HOW TO TACKLE THE RISING RURAL-URBAN DIVIDE THE ROLE OF EU COHESION POLICY

Transcription

1 Riga Cohesion Conference 13 th September 2018 HOW TO TACKLE THE RISING RURAL-URBAN DIVIDE THE ROLE OF EU COHESION POLICY by Fabrizio Barca * * Fondazione Basso 1

2 THE RISE OF TERRITORIAL INEQUALITIES Economic territorial inequalities have been rising in Europe, within a general trend of increased interpersonal inequalities. The long term decline of inequality in regional per-capita income (Gini coefficient) has reversed since the 80s (J.Roses and N.Wolf, 2018) In , the productivity gap between frontier regions of Europe and the bottom 10% increased by 56% (Bachtler et al 2017, OECD data)). Social inequalities (in the access and quality of essential services) are also on the rise The same is true for recognition inequalities (the recognition of one s values, role and aspirations). These three inequalities are deepening the divides between people living in: rural (or inner) and urban areas, static or falling-behind towns and thriving cities, peripheries and urban centres. 2

3 THE RURAL-URBAN DIVIDE Inequalities are particularly significant in rural areas (still about 27-28% of European population, over 45% in Latvia). On the economic dimension, several negative factors have been at work (deindustrialization, displacement of labour-intensive activities, outflow of skilled people), but during the crisis the gap with urban areas in terms of poverty rate dropped. On the social dimension, rural areas have been strongly hit by a shift of private and public services to major cities and a decrease in the quality of essential services, worsened by economic austerity On the recognition dimension, the perception has grown for rural people of their values, their labour in the fields and forests, their role as guardians of the land, environment and paysage, not being recognised or even being despised.

4 EXIT, ANGER AND THE AUTHORITARIAN DYNAMIC As for many urban peripheries or towns and cities that don t matter (Rodriguez Pose), the rise of cumulative inequalities has produced fear and anger. Exit has not be the solution. While depriving rural areas of skilled people and increasing their unused potential, it has been forestalled by the economic crisis. With no solution at hand and with people feeling abandoned, fear and anger have not produced endogenous change but have turned into an authoritarian dynamic (Karen Sennert): intolerance for diversity; lack of trust in institutions and experts; demand for closed communities and tough-sanctioning authorities These attitudes have reflected in the ballots, sending a strong signal to economic and political elites. With reference to Brexit and Trump election (both with a very strong support in rural areas), The Economist wrote: Unless policymakers grapple seriously with the problem of regional inequality, the fury of those voters will only increase Assuaging the anger of the left-behind means realising that places matter too

5 WHAT ABOUT THE EUROPEAN UNION? The scenario ispurticularly threatening for the European Union, which needs visible support to move ahead, or else it will fall back. In spite of its achievement in terms of peace and freedom, the expectations of too many Europeans have not been met. The promise that the removal of barriers and the reduction of national sovereignty would benefit all has not been delivered to many European citizens. Cohesion policy, the tool designed for achieving harmonious development, has boosted growth, has been used by some Member States, Regions and territories to increase people s opportunity and reduce territorial inequalities, can claim some important sucesses in rural areas, but its potential is still largely unexploited, it has failed to bring many slow-growing places out of their trap, and it is not perceived by most citizens as the distinctive European touch removing their obstacles to a better life, a sign that the EU exists and acts in their interest. What is to be done?

6 UNDERSTANDING THE CAUSES: THREE WRONG POLICIES Wrong macro-policies are largely responsible for the general increase in inequalities (Rodrik): reversing the post-war keynesian compromise, abandoning the full employment target and anti-ciclical policies, weakening market regulation and anti-monopoly policies, weakening labour negotiating power. Within this context, territorial inequalities, namely the rural-urban divide, have been widened by three development policies: Space-blind one-size-fits-all institutional reforms, ignoring that context matters in terms of both people s knowledge and local elites power Public investments and tax measures passively accomodating agglomerations led by corporate decisions (metrofilia) And, as a way of remeding the inequalities and social tensions produced by these two approaches: compassionate compensations (=subsidies) to lagging behind areas. With the results of weakening and mortifying the beneficiaries and turning local elites into rentiers. In the end 90s / early 2000s EU cohesion policy fell pray of these approaches. A RADICAL POLICY REVERSAL WAS NEEDED: THE PLACE-BASED APPROACH

7 TACKLING KNOWLEDGE AND POWER : THE EU ADDED VALUE Bringing a place out of an underdevelopment trap requires dealing with knowledge and power: Knowledge Knowledge embedded in the place, in its inhabitants, is needed to produce innovation if it comes to the fore through public and open debate, and if it is confronted & combined with external knowledge in a balanced negotiation. Power (political economy) Local elites. They can be hesitant or opposed (especially if compassionate transfers have been at work) to any innovation process, which could make them dispensable. External public authority (national elites). Pushing places out of their traps might run against the short-term interest of exchanging with local elites transfers for votes. The task for an external public authority is triggering innovation and acting as a fair and impartial spectator. For this role, a strong motivation is needed, stronger than the short term interest. The European Union/Commission is well placed to play this role (EU value added): The EU-EC is at arms length from territories without short-term interests to collude with local elites (a reminiscence of the US Federalist Papers) The EU-EC has a strong long-term interest to survive as a useful institution. 7

8 THE PLACE-BASED APPROACH DEFINITION. The place-based approach aims at giving people in places stuck in an underdevelopment trap the power and knowledge to expand their sustainable substantial freedom (Sen): improving access and quality of essential services and promoting the opportunity to innovate, thus reducing economic, social and recognition inequalities. The European Union (in a coalition with Member States and/or Regions) should act in each place as an active fair and impartial spectator : I. Building a permanent space for a heated, informed, open and reasonable debate (Sen, Haidt) to build a shared vision of the future and on how to get there (actions). II. III. IV. Drawing the boundaries of inter-municipality cooperation, i.e. the place through the policy process (not as a top-down ex-ante decision). Entrusting local elected elites with responsibility for decision making, while destabilizing any attempt to curb Sen-like debate. Building with citizens and using outcome indicators, capturing the desired impact on people s well being and making the vision&policy clear-cut and accountable. V. Acknowledging its own ignorance and therefore writing the policy rules as incomplete contracts (less procedures, more monitored discretionality). VI. Committing to make sectoral actions space-aware, by taking into account what it is learnt on the ground. VII. Deploying on the ground multidisciplinary, outreaching teams. 8

9 IMPLEMENTING THE PB APPROACH THE ITALIAN RURAL AREAS Italy too suffers from a serious rural-urban divide. With a paradox. Italian rural areas have a diversity advantage, due to nature+history: The areas supply of idiosyncratic joint-products suits an increasingly diversified global demand (food, culture, paysage, tourism-experience), People strong sense of us at micro-level give them prima facie a greater resilience to normative threats and the chance to build a glocal culture, bypassing nationalism. This advantage is reflected in intense innovative signals: inflow of young people (sometimes coming back) and foreigners, mostly in agri-pastoral activities, experiments in education and health services, cultural innovative projects, etc. But signals of crisis prevail over the good ones: less youth in agriculture; inadequate land-river-forest maintenance; reduced resilience to natural shocks; services moving out or worsening; sense of us turning into closed communitarianism and nativism. Under the stress and pressure of the three wrong development policies, the endogenous market and democratic process generally failed to exploit the diversity advantage. This was singled out by people s vote: with their feet: a strong demographic decline, resulting also in accelerated aging. in the ballot box: a higher and rising support for anti-elites parties in the North-Center 9

10 THE ITALIAN RURAL-URBAN DIVIDE A STRATEGY Based on this paradox, a place-based strategy was launched in 2012 which is being implemented now: the Strategy for Inner Areas (Strategy) The divide was drawn with reference to remoteness from essential services, since this was chosen as one of the main issues to be addressed by the Strategy 10

11 DEGREE OF INNERNESS AND DEMOGRAPHIC DECLINE Using the broad and narrow definition as benchmark, inner areas account approximately for 15% of Italian population and 45% of Italian land. Population is severely declining in most (but not all) inner areas. It is moving both to big cities and to close less-remote areas. Fig. 5 - Population change between 1971 and

12 IMPLEMENTING THE PLACE-BASED APPROACH The Strategy was endowed (through the years) with about 300 mln. euros for projects aimed at improving the accessibility and quality of education, health and mobility. The Fund was matched by the five Cohesion Policy Funds at Regions disposal and aimed at promoting innovation, jobs and economic activities: for a total amount around 1 bln. euros. The task of the Strategy is bringing to a halt the demographic decline. Its main steps looks as follows: 1. Drawing boundaries = defining each place - or project-area - as an alliance of municipalities. Then, in each place 2. Setting a gradual policy-process aimed at building a vision, a set of desired outcomes (and corresponding indicators/targets) and the projects to achieve them. 3. Promoting a heated, informed, reasonable and open debate and destabilizing attempts to prevent it or to limit it to incumbents. 4. Learning from the place-level policy process how to give space-awareness to sectorial nation-wide policies and ensuring long-term sustainability to the projects aimed at improving essential services. 5. Building a mixed team territorial-aware units embedded in sectorial Ministries and external experts and blending it on the ground 12

13 FOCUS 1. DRAWING PLACE S BOUNDARIES Development policies often fail right from the beginning, when setting the boundaries. Both administrative/electoral and functional boundaries must be taken into account. But the choice of boundaries should be endogenous to the policy process. A radically new way to choose boundaries was experimented. First, the share of the national Fund for each area was fixed at a given level (3.8 million euro per project-area), independently of size, to avoid any incentive towiden areas. Then, a call for proposals to municipalities/citizens and Regions was made with these criteria: Contiguity, plus a preference for municipalities of the most inner areas, Strong demographic decline (at least in some municipalities within the alliance) Description of a common vision, innovative signals, complementarities, etc. Commitment to choose a leader (among the majors) and to unify services A focus group (experimenting Sen-like debate) was held in each candidate-place to discuss/challenge/revise the proposal and the boundaries. Reports were written for each project-area, which opened up a long tripartite dialogue (place-region-state). The final decision was taken together by State and Region. In an open-government fashion, all intermediate/final documents were published on web 13

14 FOCUS 1. SELECTED PROJECT-AREAS 14

15 FOCUS 2: MEASURING DEMOGRAPHY AND ECONOMIC SPECIALIZATION A systematic drop of population currying on into this decade A high variability in and a much lower one in the current decade 15

16 FOCUS 2: MEASURING HEALTH CARE + BROADBAND. BOTH DISTANCE AND INSTITUTIONS MATTER Distance from service poles sometimes matters for access to some services But other factors, influenced by policies, do make a big difference 16

17 FOCUS 2. MEASURING EDUCATION FRAGMENTATION, NO-FULL-TIME, TEACHERS MOBILITY Class size, teachers mobility and opening times are major problems for most They aren t clearly reflected on measured competences (but on students socialization and other features) 17

18 FOCUS 3. POLITICAL ECONOMY WHY HAS THE STRATEGY SURVIVED? A place-based approach does not tolerate speeding. Freeing up innovative forces through a deliberative process + cultural change + overcoming strong opposition take time. It has taken 1½ year to select the 72 areas; 2 years for the first 22 prototype areas to have their Strategy approved 1 year to turn a Strategy into an operational Tripartite Agreement. Why did the Strategy survive? What made national authorities through four different governments - resist offers of local rentiers: votes in exchange for reverting to compensating subsidies? Four factors might explain policy resilience (in descending order of relevance): Concern of national elites for the authoritarian dynamic. Perceived benefits/costs by elites: role of inner areas for Italy s national identity and social and environmental cost of inaction. The rising pressure of one thousands majors, emboldened by the common framework. The mobilization and pressure of private and social actors at place level; magnified by the alertness of web-based local media and by off-strategy effects. 18

19 LESSONS FOR EU COHESION POLICY The European Union urgently needs (well before the post-2020 budget) a widespread and convinced implementation of the place-based approach embodied in the 2013 CP Regulation. It is a way for the EU: To prove on the ground its capacity to be a fair and impartial spectator, pursuing the rise in opportunities and life-conditions for all people, especially those who have not yet benefited from or are damaged by the EU itself To reconnect to people, place by place, through integrated projects, shading away the image of far-away eurocracy. In order to do so, two steps are needed: Relaunching now CP with a political strategy and an investment in human resources. Using the negotiation to adjust a few/relevant aspects that are preventing CP to be extensively used for integrated and locally embedded projects aimed at tackling territorial inequalities

20 Five issues must be addressed: WHAT SHOULD WE NEGOTIATE FOR 1) Connecting a revised European Semester to people. The Semester must be centered around a Strategic Development Long-Term Plan (build on the 2030 Agenda targets). CP thus becomes the policy tool through which EU-wide objectives and institutional changes get translated into place-by-place space-aware objectives built through people s participation. 2) Avoiding any move aimed at reducing the role and power of municipalities in the management of funds 3) Overcoming the tyranny of tenders. Designing ways in which the choice of objectives and requisites for the use of funds is adjusted to the actual strategies and needs expressed by territories rather than the other way round 4) Putting a strong political emphasis on the implementation of the European Code of Conduct for Partnership. A requisite to promote an active and informed role of all relevant actors. 5) Investing in 500 new human resources, facilitators of developments on behalf of the EC, to be deployed on the field: a necessary condition for the EU to be a fair&impartial spectator. One more issue should also be addressed: 1) Entrusting the EU responsibility for audit and control to a European System of Control: articulated in National Agencies, as the European System of Central Banks.

21 FINAL MESSAGE WE ARE STILL IN TIME TO AVOID WASTING THIS OPPORTUNITY THE ANGER OF PEOPLE IN PLACES THAT DO NOT MATTER IS HIGH WE CAN GIVE THEM THIS CHANCE THIS IS NOT THE TIME FOR BUSINESS AS USUAL THANKS! 21