The Regional Development Strategy of Estonia 2014 -2020

The Regional Development Strategy of Estonia 2014 -2020 Estonian Ministry of the Interior

The need for updating • Foreseen by the old strategy. However, old strategy would have needed a new action plan and also new structure due to changed legislation. • Recently approved national spatial plan as a new basis for updating the strategy. • New EU Territorial Agenda 2020 (determining common principles and priorities for EU and MS regional policies). • A need to formulate the basis for EU CP 2014+ territorial measures. The scope and activites of the strategy are much wider, however.

Elaboration and consultations • Formulation of the „To. R“ at the end of 2011. Governmental approval in June 2012 • Consultations: formal Task Force, expert opinions, political parties in the Parliament, regional seminars, wider written consultation rounds, meeting with other ministries and county governments. • Formal round of approval in summer 2013. • Discussions in the parliamentary commission in December 2013 • Discussions on amendments with Mo. Agri in January 2014 • Governmental approval of the Strategy March 20, 2014

Baseline for regional development • The domestic regional socio-economic differences in Estonia are comparatively big, especially when considering the size of the country; • The population and economic activities primarily concentrate in larger urban areas; • The resources and developmental potential of functional regions outside the urban areas of Tallinn and Tartu play a limited role in economic growth; • The changing developmental situation of sparsely populated rural areas requires new approaches to service delivery (increased mobility, structural changes in population and rural economy); • There is unused potential in regional and local development activities; • The implementation of national regional policy can also be improved, (i. e. MLG, „regionalisation of sectoral policies).

The domestic regional socio-economic differences are wide • In this context the investment capacity at regional and local level is modest, localities are more depending on national grants. • National policy has comparatively larger role in balancing regional differences.

The population and economic activities primarily concentrate in larger urban areas – Global process, difficult to be changed. Important to national competitiveness – urban areas as places of economic growth. • Challenges in regional development – how to promote the competitiveness of urban areas in a way that does not harness other regions? How to develop sustainable environment and meet increasing demand of services in the conditions of urban sprawl? Rahvaarvu muutus 2000 -2011 rahva- ja eluruumide loenduse alusel

The resources and developmental potential of other functional regions play a limited role in economic growth • GDP and productivity differences are big and growing. • Working age population in these regions has less opportunities to contribute to regional/national economic growth and wellbeing. • The share of decreasing economic sectors in high and shift towards service economies is slow in several regions. • The influx of new labour force is different, differences in educational and skills background are not decreasing.

Other centres are weak regional motors for development • Some smaller LMAs have been weakening, some have flown under the influence of Tallinn or Tartu. • The reasons being scarcity of attractive jobs and services in smaller centres, or weak urban-rural linkages -> powering the county centres, increased added value or employment, smart specialisation. . .

The changing developmental situation of sparsely populated rural areas • Decrease and ageing of population; • Increasing role of mobility (jobs, education) and urban areas (services) for rural population, also increase of seasonal commuting; => Changes in demand for services and their delivery, also in the municipal revenues; • Changes in local employment and entrepreneurship structures; => Need for diversification, increase of local cooperation, role of the community in job creation and service delivery, linkages with closest centre

Unused potential in regional and local development activities • Uneven local development and investment capacity; • Short-term and low-ambitious local development priorities; • Low cooperation among municipalities in development and service delivery (also with businesses and NGOs). Shortages in vertical coordination (stateregion-municipality); • Weakness of development activities at the scale of LMA/county – insufficient • Insufficient seizing of opportunities related to cross-border and interregional cooperation networks (few strategic aims, narrow spreading of results and experiences). consideration of regional plans in national budgeting and sectoral policy-making, scarcity of development funds at regional level, low level of municipal cooperation of regional scale.

The implementation of national regional policy can also be improved • Compared to many other countries, the public financing of regional policy and its regional focus has been modest; • Grants have been used too often for one-off and simple activities, complex long-term activities are scarce; • Using regional aid schemes to promote entrepreneurship or create jobs is not common. • Weak consideration of territoriality and regional priorities in sectoral policies (territorial blindness, centralisation, weak cross-sectorality).

Regional Development Strategy 2014 -2020 Main messages • Strategic choice on developing county centres and their functions related to their hinterland (jobs, services). • Focus on regional entrepreneurship and employment instead of infrastructures related to public service delivery. Business development outside the centres is the task of Rural Development Plan 2014 -2020.

Regional Development Strategy 2014 -2020 Main messages (2) • Stronger territorial dimension. More attention to functional regions (LMA, urban areas) and their various characteristics and needs. • Introduction of region-specific growth sectors and priorities (based on local resources or conditions, having comparative advantage).

Regional Development Strategy 2014 -2020 Main messages (3) • Need to empower local and regional development capacity and community involvement in development activities. • Clear need for sectoral policies to contribute to regional development aims, giving input and guiding interaction.

Regional Development Strategy 2014 -2020 Vision and objectives 1. Development of living and business environment favouring the integrity and competitiveness of functional regions Vision 2030 + National growth and competitiveness based on regional specificities, resulting benefits of national growth shared by all regions. People in all functional regions have access to good jobs, quality services, pleasant living environment and diverse possibilities for self-realisation. 2. Environmentally friendly living environment in larger urban areas promoting their international economic competitiveness 3. More skilful utilisation of region-specific resources 4. Stronger regional linkages and development capacity

Regional Development Strategy 2014 -2020 E 1. integrity and competitiveness of functional regions • Increased share of 13 regional GDPs, employment, business activity and incomes • Activities 2014 -2017: – Mo. I ca 95 meur for business infrastructure, regional mobility and urban spaces of county centres, service delivery in sparsely populated areas and islands – Mo. Ec >62 meur business start-ups and other businesses services, transport infrastructure and public transportation, broadband – Mo. Ed ca 80 meur educational infrastructure, life-long learning – Mo. SA ca 68 meur social infrastructure, active labour market measures – Mo. A ca 15 meur diversification of rural businesses, broadband, non-agricultural startups in rural areas

Regional Development Strategy 2014 -2020 E 2. International competitiveness and sustainability of larger urban areas • GDP per capita growth compared to EU average; share of population using sustainable urban transport • Activities 2014 -2017: – Mo. I ca 48 meur sustainable urban mobility (public transportation, light traffic infrastructure) and attractive urban spaces (vitalising unused areas), childcare infrastructure, community involvement – Mo. Ec ca 34 meur energy saving in areas of valuable milieu, mobility – Mo. I, Mo. C, Mo. SA, Mo. Ed >10 meur attraction of foreign talents, investors etc.

Regional Development Strategy 2014 -2020 E 3. More skilful utilisation of region-specific resources • Increase of employment and business activites in specific sectors • Activities 2014 -2017: – Mo. I ca 29 meur regional centres of competence, business clusters and networks, promoting business based on local historical and cultural values, regional tourism infrastructure – Mo. Ec > 2 meur regional tourism services and joint marketing, small harbours etc – Mo. C ca 3 meur maintenance of local cultural and historic heritage, regular events in regions – Mo. A development of local products valuing traditional resources

Regional Development Strategy 2014 -2020 E 4. Stronger regional linkages and development capacity • More frequent outside transportation links, increased cross-border cooperation, more efficient development activities • Activities 2014 -2017: – Mo. Ec ca 186 meur transportation links between county centres and across borders, municipal ICT infrastructure and e- services – Mo. I ca 45 meur cross-border cooperation, capacity building of municipalities and regional authorities and NGOs providing services or representing communities, cooperation among municipalities, regional impact assessment of sectoral policies – Mo. A ca 31 meur community involvement in rural areas – Mo. I, Mo. C, Mo. Ed, Mo. SA social integration of Ida-Virumaa with the rest of the country

Regional development programmes Estonian Ministry of the Interior

• Domestic regional development programmes since 1995 • EU pre-accession programmes before 2004 • EU structural funds since 2004: – Different sectoral investments – Local and regional development – Cross-border cooperation

SF operational programmes 2007 -2013 Majanduskeskkonna arendamise rakenduskava CF 36% ERDF 64% 1, 46 billion euro Elukeskkonna arendamise rakenduskava CF 40% Inimressursi arendamise rakenduskava ERDF 60% 1, 55 billion euro 0, 39 billion euro

12% Delivery by beneficiaries 34% Majanduskeskkonna arendamise 36% rakenduskava KOKKU other 8% State authority 30% 7% Business 32% 11% 4% 21% NGO 17% Elukeskkonna arendamise rakenduskava 35% 22% 17% Municipa-lity 13% 5% Inimressursi arendamise rakenduskava 12% 44% 38% 2%

Types of activities by municipalities Infrastructure for public services 190 meur Transport infrastructure 105 meur Development of urban areas 55 meur Tourism and business infrastructure 42 meur Water and sewage infrastructure 42 meur Nature protection 5 meur Employment and education 5 meur Other 4 meur Total 447 meur

Regional development measures 2007 -2013 Tourism infrastructure 3, 1 1% Business infrasctructure NGO support structures Regional centres of competence Broadband 161, 2 41% 169, 9 44% Local public services 57, 3 15% Secondary schools Urban areas Praeguseks toetust saanud 391 projekti, sh 272 KOV projekti

• Ca jobs 1000 jobs created in business and industrial areas • Ca 1700 km boradband networks Development of 6 regional centres of competence

60 kindergardens, 75 schools, 44 cultural facilities, 27 social infrasturctures 5 state secondary schools (according to the reform

61 tourism infrastuctures, incl. museums, visitor centres, public facilities etc

Ca 100 km light traffic roads, upgrading of urban green spaces New social facilities related to social inclusion, New child care infrastructure

Domestic programmes Programme Public services Regional investments into educational and social infrastructure Light traffic roads Centres of services in rural areas Individual services in sparsely populated areas Public service delivery on small islands Regional business Seto region Peipsiveere region Others Local initiative building Cross-border movement on Russian border County development centre network 2014 funds 12, 7% HMM 1 451 731 488 945 1 500 000 640 000 256 000 1 200 000 66 500 519 200

SF measures for municipalities 2014 -2020 • • Modernising district heating Modernising street lightning Water and sewage infrastructure Connections related to railway Secondary school network Child care facilities Primary health care infrastructure Various social services for disabled people In addition: • National transport connections (incl roads, regional ports and airport) • Railroad infrastructure • Energy saving measures in apartment buildings • Broadband development • Smart service infrastructure (e. ID, X-tee), e-services

SF regional development measures 2014 -2020 3, 1 1% 95 37% Local and regional capacity building 156, 3 62% Tallinna, Tartu, Pärnu urban areas Ida-Viru urban areas Business and tourism environment, public urban spaces and mobility Regional centres of competence Regional employment initiatives