Ministry of Local Government and Regional Development

Summary in English: St.meld 34 (2000-2001)

Report no. 34 (2000-2001) to the Storting

Regarding Rural and Regional Development Policy

Recommendation of 6 April 2001 by the Ministry of Local Government and Regional Development, approved in the Council of State on the same date

1 Introduction and summary

1.1 Introduction

The Government herewith submits the Report to the Storting (white paper) on goals and strategies in rural and regional development policy. This type of report is presented every four years. The last report was presented in spring 1997 as Report No. 31 (1996–97) to the Storting on Rural and Regional Development Policy.

The Government sees the overall rural and regional development policy as a national effort to secure balanced social and economic development in all parts of the country. Rural policy involves extra measures for those parts of the country that must be given special attention in relation to general growth and prosperity in Norway.

Most parts of society are currently developing very quickly and with great dynamism. A major challenge is to understand the driving forces that determine where people and business will invest and develop in the future and what measures will best promote economic growth in all parts of the country.

The future of the regions will depend primarily on developments in two areas. These are

people – individuals or households – deciding where and how they will reside, work and live, and

business and industry – enterprises, trades and industries – deciding how to adjust to market demands and how they relate to customers, suppliers, the labour supply and knowledge environments.

An effective policy must be based on a sound analysis of what developments can be steered by government policy and how. Today’s assessments, priorities and measures will have an impact on where and how the next generation will work and live. The Report to the Storting on Rural and Regional Development Policy builds on the themes that were brought into focus in the policy statement presented to the Storting in May 2000: ’The Development of Robust Regions – the interplay between town and country and the development of competitive economic activity – with emphasis on innovation and competence development as well as renewal of the public sector’ – where a holistic and coordinated public policy is a key objective. This Report to the Storting will not deal with challenges and opportunities in major towns and cities. These issues will be reviewed in the Report to the Storting on the Long-Term Programme.

The Report must be seen in the context of the white papers on the Norwegian Industrial and Regional Development Fund, the Long-Term Programme and task distribution and organisation at the regional level.

As part of the work on the Report, a discussion memorandum and subsequently a supplementary memorandum were circulated for comment to a wide range of authorities and organisations. Several open seminars were arranged where various themes in the Report were discussed. Meetings have also been held in different parts of the country to gather inputs from the regional level on the policy that is now being put forward. Many useful contributions have been made during these processes.

1.2 Regional Norway is in continuous change

Even though over the last fifty years all the counties have experienced population growth, the long-term trend regarding industrial and settlement patterns has primarily been one of centralisation. Towns and urban settlements have had the largest population growth, and over the last twenty years growth has been greatest in the central area of Eastern Norway and the South West of the country. Regional centres have contributed to stemming the centralisation towards the Oslo region.

Today we are faced with a new situation that will have consequences for further population development. An even greater proportion of the population is growing up in central areas. Population projections indicate that as many as half of the municipalities will experience a drop in population over the next 10 years. Many peripheral municipalities will experience a decrease in population even without net emigration because of fewer births and small numbers of young people. For most of these, however, the drop will be moderate.

Even though access to jobs continues be the most important factor when people choose where they want to live, the total range of services, leisure opportunities, housing and jobs on offer now has a greater impact than before. Many enterprises in more peripheral areas have problems in recruiting qualified staff, whilst at the same time there is a shortage of jobs for people with higher education. The choice of where to live will vary both between men and women and the stage of life people are in at the time. Migration losses in rural areas are higher for people with higher education than for other groups. Studies show that many people want to live in medium-sized towns and urban settlements. For young adults about to settle down, the tendency is that areas outside the largest towns are more attractive.

Employment increased throughout the country during the 1990s. However, the increase has been greatest in central areas, particularly within the private sector. The primary industries have declined in just about all parts of the country. The proportion employed in the primary industries varies significantly between different municipal groups. The greatest proportion is found in the most peripheral municipalities. Developments in the public sector seem to be more evenly spread than in the other sectors. Since the public sector employs the largest number of women, the regional distribution of jobs in this sector has considerable bearing on where women choose to live. Women with higher education often choose to settle in less central areas than men with higher education because many women are recruited to the public sector.

The centre of gravity in regional employment markets is moving towards larger centres. There is a great need for innovation and entrepreneurial activity to secure the economic base for welfare, employment and the population settlement pattern for the future. The development and setting up competitive and innovatory enterprises depends on access for entrepreneurial activity, effective interplay with the local authorities, business sector and community and good services. Proximity between enterprises and suppliers and/or centres of knowledge is an important factor in accounting for innovation, commercialisation and development of entrepreneurial cultures both in enterprises and in regions.

Studies show that the majority of the country’s population have good standard of living, and that this trend has been positive in the 1980s and 1990s. The most peripheral areas of the country emerge worst with respect to education, income and wealth, but best in the areas of housing, pollution, services and social infrastructure. In the larger towns we find both the best and the poorest standard of living in the country. In an annual standard of living study carried out by Statistics Norway, nine of the ten municipalities that come out worst are in Northern Norway. Municipalities in Western Norway have the best standard of living .

1.3 Robust communities will provide the basis for maintaining the main features of the settlement pattern and ensuring equal living conditions for everyone

The key goals in rural and regional development policy remain constant

The aim is to maintain the main features of the settlement pattern and ensure equal living conditions throughout the country. The practical pursuit of these goals must be understood in the light of regional development features. Access to jobs continues to be the most important prerequisite for population settlement. However, developments over recent years have shown that people settle more often than before in more densely populated areas. In other words, population concentration is increasing and residential aspirations are also influenced more than previously by the combination of available housing, services, leisure and jobs.

Robust communities

Rural and regional development policy must, more than ever, be based on the situation in the entire country and must identify the opportunities the various parts of the country have to meet the new needs of the population and business. This demands a broad approach in which the development of the business environment and the provision of public and private services, leisure opportunities, housing and jobs are central. Efforts to develop robust communities will be more important than efforts directed at single communities and individual enterprises. So a long-term approach and a coordinated effort with a broad range of instruments will be essential to success in rural and regional development policy. This is the main foundation of the government policy outlined in this report.

Robust communities are communities that have

• reliable public services available to all,
• a competitive, profitable and adaptable business sector,
• access to qualified personnel in the various sectors, and
• varied employment and housing opportunities, and a wide range of public services.

Robust communities are capable of adapting to future development, whether it involves changes in economic activities and corporate structures or new demands for services, transport, communications, skills and welfare provision made by the business sector and the public.

The development of such communities is a prerequisite for achieving good, balanced economic and social development throughout the country without major overcrowding or depopulation problems.

The gender and stage of life perspective is a prerequisite for the development of robust communities

The Government emphasises that the development of robust communities requires an understanding of the population’s different preferences and needs in relation to gender, age and stage of life. It is important to pay particular attention to the opportunities for participation in economic activity available to young people and women. The Government will include young adults as a new target group. Policy instruments must be more flexible to meet the special needs of the under-20s and young adults. Women must benefit just as much as men from the resources that are made available.

From single communities to regions

The Government will support regional development as a counter to today’s centralisation. People and companies today need employment opportunities, labour and services that often cannot be offered in single municipalities, but that can be found distributed over a larger area that covers several municipalities and places. Town and country, urban settlements and the surrounding country have various functions in the national and regional division of labour and are mutually dependent on each other. Urban settlements and towns have a varied job market and broader leisure and service provision than more sparsely populated areas. The development of relatively large, integrated regions where employment, housing and services are all available is therefore a key strategy in providing this kind of integrated solution for as many of the population as possible. The development of regions in various parts of the country must take account of what is effective and appropriate for the business sector and the population. This must be done through regional development work and must involve close cooperation between municipal and county authorities.

Initiatives for small communities

Some parts of the country, primarily the small municipalities in the areas traditionally considered remote, have weaker parameters for developing a broad economic base and a wide range of services than the larger regions. The special challenges in such small communities require particular initiatives beyond the general initiatives in rural and regional development policy. Such communities are faced with major challenges with regard to ensuring welfare provision, public and private services and employment. It is important to make these communities attractive as places to live for young people and women as well. The Government is preparing to implement during the next four-year period a separate small communities initiative in areas with major decreases in population and long distances from centres. Counties that have many such areas will be given priority in the distribution of rural policy resources to the county authorities. Particular attention will be paid to those areas of government policy that are important for the development of local communities. Work to establish public service offices is particularly important to ensure access to public services in small and peripheral municipalities and communities.

Challenges in the North and in the border regions

To a greater extent than other parts of Norway, Northern Norway is characterised by sparse population settlement, long distances, a harsh climate, a high level of dependence on the public sector and a narrow industrial base. Northern Norway, particularly Northern Troms and Finnmark, therefore has a continued need for extra attention and effort. The forthcoming evaluation of the initiative zone in Northern Troms and Finnmark will provide a basis for further assessment of the initiatives.

The Government considers participation in regional border cooperation with the EU nations (the Interreg programmes) and in the Barents region as important for regional development in Norway and for Norway’s policy on adjacent areas. Against this background and the evaluation that has been carried out, Norway has accepted the opportunity to participate in a new Interreg period. The new period, Interreg III, will last from 2000 to 2006. The economic framework has been enlarged and the geography has been changed so that all parts of the country can participate in one or more Interreg programmes.

The Challenge of Restructuring

The Ministry of Local Government and Regional Development will continue the arrangement for special restructuring support to municipalities and regions that have a narrow industrial base and that face particularly large restructuring challenges. This often involves the closure of key enterprises, but the sum of several lesser reductions in employment may also become significant. The work of restructuring should be directed towards restructuring of the whole local community and region and not only towards the enterprises. A broad combined effort from all the actors is usually necessary in this work. A particular challenge is the forthcoming reorganisation in the defence forces.

1.4 Infrastructure and equality in living conditions – from single measures to targeting overall needs

Welfare provision and public service

Good welfare provision and living conditions are becoming increasingly important in determining where people settle. The municipalities’ efforts are particularly important for key welfare provision such as houses, schools, kindergartens, primary health services, care of the elderly and social services, and cultural and leisure activities. The creation of good conditions for raising children and young people is a particularly important part of rural policy, because finding a healthy environment for children is an important reason for settling away from the cities. The Government’s kindergarten policy and ultimate goal that every child requiring a place should have one and that prices should be reduced will help to create an environment suitable for young families. Cultural and leisure opportunities are also central to the choice of where to live. The cooperation on provision between public authorities and voluntary organisations is important. The development of telemedicine enables local hospitals and GPs to make more patient need assessments than before and provide services closer to home.

The Government’s economic policy should ensure a vigorous municipal sector. The grant system is built up in such a way as to offset variations in tax revenues and in demographic, geographic and social conditions, so that the municipalities should be able to ensure equal provision of service to their public. Central government intervention will be reduced and general purpose grants increased to give the municipalities greater freedom to decide for themselves and choose solutions suitable to local conditions. The development of a business-friendly municipal sector will significantly improve the framework conditions for economic development and choice of location by companies.

New central government activities to be located outside Oslo

The Government wants to achieve good service availability throughout the country and a more even regional distribution of central government jobs through an active location policy. This policy is closely connected to the Government’s goals for renewal of the public sector. The renewal is essential to the maintenance of, and commitment to, the welfare state, both in regard to matching changed expectations and to access to resources and staff to meet new needs in our welfare society. Therefore the aim of the Government’s programme for renewal is to base organisations and service production on users’ needs, transfer resources from administration to service production and from sectors with falling needs to sectors with increasing needs, and to increase the efficiency of resource usage and the scope for action at all levels.

Restructuring affects central government activities throughout the country. The Government therefore attaches great importance to an active location policy as a significant part of its renewal policy, based on the following goals and strategies:

Good access to central government services throughout the country. Establishing a public service office in every municipality is an objective. When the requirement for physical accessibility is important for central government agencies to carry out their work, this will be a major factor in the choice of location.

Dispersal of central government agencies, tasks and functions.

Compensatory restructuring measures in municipalities where job provision has been reduced as a result of a combination of several changes.

Active follow-up of revised guidelines for central government location policy. New central government tasks will normally be located outside the Oslo area.

Communications, basic infrastructure services and education

Communications and basic infrastructure services are keys to regional development. They are of particular significance for exploiting the potential of new businesses, industries and markets. It is important to expand and strengthen relatively large, integrated regions where employment, housing and services are all available through development of the infrastructure and coordination between various transport solutions. In more peripheral areas, stable transport provision with sufficient capacity for trade and industry is of great significance.

The objective of the Government’s action plan for broadband communications is to offer primary and secondary schools, hospitals, libraries and municipal administrations broadband connection at acceptable prices by the end of 2002, and broadband connection for all Norwegian households by the end of 2004.

The provision of higher education in the regions is important as a foundation for the development of skills and qualifications in the job market and for local educational opportunities. Both central government and county educational institutions must match educational provision to the needs of the regional job market, including developing distance education. One of the benefits of the competence reform should be to contribute to providing opportunities for adults for basic education and for re-training and further education without having to travel far from home, whilst the competence development programme aims to exploit the opportunity provided by the workplace as a place of learning. Both of these initiatives are of great significance for competence development throughout the country.

Attractive urban settlements

Over the last ten years, much has been done in the rural areas to strengthen and develop attractive urban settlements that are perceived as thriving, functional and pleasant. Such urban settlements are important to maintain the population settlement pattern. To further this positive trend, the Government will continue to create an enabling environment for a coordinated effort to develop urban settlements in which various instruments and actors are viewed together as a whole, whether in a central, regional or local context.

1.5 From single enterprises to developing the business community as a whole

Competitive, future-oriented and innovative enterprises

The business-oriented extra effort in rural and regional development policy is intended to implement both national economic policies and rural and regional policy goals, and is designed to underpin national strategies and initiatives in an effective way. The primary objective, to preserve the main features of the settlement pattern, requires profitable and competitive trade and industry in all parts of the country. Skills and innovative ability are the most important future elements of competitiveness for the development of such trade and industry. The prerequisite for the development of regional trade and industry is stronger regional resource and innovation environments, preferably located on the same site as universities and colleges. It is important to build up and develop such environments and to stimulate cooperation between them and the regional business sector, other human resource environments and national and international networks. Considerations both in relation to population distribution and the economy mean that there is a continuing need for extraordinary measures to support business sector development in rural areas.

This business-oriented extra effort in regional and rural policy is directed at three main areas:

• Increased attention to human resource development and innovation in the existing business sector. Strategies and frameworks for resource usage must pay more attention to human resource development and innovation.
• It will be important to stimulate the establishment of more enterprises that are competitive, future-oriented and innovative. A particular challenge here lies in stimulating the establishment of businesses in industries with a potential for high productivity. Work to bring entrepreneurial skills into the education system at all levels will be strengthened.
• It is important to strengthen cooperation between individual enterprises and between enterprises and institutions of learning by developing good regional wealth creation environments. A major proportion of today’s resource use will be diverted from supporting single enterprises more towards strengthening the development environment for business as a whole. Resources must be directed towards areas that have the potential to succeed. The resource apparatus must take a more proactive approach and be more development-oriented.

The value chains in the agricultural and fisheries sectors must exploit regional advantages

The agricultural and fisheries sectors are important for population settlement and employment in the rural areas. These sectors face great challenges in exploiting the potential that lies in Norway’s natural resources and the natural environment. In the further development of the value chains in the agricultural and fisheries sectors, it is therefore important to focus on exploiting regional advantages to increase profitability in these sectors. Here, providing support to develop and strengthen regional wealth creation environments is very important to foster a positive trend in coastal and agricultural areas in various parts of the country. General employment policy continues to face major challenges in ensuring the supply of qualified job applicants to an increasingly demanding labour market. Local tailoring of labour market policy is therefore an important challenge.

1.6 Regional development - from sole responsibility to joint initiatives

Coordination and cooperation on users’ terms - from sector initiatives to coordinated initiatives

The county authorities will have the primary responsibility in setting up and developing cooperation in regional partnerships between county authorities, regional central government agencies, the municipalities, the business sector, educational institutions and private organisations. Such partnerships must have the capacity to mobilise joint initiatives for regional development. Without continuous human resource development, innovation and conscious exploitation of the special advantages of various regions, individual districts or sectors may become losers in the increasing competition.

Rural and regional development policy must be based on the needs of people and business and on the great regional variations in the country. This will be achieved by giving responsibility to, and having confidence in, the actors that set the terms regionally for the development of local and regional communities. This is also in line with the goal of increased efficiency in public administration and management.

New and simplified ways of working must pay regard to user needs. Experience shows that people and businesses need an effective and coordinated public sector. All policy areas relevant to regional development must be seen as a whole. User participation will be strengthened both in analysis work and in discussions of targets and priorities. In the work on regionalisation and participation lessons must be drawn from both national and international experience.

The implementation of such a policy means better coordination and more cooperation across ministries, sectors, public agencies, directorates and professions. There is a particular need to ensure good coordination in specifying national aims between the ministries with responsibility for policy formulation and measures associated with business development. A redistribution of tasks between the levels of administration aims to simplify and improve coordination opportunities between various types of central government and other public sector initiatives for regional development. Combined with a simplification of regulations and a greater degree of freedom, primarily in the use of general rural policy resources, this will contribute to creating better conditions for joint action.

Government bodies like the various ministries, the Norwegian Industrial and Regional Development Fund , the agricultural departments of the county governors, the Industrial Development Corporation of Norway and the Research Council of Norway, the Sami Parliament, county and municipal authorities all have key roles to play in their various ways in rural and regional development policy, and in social and business sector development.

The Norwegian Industrial and Regional Development Fund is important in setting the terms for formulating rural and regional development policy and industrial policy in general. It is a prerequisite that this body plays an active role in the regional partnership within the confines of national targets and guidelines that apply to the Fund’s activities. The aim of the Industrial Development Corporation of Norway is to be a national enterprise that promotes economic growth and employment in the rural areas. Its main tasks will continue to be focused on rural areas and the company must project a clear regional profile. The Research Council of Norway is an important actor when it comes to disseminating new science and technology to trade and industry. In pursuing the ongoing evaluation of the Council, an assessment will need to be made about whether, and possibly how, its regional base can be strengthened.

Municipal and county authorities set important parameters and deliver important services to the local population and businesses. It is a central challenge that the municipal level is involved in attaining the objectives laid down in rural and regional development policy in the best possible way.

A longer-term perspective in development work

The Government is in favour of a change in the duration of the regional development programmes being developed by the county authorities from annual to four-year programmes and their coordination with county planning. Evaluation of regional development programmes shows that the work on these programmes has developed in the right direction and has contributed to putting into action and further developing cooperation and coordination in many counties. However, the programmes need to be more administratively flexible and have a stronger focus on policy goals and priorities for business and industry. Particularly important are a longer-term perspective in the programmes, greater regional freedom to tailor measures and greater emphasis on cooperation in partnerships and on the setting up of agreements between the national and the regional levels for the use of rural and regional policy resources. The agreements will be coordinated with the central government budget and appropriation procedures.

From centralised regulation to greater regional freedom

The Government attaches considerable importance to matching the financial resources of rural and regional development policy as closely as possible to the changing problems and challenges in the different regions. There will therefore be considerably greater freedom to make regional and local priorities within the framework of national goals and strategies.

The use of instruments shall, through business and community development, contribute to strengthening and developing robust regions and small communities. The Government emphasises the importance of resource use being founded on a gender and stage of life perspective. In this connection, particular attention will be focused on the participation and influence of women in business, trade and industry, and on the under-20s and young adults in rural areas.

The Ministry of Local Government and Regional Development will simplify the resource allocation by dividing the rural and regional policy resources into two parts, for adaptation for social and economic development and for direct initiatives for businesses. The regulations will be simplified and more of the rural policy adaptation resources that are currently administered centrally will be delegated to county authorities and these authorities will be given greater discretion in the use of the adaptation resources. The changes will be introduced gradually over several years. They will be viewed in conjunction with the introduction of four-year regional development programmes and with the redistribution of tasks between the levels of administration. The geographical area for the use of adaptation resources will be determined in the four-year regional development programmes. Additionally, central counties may expect to receive some degree of funding for participation in regional cooperation.

Municipal economic development funding will continue. The aims of this arrangement will be expanded so that these funds may be used for initiatives that involve several aspects of economic and social development. The county authorities will be given greater latitude and responsibility in the allocation of municipal economic development funds.

The responsibility for administering start-up grants will be transferred to the district offices of the Norwegian Industrial and Regional Development Fund in the counties. The county authorities will nevertheless have a strategic responsibility to be able to ensure a holistic and coordinated effort for economic development through policy guidelines in regional development programmes.

1.7 Conclusion

In conclusion the Government’s new programme represents a major shift in organisation, focus and measures:

• from single communities to regions
• from single measures to targeting overall needs
• from single enterprises to developing the business community as a whole
• from sole responsibility to joint initiatives to promote regional development
• from individual sectors to a cross-cutting approach
• from centralised regulation to greater regional freedom

For the Government the aim of this renewal is to make rural and regional policy more holistic, proactive and realistic.