR12=100**

cumulative

share (in %)

0.2

2.2

25

2 5

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

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

**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

J 0 2

**Statistical** **annex** *WW»*£VsJS3Su '*»/ [J] «rtS*%»a^. ^ ^ * K - V

**Table A.26**
**Regions of the Community ranked according to their level of unemployment**

**GDP/head in**

**PPS average**

**(89-90-91)**
**EUR12=100**

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

**Total**

**(in millions)**

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

**cumulative**

**share (in %)**

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

**Population 1991**

**Rank** **Region**

**Unemployment rate**
**average (91-92-93)**

**Rate** **Index**

_**\**_ **EUR12=100**

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**

**196**

**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...

_**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**

**Total**

**(in millions)**

**Population 1991**

**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**

**Rate** **I** **Index** **Total** **cumulative**
**EU R12=100** **EU R12=100** **(in millions)** **share (in %)**

**123** **Brabant** (B) 7.0 ! 74.4 | 116.6 22 68.9
**124** **Antwerpen** (B) 6.7 71.5 125.6 1.6 69.4
**125** **Surrey, East-West Sussex** (UK) 6.7 71.4 j 99.4 2.4 70.1
**126** **Braunschweig** (D) 6.7 71.0 j 1123 1.6 70.6
**127** **Kentriki Makedonia** (GR) 6.6 70.0 i 46.8 1.7 71.1
**128** **Utrecht** (NL) 6.5 68.7 j 107.1 1.0 71.4
**129** **Saarland** (D) 6.4 68.4 | 107.6 1.1 71.7
**130** **Dûsseldorf** (D) 6.4 67.9 ! 1228 5.2 73.2
**131** **Marche** (I) 6.3 66.7 | 104.7 1.4 73.6
**132** **Arnsberg** (D) 6.3 66.4 j 104.2 3.7 74.7
**133** **Peloponnisos** (GR) 6.0 63.7 I 47.3 0.6 74.9
**134** **Berks,** **Bucks, Oxfordshire** (UK) 6.0 63.6 110.8 2.0 75.4
**135** **Luxembourg** (B) 6.0 63.4 84.7 0.2 75.5
**136** **North Yorkshire** (UK) 5.9 j 625 92.6 0.7 75.7
**137** **Anatolikl** **Make, Thraki** (GR) 5.8 61.1 43.3 0.6 75.9
**138** **Munster** (D) 5.7 60.3 95.4 2.5 76.6
**139** **Weser-Ems** (D) 5.6 59.9 94.0 2.2 77.2
**140** **Kôln** (D) 5.6 59.5 1128 4.0 78.4
**141** **Hamburg** (D) 5.6 59.4 194.5 1.6 78.8
**142** **Alsace** (F) 5.6 59.1 113.7 1.6 79.3
**143** **Hannover** (D) 5.6 j 59.1 116.6 2.0 79.9
**144** **Oost-Vlaanderen** (B) 5.5 58.6 99.7 1.3 80.3
**145 146** **Friuli-Venezia Giulia** **Grampian** (UK) (I) 5.2 5.4 55.1 57.5 j 117.3 121.6 0.5 1.2 80.8 80.6
**147** **Lisboa** **e vale do Tejo** (P) 5.0 53.5 76.6 3.3 81.7 82.1
**148** **Kassel** (D) 5.0 I 53.3 107.4 1.2 82.8
**149** **Schleswig-Holstein** (D) 4.8 51.3 96.9 2.6 83.3
**150** **LGneburg** (D) 4.7 49.9 81.9 1.5 83.8
**151** **Detmold** (D) 4.7 49.8 106.0 1.9 85.1
**152** **Veneto** (I) 4.5 47.5 116.6 4.4 85.4
**153** **West-Vlaanderen** (B) 4.4 47.2 106.3 1.1 85.7
**154** **GieBen** (D) 4.4 47.1 97.9 1.0 86.8
**155** **Emilia-Romagna** (I) 4.4 46.2 127.5 3.9 87.0
**156** **Kriti** (GR) 4.3 45.3 | 45.5 0.5 87.5
**157** **Rheinhessen-Pfalz** (D) - 4.2 44.9 j 110.9 1.9 87.8
**158** **Oberpfalz** **(D)** 4.2 44.7 95.6 1.0 87.9
**159** **Ionia** **Nisia** **(GR)** **4.2** **44.7** **43.7** 0.2 90.5
**160** **Lombardia** **(I)** **3.9** **!** **41.8** **134.7** 8.9 90.5
**161** **Notio Aigaio** **(GR)** 3.8 i 40.7 52.2 0.3 90.7
**162** **Trier** **(D)** 3.8 40.7 86.5 0.5 90.7
**163** **Acores** **(P)** 3.8 ! 40.4 1 0.0 0.2 90.8
**164** **Algarve** **(P)** 3.7 39.8 i 47.9 0.3 91.1
**165** **Oberfranken** **(D)** 3.7 39.1 103.9 1.1 91.5
**166** **Unterfranken** (D) 3.5 37.2 99.6 1.2 91.9
**167** **Koblenz** (D) 3.5 36.8 92.4 1.4 92.4
**168** **Mittelfranken** (D) 3.4 36.4 126.7 1.6 93.1
**169** **Karlsruhe** (D) 3.4 36.3 124.2 2.5 94.1
**170** **Darmstadt** (D) 3.3 35.0 1629 3.5 95.1
**171** **Norte** (P) 3.3 35.0 50.2 3.5 95.4
**172** **Niederbayern** (D) 3.3 34.6 96.5 1.1 96.0
**173** **Freiburg** (D) 3.2 34.2 110.0 2.0 96.1
**174** **Madeira** (P) 3.2 33.7 j 0.0 0.3 96.3
**175** **Trentino-Alto** **Adige** (I) 3.1 327 j 1220 0.9 97.4
**176** **Stuttgart** (D) 2.9 30.8 I 137.6 3.6 97.8
**177** **Tubingen** (D) 2.9 30.4 1129 1.6 98.3
**178** **Schwa** **ben** (D) 2.8 29.4 111.1 1.6 98.8
**179** **Centro** (P) 2.7 28.3 39.6 1.7 99.9
**180** **Oberbayern** (D) 2.5 27.1 j 148.1 3.8 100.0
**181** 0.4

**123** **Brabant**
**124** **Antwerpen**
**125** **Surrey, East-West Sussex**
**126** **Braunschweig**
**127** **Kentriki Makedonia**

**128** **Utrecht**
**129** **Saarland**
**130** **Dûsseldorf**
**131** **Marche**
**132** **Arnsberg**
**133** **Peloponnisos**
**134** **Berks,** **Bucks, Oxfordshire**
**135** **Luxembourg**
**136** **North Yorkshire**
**137** **Anatolikl** **Make, Thraki**
**138** **Munster**
**139** **Weser-Ems**
**140** **Kôln**
**141** **Hamburg**
**142** **Alsace**
**143** **Hannover**
**144** **Oost-Vlaanderen**
**145** **Friuli-Venezia Giulia**
**146** **Grampian**
**147** **Lisboa** **e vale do Tejo**
**148** **Kassel**
**149** **Schleswig-Holstein**
**150** **LGneburg**
**151** **Detmold**
**152** **Veneto**
**153** **West-Vlaanderen**
**154** **GieBen**
**155** **Emilia-Romagna**
**156** **Kriti**
**157** **Rheinhessen-Pfalz**
**158** **Oberpfalz**
**159** **Ionia** **Nisia**
**160** **Lombardia**
**161** **Notio Aigaio**
**162** **Trier**
**163** **Acores**
**164** **Algarve**
**165** **Oberfranken**
**166** **Unterfranken**
**167** **Koblenz**
**168** **Mittelfranken**
**169** **Karlsruhe**
**170** **Darmstadt**
**171** **Norte**
**172** **Niederbayern**
**173** **Freiburg**
**174** **Madeira**
**175** **Trentino-Alto** **Adige**
**176** **Stuttgart**
**177** **Tubingen**
**178** **Schwa** **ben**
**179** **Centro**
**180** **Oberbayern**
**181** **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)**

**Economy**

**Share of sectors j GDP three-year**
**in total** **] average 1989-91**
**employment (1991);** **EUR12=100**
**!** **I**

**Region**

**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**

**198**

**Population** **Labour** **market** **[1 ]**

**|** **Unemployment**

**I** **rate**

**CO**
**CO**

**o>**

**a>**

**OJ**

**c**
**2** **oT**

**O** _**Ç**_

**74.2 I** **81,8**
**89,6** **!** **98,9**
**108.8** **j** **120,1**
**120,8** **I** **133,2**
**108,5** **!** **119,7**
**97.0** **.1 IflLO**

**3**
**O**

**ui**

_**•a**_ **s** **-o**
**& I &**
**O** **j** **o**
**E a.** **a.** **E**
**o** **o**
**c** **c**
**o** _**m**_ **o** **40**
**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**

**o**
**O)**
**(0**
**I-**
**a**

**>**

**<**

**a**

**>**

**<**

**CO**
**O)**

**o**

**Q.**

**JQ**

**a**

**&**

**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**

**S CL**

**E** **®**
**ï T** **9-** **CO** **c**
**c** *****
**c** **o**
**CO** *** -**
**si**

**-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**_

**en**

**<**

**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**

**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.**

**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**

**en**

**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,**

**116,6**
**112,6**
**100,2** **!**
**201,2** _**l**_
**139,8** _**\**_
**128,4** **I**
**97.5** _**\**_
**110,7** **!**
**119,6** **;**
**94,2** **I**
**100,3** **I**
**103,5** **!**
**109,5** **I**
**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**

**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**

_**t^v^s^**_ _**-**_ **'<*:**

iîf^I^flïé **t^w^|;3^«statiètlcal** **annex**

**TableA.27**
**Principal indicators** **for the** **regions in** **the** **Community (NUTS** **2)**

**Labour market** **I** **Economy**

**a.**

**CL**

**xi**

**CO**

**©**
**o.**

**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....!**

**GDP three-year**

**average** **1989-91**

**EUR12=100**

**3**
**O**
**I U**

**©**
**>»**

**O**

**Q.**
**E**
**©**
**c**
**o**

**CO**
**ii**

**©**

**Q.**

**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**

**Region**

**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**

**Population**

**CO**
**Q.**

**19,6** **188,4**
**19,2** **179,3**
**18,6** **171,0**
**22,3** **212,5**
**12,5** **118,0**
**13,6** **125,8**

**15,3** **!** **125,4**
**16,5** **| 143,6**
**21,0** **196.0**
**19,2** **179,6**
**18,6** **167,2**
**28,9** **279,9**
**19.6** **167,3**
**18,0** **150,8**
**22,8** **202,2**
**15,7** **123,3**
**29,7** **279,4**

**Unemployment j Share of sectors** **[ f ]**

**rate** **j** **in total**
**^employment** **(1991);**

**O** **]** **00**

**oc i °>**

**o** **I O C**
**OJ** **:** ***S**

**5** **§.;**
**C** **©** **i**

**196.0**
**179,6**
**167,2**
**279,9**
**167,3**
**150,8**
**202,2**
**123,3**
**279,4**

**E**

**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.**

i jjiffil^lfr^nih ffrjifjltflflfi it ;,|.i;,r ifi|| _t_ - Hijil'il 1 ill f 'ill TI _! M_ fffliiii

**to**

**CL**
**0 -,**

**©**

**o**

**Q.**
**E**
**©**

**c**
**o**
**V)**

**&**

**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**

**CO** **!** **« -**

**o>**

**4)**
**OJ**

**CO**

l .
**0)**

**>**
_**<**_

**>.** **o»;**

**©**

**CO**

I 

_**>**_

**o**

**<**

**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**

**CO**
**O)**
**O)**
T 

**©**

4-*

**CO**
**OC**

**>.** **o»;** **C** **! ©**

**•s** **o**

**3**

**c**

**E** **o ! o** **s.** **<** **c**

**3**
**CL**
**O**
**CL**

**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**_

**©**

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**0,2**
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**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**
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**11,5**
**13,6**
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**49.8** **!**
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**41.3** **j**
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**51,4**
**53.1**
**54,7**
**55,8**
**56,7**
**53,4**
**60,7**
**48.6**

**49.4**

**66.1**
**46,4**
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**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**

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**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**
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**7,4** **68.4** **j** **-2,0** **1.0**
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**5,3** **51,3** **j** **-2,0** **4.8**

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**6,2**
**8,1**
**7,0**
**7,3**
**9,9**
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**8,8**
**7,1**
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**10.0**
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**9,0**
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**7,8** **87,5**
**6.4** **71.8**
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**6,2** **70,0**
**8,1** **90,5**
**7,0** **78.6**
**7,3** **81,7**
**9,9** **111,1**
**4,0** **44,7**
**8,8** **98,8**
**7,1** **79.5**
**5,7** **63.7**
**10.0** **112,6**
**4,9** **54,7**
**9,0** **100,8**
**3.6** **40,7**
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**21,3** **194,4**
**17,8** **169,1**

**17,0** **j 160,3**
**19,6** **188,4**
**19,2** **179,3**
**18,6** **171,0**
**22,3** **212,5**
**12,5** **118,0**
**13,6** **125,8**

**22,2**
**31,2**
**43,0**
**25.1**
**29,5**
**36,1**
**39,8**
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**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**

**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**
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**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**

**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**

^ïfâSsssssf^j ^ ^ S ï S S ï * i « *

**TableA.27**
**Principal indicators** **for the** **regions in** **the** **Community (NUTS** **2)**

**Labour market**

**Economy**

**Share** **of** **sectors** **[f]** _**\**_ **GDP** **three-year**
**in** **total** **j** **average 1989-91**

**employment** **(1991)!** **EUR12=100**

**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**

**200**

**•ir-^** **~**

**»~fc.** _**&*~z**_ _•ftfgx_ _'_ _îsfMtMS3piïgA*xb_ annex

_**i:<'l^j.g§£&&.**_

**TableA.27**
**Principal indicators for the regions in the Community (NUTS 2)**

**Population** _**J**_ **Labour** **m a r k e t** **[1 ]**

**Unemployment**

**rate**

**o**

**Share** **of** **sectors**

**in total**

**employment** **(1991)**

**<**

**Economy**

**(0**

**Q .**

**CL**

**CO**
_**JZ**_
_**c**_

_**0**_

_**a.**_

**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.,-**

**GDP three-year**

**average** **1989-91**

**EUR12=100**

**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**
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**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**
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**0,9**

**0,3**

**0,1**

**0,4**

**1,4**

**0,3**
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**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**
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**100,6**
**113,8**
**149,3**
**93,3**
**96,4**
**87,7**
**93,7**
**87,0**
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**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**

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**-0,1**
**0.2**
**0,2**
**0,4**
**0,7**
**0,4**
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**0.2**
**0,5**
**0,6**
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**13**
**0,3**
**0.4**

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**0,6**
**0,3**
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**-0,1**
**0,2**
**-0,5**
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**-0,2**
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**154**

**96**

**147**

**299**

**414**

**104**

**116**

**75**

**151**

**208**

**61**

**137**

**193**

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**367**

**140**

**187**

**104**

**166**

**281**

**301**

**354**

**94**

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**719**

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**118**

**457**

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**107**

**105**

**163**

**73**

**275**

**20**

**68**

**106**

**318..**

**237**

**201**

**386**

**72**

**258**

**323**

**250**

**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** _**9,0~\**_
**67,** **7.6** **j**
**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**

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**65,4**

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**65,9**

**65,5**

**65,3**

**65,3**

**64,7**

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**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**
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**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**
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**83,7**

**82,1**

**96,4**

**79,4**

**83,4**

**93.1**

**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**
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**4.3**

**5.0**

**3.9**
**6,8**
**3,9**
**6.1**
**6,3**
**5,8**
**8,0**
**33**
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**2,6**
**3,9**
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**4.7**
**4,8**
**4.5**
**17,4**
**17,2**
**18,4**
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**22,0**
**17,0**
**21,9**
**21,8**
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**0,0**
**0,0**
**2,5**
**0,0**
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**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**

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**-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**

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**34,6**
**34,2**
**43,0**
**33,3**
**27.1**
**28,5**
**20.8**
**24,0**

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**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**

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**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**

**-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** **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**

**4** **3.5**

_**9,0~\**_
**7.6** **j**

**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**

**Table A.27**
**Principal** **indicators for the regions In the Community (NUTS 2)**

**Labour market**

**]** **Unemployment**

**;** **rate**

**Economy**

**Share of sectors** **1 GDP** **three-year**
**in total** **1 average** **1989-91**
**employment** **(1991)** **EUR12=100**

**3**
**U**

**u**

**•o**

**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_

**2 0 2**

**Population**

**| I S**

**M** **CO**

**s** **s.**
**UI**
p i g» **E**

**i tf>**

**•: CL**

_**•**_ **Jb-**
_**\**_ _**-o**_

**10,4**
**...5,3**

**DC**

**UI**

**o** **o>**

**O»** **•** **<p**
**2** **oi**

**^** **CO**
_£_ _\_ «

**o**
**o>**

**co**

**CO**

 

<

**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**

**o** **l** **£**

_**2**_ **i JE** **i** **i?**

**CO**

a **Q.** **c**
o **O** **o**

**CJ>** **•o**
>» **0)**
**!** **O** >•
**(O** **a.** **;;** **£•** **E** **O** **a.**
**a.** **CD** **E**
T i c **CD**
_**X}**_ _**\**_ **o** **C**
**CO** _**i**_ **(A** **O**

**CO**

**11** **i**

**Q.**
**O**

a.

**CO**
**c**
**o**
**Q**

**CO**
**3**

**• o**

**C**

**0)**
>•
**O**

**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**

**k.** **•_**
**It** **!** **«i**
**77,5 i** **74,8**
**92^** **!** **84,4**
**94.5** _**\**_ **82,5**
**9a3** **!** **79,7**
**104,6 !** **87,2**
**83,1 !** **76.4**
**99,8 !**
**119,0 |**
**102,6 I** **82.2**
**110,8 :** **88,2**

_**a.**_
_**o**_
**a**

**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**

**CO** **!** **>**
**CC** **<**
**11,9** **124.5**

**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...**

_**\**_ **-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**

 **O»**
**c**
_**iz**_ **(0** _***£•**_ _**B**_
**o** **c**
_**n**_

**c** **o**
_**H**_ **CD** ***-**

**-1.6**
**0,4**
**1.1**
**0,5**
**2.3**

**0.1**

**2.7**
**4,4**
**4,2**
**3.6**
**4,4**
**4 3**

**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

**o>**

<

**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**
**0,0** **0,0**
**2,7** **38,0**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0.0**
**4,0** **29,2**
**1.2** **25,4**
**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**
**4,6** **29,0**
**0,0** **0,0**

**0,0 j 0,0**
**0,0 i 0,0**
**2,1** **39,1**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**1.5** **33,3**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**3,1** **32,7**
**0,0** **0,0**
**0,0** **0,0**
**3,0** **30,2**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**

**2,1** **39,1**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**1.5** **33,3**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**3,1** **32,7**
**0,0** **0,0**
**0,0** **0,0**
**3,0** **30,2**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**
**0,0** **0,0**

**.4,5** **i 28.0**
**6,4** **i** **33,2**
6,6 ! 6,6

**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**

**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**

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**

**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** **:**

**5,6**
.1.5,0..,

**100,0**
I _M.._

**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**

_data based on the Labour Force Survey._

**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**