Regional Growth and Regional Policy Within the Framework of European Integration

Regional Growth and Regional Policy Within the Framework of European Integration

Karin Peschel

Karin Peschel (Ed.) Regional Growth and Regional Policy Within the Fralllework of European Integration Proceedings of a Conference on the Occasion of 25 Years Institute for Regional Research at the University of Kiel 1995 With 17 Figures Physica-Verlag A Springer-Verlag Company

Series Editors Werner A. Milller Peter Schuster Editor Prof. Dr. Karin Peschel Institute for Regional Research University of Kiel OlshausenstraBe 40 D-24098 Kie1, Germany Editorial Supervisor Markus Hirschfeld ISBN-13: 978-3-7908-0957-2 001: 10.1007/978-3-642-48428-5 e-isbn-13: 978-3-642-48428-5 Die Deutsche Bibliothek - CIP-Einheitsaufnahme Regional growth and regional policy within the framework of European integraton: proceedings of a Conference on the Occasion of 25 Years Institute for Regional Research at the University of Kiel 1995/Karin Peschel (ed.) - Heidelberg: Physica-Verl., 1997 (Contributions to economics) NE: Peschel. Karin [Hrsg.]; Conference on the Occasion of 25 Years Institute for Regional Research at the University of Kiel <1995, Kiei>; Institut fiir Regionalforschung <Kiei> This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Physica-Verlag. Violations are liable for prosecution under the German Copyright Law. Physica-Verlag Heidelberg 1997 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. SPIN 10544030 88/2202-5 4 3 2 I 0 - Printed on acid-free paper

Preface The twenty-fifth anniversary of the Institute for Regional Research (Institut for Regionalforschung) was celebrated by an international conference on "Regional Growth and Regional Policy within the Framework of European Integration". We are happy to be able to present the outcome of that conference in this volume. Its authors reflect the Institute's international character. Their contributions characterize main fields of interest of the Institute's research staff. The Institute for Regional Research is an establishment of the Economic and Social Science Faculty (Wirtschafts- und Sozialwissenschaftliche Fakultiit) at Christian-Albrechts-University in Kiel, one of the faculty's four institutes of economics. It began as an initiative of Reimut 10chimsen. He wanted to upgrade regional research and planning at the university because at the faculty level this field was only a minor province. As further justification for the foundation of an institute, 10chimsen referred to the growing international and national significance of regional research and especially of regional structural policy. The need for an autonomous institute in the north of Germany was emphasized above all, particularly since regional science in the Federal Republic of Germany in the late sixties was largely limited to the universities in Freiburg, Karlsruhe and MOnster. It was emphasized as well, that an institute for regional research in Schleswig-Holstein would be to the state's advantage as it could help the state take policy decisions on regional political or economic measures on the basis of continuous study of the regions. When the Institute was fmally founded in 1970, Reimut 10chimsen was on temporary leave from Kiel due to his activities at the Federal Chancellery in Bonn. That is why within the subject theoretical economics Karin Peschel had delivered lectures in regional economics (Raumwirtschaftstheorie) begirming with the 1972173 winter term. It was not until the 1977178 winter term that students could choose regional science as an optional course within their curriculum. The supervision of students was largely based on the voluntary work of externally funded scientists. Thanks to their efforts, well over 100 diploma theses (masters) have been written at the Institute up to now. In 1974, Karin Peschel became head of the Institute together with Manfred Willms, under very adverse conditions: through many years the Institute had to work without a permanent assistant's post, that is, it existed only with externally fmanced scientists. Only due to the special research area (Sonderforschungsbereich) "Research for the Scandinavian and Baltic Sea Region" with several scien-

VI tists engaged in longer-term research projects, could the Institute prevent rapid turnover of the scientific team, gain the necessary international reputation and ensure its existence. As most important staff members are to be named Johannes BrOcker, whom the Institute owes its high standard in theory and econometrics, Walter Reimers and Jens Haass. After the Sonderforschungsbereich ended in 1982/83, it still took ten more years before, in 1993, a permanent post for the management of the Institute's data base and for ongoing regional analyses for Schleswig-Holstein was fmally installed. This post - occupied since that time by Hayo Herrmann - allows ongoing work in the field of empirical research on Schleswig-Holstein and Northern Germany. Despite the wide spectrum of empirical regional research projects that have characterized the Institute's work over almost 25 years, three main subject areas can be identified: changes in international and interregional division of labor and regional growth differences resulting from long-term integration processes in West Europe, paying special attention to Northern Europe (Scandinavia), and recently the entire Baltic Sea area. determinants of regional differences in growth and structural change in Germany. structural change and growth differences in Schleswig-Holstein and in its regions - analysis of regional labour markets and interlinks. These subjects are well represented in recent research projects as well as in continued empirical work at the Institute and in the dissertations of its members. The frrst subject mentioned, "integration and interregional division of labor", is a main interest of Karin Peschel. This field has considerably determined the Institute's integration into Northern European and Scandinavian research. The empirical work on Schleswig-Holstein, of which Hayo Herrmann is in charge, has grown into a further core activity in recent years - more or less in counterpoint to the emphasis on European research. The Institute has thus become an established part of Schleswig-Holstein's research in regional empirical analyses. The fact that Karin Peschel is a founder member of the German Section of the Regional Science Association (RSA) and that she was in the organizing committee of the international RSA for many years led to a multitude of contacts. In the course of time there have arisen excellent connections with scientists in the Scandinavian and Baltic Sea regions: frrst from 1974 to 1982 due to the projects in the Sonderforschungsbereich "Research for the Scandinavian and Baltic Sea Region", and later due to good connections within the "Nordic Section" of the Regional Science Association. Recently connections are due to heightened co-operation with scientists from Poland, the Baltic States and Russia.

Among the scientists and institutions, with which the Institute had co-operated are, for example: VII Alee E. Anderson, Institute for Futures Studies, Stockholm, Folke Snickars and Bl>rje Johannson, Royal Institute of Technology, Stockholm, Nils Groes, AKF, Amternes og Kommunernes Forskningsinstitut, Copenhagen, Arild Srether, Department of Economics, Agder State College, Kristiansand, Institut for Grrenseregionsforskning, Aabenraa (the Sonderforschungsbereich mentioned above contributed much to the founding of this institute), Henryk Cwiklinski, Department of Economic Policy, Faculty of Economics, University of Gdansk, Murat Albegov, International University, Moskow. These contacts have led to some present projects, other projects are still being planned. In the German-speaking regions the Institute is closely connected with Rolf Funck and Werner Rothengatter, Institut for Wirtschafts- und Sozialwissenschaften, University of Karlsruhe, with Franz-Josef Bade, Institut for Raumwirtschaftspolitik, University of Dortmund, and of course with Johannes Brl>cker, head of the Institut for Wirtschaft und Verkehr, University of Dresden, since 1993, who determined the Institute's work for a long time. Of course, there are regular contacts with all important German institutions working in the field of empirical regional research, in particular the Institut for Arbeitsmarkt- und Berufsforschung in Nilrnberg, the Akademie for Raumforschung und Landesplanung in Hannover and the Bundesforschungsanstalt for Landeskunde und Raumordnung in Bonn. In 1971 the Institute's first publications - written in English - came out under the designation "Discussion Paper". This serial has been continued since 1980 as "Diskussionsbeitrage aus dem Institut for Regionalforschung", appearing originally in English and later in German. Other publications are the "Beitrage aus dem Institut for Regionalforschung" (since 1982) and the serial "Schriften des Instituts for Regionalforschung der Universitat Kiel" (published by V. Florentz, Munich). All publications are edited by Karin Peschel. For publication ofthis conference volume we would like to thank the President of the Landeszentralbank in der Freien und Hansestadt Hamburg, in Mecklenburg Vorpommern und Schleswig-Holstein, Prof. Dr. Hans-JOrgen Krupp. Kiel, May 1996 Karin Peschel

Contents Reimut Jochimsen Regional Science in Germany - From the Beginnings to the Present -.... The Early Roots.... 3 2 The "Quantum Leap" to Regional Science... 4 3 The Main Fields of Emphasis in Gennan Regional Research...... 5 4 Regional Science at the Time of the ItR's Foundation... 7 5 Regional Development with Changing Perspectives.... 10 6 Current Challenges to Regional Science... 12 7 European Economic and Monetary Union... 14 8 Deepening and Widening the EU... 16 9 New Visions... 18 Johannes Brocker Economic Integration and the Space Economy: Lessons from New Theory............................................ 20 1 Introduction............................................. 20 2 Growth Theory.................................................. 21 2.1 What is the Novelty of New Growth Theory?... 21 2.2 New Growth Theory and Dynamic Integration Effects............. 23 3 Location Theory................................ 24 3.1 Old Location Theory... 24 3.2 New Location Theory... 25 3.3 New Location Theory and Spatial Integration Effects... 28 3.4 Regional Policy Lessons from New Location Theory... 30 4 Final Remarks... 32 Paul Cheshire and Gianni Carbonaro Testing Models, Describing Reality or Neither? Convergence and Divergence of Regional Growth Rates in Europe during the 1980s... 36 Introduction.................................. 36 2 The ConvergencelDivergence Debate... 37 3 Test or Measure?... 38 4 The Present Approach... 40 5 The Defmition of Region............ 41 6 The Model... 43 7 The Results......................... 53 8 Discussion and Conclusions..................... 56

x Wi/lem Molle The Regional Economic Structure of the European Union: an Analysis of Long-Term Developments............ 66 Introduction, Summary and Conclusions... 66 2 Simple Indicators.................................... 67 2.1 Employment Growth by Branch for the Whole of the EU... 67 2.2 Regional Distribution of Branch Activity... 69 2.3 Branch Structure of Regional Economies... 70 3 Composite Indicators... 72 3.1 Convergence or Divergence?........... 72 3.2 Regional Patterns.............. 74 3.3 Branch Patterns........................... 77 4 Ways of Improvement... 79 Arild Saether, Nicola Schmidt-Nissen, Kerstin Lorenz The Role of the Regions in the European Union - The Future of the Committee of the Regions................ 87 Abstract... 87 2 Introduction... 88 3 Evolution of EU Regional Policy........................ 89 4 Regional Policy of the European Union... 94 5 Regional Policy or a Policy of the Regions................ 97 6 The Committee of the Regions... 98 7 Other Forms of Regional Participation... 102 8 The Future of the Committee of the Regions... 104 9 The Future Role of the Regions... 106 Riccardo Cappellin Regional Policy and Federalism in the Process of International Integration... 111 1 Introduction... 111 2 The Internationalisation Process of Firms... 112 3 The Microeconomic Characteristics of a Network... 117 4 Federalism and a New "Market Oriented" Regional Industrial Policy... 119 4.1 The Aims and Instruments of a Modem Regional Industrial Policy... 119 4.2 The Principle of Functional Subsidiarity and of Public-Private Cooperation... 121 5 Federalism and the Network Paradigm... 128 5.1 The Reasons for Decentralisation... 128 5.2 An Organisational and Institutional Perspective to Federalism... 131 5.3 The Limits of the Principle of Subsidiarity... 134 5.4 Regional and National Identities and Interregional Solidarity... 135 6 Conclusions... 138

XI Nils Groes Inequalities and Mobility in the Danish Welfare State Summary... 142 2 Small Differences... 143 3 The Development.... 144 4 Localization and Commuting... 146 5 Concentration of Trade and Industry... 149 6 Regression Analysis of Geographic Patterns... 150 7 Conclusion... 157 Werner Rothengatter Considering Regional Effects of Transport Infrastructure Investments in Privately Financed Projects... 176 1 Introduction... 176 2 Public and Private Interest in the Transport Infrastructure... 177 3 Need for Private Investment Capital...... 178 4 The Conventional Scheme of Planning Large Infrastructure Projects... 180 5 Alternative Schemes for the Planning Process and for the Investment Appraisal... 181 6 Assessment of Regional Effects... 183 6.1 Infrastructure as a Production Factor... 183 6.2 Evaluation of Regional Benefits of the Transport Infrastructure in the BVWP... 184 6.3 Macroeconomic Approach to Estimate the Overall Effects of Infrastructure Investment... 185 6.4 Critical Remarks... 185 7 Project Appraisal and the Financing Scheme... 188 8 Conclusion... 190 Institute for Regional Research Publications since 1993... 193