Published 31 May 2011

Development potential in municipalities and regions 

– growth initiatives in the age of multi-level governance

Growth Analysis was given the assignment, in the Letter of Regulation for 2010, to analyse the contributions of municipalities and regions to the regional growth initiatives. The assignment was formulated in accordance with the following:

“Growth Analysis shall analyse municipal and regional contributions to the sustainable growth initiatives. Municipalities and regions provide a major part of the initiatives aimed at growth. There is a need therefore to develop knowledge on how various regional actors take action within the growth area, which resources are involved, and how the actors - state, regional and municipal - cooperate with each other.” 

In the Letter of Regulation for 2011 an addition was made so that the assignment would also “describe how regions are working to strengthen their international frame of reference for regional growth initiatives.”

Growth Analysis has interpreted the assignment as there being a need for the building up of long-term knowledge in this field. Keeping in mind the scope of the assignment, the ambition has been to develop a overview of how municipal and regional actors are working with issues connected to growth. A continued building up of knowledge in the subject provides good conditions for deepened studies in different areas. Proposals for continued studies are listed in the summary and in Chapter 8 "Conclusions and Comments".

Swedish regional policy has developed during the last few decades from being a centrally governed policy with clear elements of equalisation and localisation policy initiatives, to a more regionally directed development and growth-oriented policy. The policy now covers the whole country whereas in the past only certain defined geographical areas were encompassed. In recent years increased efforts have been made to coordinate the initiatives within the various political areas. These initiatives have been recognised as an important instrument to improve the outcome of the overall policy.

The initiatives within the political areas are now characterised by a programme-based approach in which strategic plans are developed and implemented in partnership with the actors within the region. Regional and local needs and prerequisites have therefore made a greater impact on programmes and initiatives. Through these changes, the regional level has been given greater influence and responsibility.

The issue of what creates sustainable growth, however, is complex. In addition to state and regional initiatives, municipal initiatives and activities are also meaningful for local and regional growth, for example, within the framework of the municipalities' basic mission. A well maintained municipal economy with well managed operations and a good environment for enterprise affects builds both trust in the municipality and its attractiveness to residents and entrepreneurship. This, in turn, is of significance for people moving both in and out of the region, the establishment of businesses and employment.

One of the core municipal activities that is important from a growth perspective are the primary, lower and upper secondary schools. Besides the school having the main responsibility for student learning in various subjects, school also plays an important part with regard to different types of attitude issues which ultimately affect the culture that is established in an area. This could concern, for example, attitudes towards entrepreneurship, the home town or the general view of local enterprise. In the broader sense, this could involve the attitudes of individuals (and entrepreneurs) to various ethical issues, such as tolerance, openness or attitude to new residents with perhaps different ideas from other parts of Sweden or other countries.

A picture that emerges from both municipal and regional representatives is that it is difficult to point out one single factor as being the most significant for an area's growth. This also applies to hampering factors. On the contrary, a battery of factors are indicated as being significant or hampering of the regions' growth and development. This reflects the complexity of the regional growth policy, where it is difficult to find one or a few key factors for local and regional growth. As a consequence, even more emphasis is placed on the importance of municipalities and regions performing their work based on the specific conditions of the municipality or region. There is no standard model that suits all. One type of measure that works in one municipality might not necessarily work in another. On the contrary, modern growth research points at the fact that local and regional growth policies must be adapted to the specific requirements of the municipality or region in question. Thus, there is no “quick fix” for individual municipalities. Nor is there a guarantee that a measure which has a good effect in one municipality will impact another in the same way.

One factor hampering local growth that stands out from the survey of municipal and regional actors is the option “weak political unity in the municipality”. Rural municipalities indicate, in contrast to urban municipalities, that this is one of the more hampering factors for municipal development. One possible conclusion from this is that conflicts between individual elected officials have a greater impact in smaller municipalities with fewer elected officials, compared to larger municipalities that usually have more elected officials and larger political assemblies. Another possible interpretation could be that larger municipalities in general have a more distinct division between the political level and the civil service organisation. Such an assumption would mean that conflicts between elected officials do not affect the management organisation the same way as might happen in a smaller municipality.

A perennial issue is supply of capital, with problems concerning lack of capital provision being mentioned now and then in the debate. In an initial overview that emerged from this investigation, municipal and regional representatives both signalled that they experienced insufficient capital supply as one of the most hampering factors to their own region's development and growth. A more in-depth examination, however, revealed a more nuanced picture that does not support the suggestion that there is a real capital supply problem. On the other hand, the in-depth examination indicates that there are problems with collateral for loans in rural areas, mostly due to low property values. It is also deemed that a lack of knowledge exists, amongst both entrepreneurs regarding the available finance possibilities, and the banks in their knowledge of local enterprise.

Municipal and regional actors seem largely to have a consensus on the areas of initiative that should be prioritised within the regional growth initiatives. Virtually no municipality or region has indicated that they consider themselves to be in disagreement with a region or municipality on which areas of initiative that should be prioritised.

At the same time it becomes evident from individual discussions with municipal actors that the picture is more fragmented. A preliminary conclusion is that there is an imbalance with regard to knowledge of the system. The indication seems to be that the different growth programmes are not perceived as being equally significant in the smaller municipalities as in the larger municipalities. One explanation could be lack of resources, especially human resources. One effect of this could be that these municipalities find it more difficult to navigate inside the various programmes and therefore also find it more difficult to use the financial resources available for the implementation of these programmes, in particular through the structural funds.

The regional actors are engaged in extensive cooperative work and projects internationally. For instance, extensive work is being conducted in the environmental field towards a more sustainable society. The work is conducted in various projects, but also within the framework of the EU strategy for the Baltic Sea Region, for example. 

The international work has evolved and grown rapidly in scope and in most cases a more strategic approach is currently being used as the basis for this work and the more concrete projects. Most regions have an international strategy, guidelines, policies and/or action plans for international work. However, it appears that the regional actors do not actively work with integration and diversity issues within the framework of the international work. This indicates that these issues are not considered to a sufficient extent a resource from a growth perspective. It appears in many regions that there is a need to more clearly integrate the work on international issues with their other operations. Through more strategic and well-reasoned work domestically, as well as improved internal coordination and broader anchorage within their own organisations, the work could be made more effective.

Sustainability aspects are regularly included in the national, regional and municipal growth strategies. In a practical sense, however, the variations are large when applied to transferring sustainability goals into practical actions. At the local level, many municipalities are working with “modernised comprehensive plans” which means that these have developed from in the past solely regulating land and water utilisation, to increasingly covering the municipality's overall goals. The comprehensive municipal plans can in this way evolve into powerful instruments within which all three dimensions of sustainable development can be managed. Presumably this indicates great potential. By further developing the physical planning as an instrument for sustainable growth, sustainability issues can be treated from a cross-sectoral municipal and regional perspective.

A review of some available literature suggests that the research situation is relatively limited regarding the significance that local and regional actors have for growth. There are a large number of case studies, but in general there is a lack of more systematic studies that analyse the relationship between actions and effects, primarily on the local level. More research in this area is therefore required, i.e. to identify explanations for economic growth in Swedish municipalities.

The research supports the notion that the trust between entrepreneurs and organisations varies in correlation with growth, i.e. a high degree of trust between citizens/entrepreneurs and organisations correlates with a high rate of growth. This is interesting from a local perspective because trust is a factor that each municipality can influence. An important instrument for a municipality that wants to work on creating confidence/trust is to promote high quality in the municipality's core duties. In general, it is about the ability to manage operations in a correct, efficient and legally secure manner. It should be said that trust is a factor that takes a long time to develop, while it may deteriorate in considerably less time. “Scandals” and “affairs” at the local level have destructive effects on both interpersonal trust as well as public confidence in those who govern them.

That there are differences in development and growth in different municipalities is a well known fact, but finding the reasons for these is more complex. Few companies would allow tax subsidies or other forms of financial support to be the sole basis for localisation decisions or other comprehensive strategies. However, research shows that companies place great value on a well functioning, non-bureaucratic and impartial municipal administration. This could be described in terms of the local administration's attitude towards enterprise, which has often been highlighted as an important factor for local and regional growth.

As previously mentioned, the purpose of this report to create a broad, rather than deep knowledge platform on issues with regard to municipalities and regions in the regional growth initiatives. In view of the material presented in this report, we are able to identify a number of possible areas for in-depth study.

One result of this study is that there appears to be a need for further research to study the relationship between growth policy initiatives and results primarily at the local level. Within this assignment, certain preliminary results have been presented that indicate weak statistical relationships between individual factors that the local level can affect and grow. It should, therefore, be interesting to go further in these approaches and study how different “effective and context-adapted combinations/initiative packages” correlate with sustainable growth. 

Based on the instruments that the local level have at their disposal, perhaps the municipal planning monopoly is the most powerful. Simultaneously it appears that the physical planning in certain cases is not fully integrated with other development and growth initiatives, or with the ambition to change directions towards sustainable development. This could provide motivation for studies that illustrate the importance of physical planning as an instrument for local growth and sustainable development. In this context it is assessed that the comprehensive municipal plans may comprise an important instrument.

The purpose of this report is to develop a knowledge platform on the municipal and regional actors' work within regional growth policy. The report indicates that these actors provide a meaningful share of the initiatives aimed at growth. Growth Analysis therefore determines that there are reasons to continue to develop knowledge on Sweden's “institutional capacity”, that is, the ability to develop and implement policies. This knowledge can serve as one of several foundations for the development of the coordination of Swedish sectors and multi-level governance and thus, in accordance with the OECD's Territorial Review, further contribute to enhancing the efficiency of the growth policies.

An important issue with regard to growth and development is the availability of labour. Even now there are noticeable difficulties in recruiting staff in certain areas, both with regard to enterprise as well as in the public sector. These difficulties are expected to increase in the next few years. At the same time there are indications that the local level is experiencing deficiencies within the systems with regard to capturing these vacant positions. This would justify an examination to see whether vacant positions are not advertised and, if so, what the causes might be, and to assess the extent to which it occurs in such cases.

A general investigation has been made in this study of the international work of the regions. Growth Analysis deems that there are reasons to extend this study somewhat, to provide a more in-depth view of how the international work is being conducted; experiences, opportunities and obstacles.


Title
Development potential in municipalities and regions  – growth initiatives in the age of multi-level governance

Serial number
Report 2011:01

Reference number
Dnr 2010/016

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