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3 Territorial cohesion: towards a more balanced development

3.1 The Union: a very centralised territory

Historically, economic activity, as well as the capital stock and qualified human resources, have, with a few exceptions, been concentrated in the most central areas of the Union. While regions on the south-west periphery of the Union have converged in some degree towards the rest of the EU, including in terms of education levels, this is not yet sufficient - and is unlikely to be in the medium-term - to undermine the validity of the centre-periphery model, which, indeed, is set to be reinforced with the accession of Central European countries.

Recent studies of the effect of integration on regional balance in the EU have emphasised the need for accompanying policies to prevent a possible widening of disparities between the stronger and weaker areas.2 This conclusion is based on the recognition that economic location is characterised by important externalities, some positive, some negative, and that there is no reason to think that market forces alone will strike the right balance between positive and negative effects and so result in balanced economic development across the EU as a whole. While the concentration of economic activity in the stronger regions may lead to greater efficiency of production in the EU in the short-term, this may be at the expense of the longer-term competitiveness of the Union economy insofar as it damages the productive potential of weaker regions and reduces their capacity to exploit their comparative advantages. Moreover, the concentration of both businesses and people in particular regions conflicts with the objective of sustainable development, not only because of the possible overcrowding and congestion which it causes in these regions but also because of the rundown and depopulation of other areas.

The evidence suggests that although, in the future, three different outcomes from EU integration can be imagined - increased concentration of economic activity, greater dispersion or little change in the existing pattern - over the past 20-30 years, the spatial pattern of activity has remained much the same. Accordingly, economic activity in the Union remains concentrated to a significant extent in a relatively small central area, as indicated above. There is no evidence that the increase in costs in the stronger regions resulting from greater congestion and higher wages will, by itself, correct this imbalance.

To give practical content to the concept of centre-periphery, an index of accessibility has been developed, which measures for each region the time needed to reach other regions weighted by their economic importance. It should be emphasised that this index involves a good deal of estimation and that it represents the position at the present time rather than what it might be in the future, given the current development of infrastructure in peripheral regions (partly financed by the Structural Funds) and, perhaps more importantly, given the implications for the concept of accessibility of the development of the information society. Nevertheless, the results are instructive. Regions can be divided into three groups in the terms of the index (see Map A.4: Central and peripheral regions):

  • central regions, for which the accessibility index is over 50% above the average for the EU plus the 12 accession countries, situated in the triangle North Yorkshire (UK), Franche-Comté (France), Hamburg (Germany);
  • peripheral regions, for which the index is under 40% of the average, situated in the north of Europe, in Sweden and Finland; in the north-west, in northern Scotland and Ireland; in the south, in Portugal, Spain, the Mediterranean islands, the southern tip of Italy and Greece, and in the east in the candidate countries; although the ultra-peripheral regions 3 were not included in the study, their accessibility is even less and they have a series of structural handicaps (as mentioned in Article 299§2 of the Treaty);
  • regions in between with an index of between 40% and 150% of the average.

The emerging picture is one of a very high concentration of activities in central regions, which account for only 14% of the land area but a third of the population and almost half (47%) of the GDP. Population density in these regions is 3.7 times higher than in peripheral regions. In all but 11 of the 88 central regions (NUTS 2 level) GDP per head in 1998 was above the EU average, while all but 23 of the 111 peripheral regions had a level below the average. Average GDP per head in the central regions was twice as high as in the peripheral ones and productivity 2.4 times higher. In 1997, expenditure on research and development amounted to 2.1% of GDP in the former as against 0.9% in the latter. In 6 of the 7 ultra-peripheral regions, GDP per head was only around half the EU average.

The point on R&D is especially pertinent. The structure of production costs of firms has changed considerably in recent years, with the fixed costs of research and development increasing and costs incurred on transport declining. Since R&D along with other strategic, high-value-added activities, tends to be concentrated in central regions where the know-how and specialist infrastructure are located, this is a factor underlying growing polarisation in the EU and the concentration of low value-added activities in peripheral areas.

The transport system is also more developed in central regions. The density of motorways is four times greater than in peripheral ones, while there are also 40% more railway lines and twice the length of double-track lines. There are signs, however, of the relative position changing, especially in areas on the periphery where the road system is most developed and is continuing to expand, which are tending to become important access points, such as Lisbon, Andalucia in Spain and Attiki in Greece.

The sectoral pattern of employment is also very different in central as opposed to peripheral regions. Although the share of employment in industry is the much the same (around 30% of the total), the share of employment in agriculture in peripheral regions is seven times larger than in central areas, whereas employment in services is only 53% of the total as against 69%. This, of course, reflects underlying competitiveness, which helps explain why the employment rate in peripheral regions is under 59% while in central ones, it is just over 67% (See Table A.6, in annex and Table 3).

This concentration of economic activity and population in such a restricted area of the Union has adverse effects not only on the peripheral regions but also on the central ones, where it is responsible for traffic congestion and strong pressure on the environment. Whereas transport bottlenecks in peripheral areas are a result of the low standard of infrastructure and a lack of connections, in central regions, they arise from capacity constraints and excessive traffic.See Map A.5 and Map A.6

A consequence of this congestion and the concentration of economic activity is that toxic emissions in central areas are 2.3 times greater than in peripheral ones 4 (See Map A7: 'Emissions of acidifying gases')

With the accession of the 12 applicant countries, the Union will include many more areas where the level of development is well below the average. A new eastern, continental periphery will be added to the existing southern, maritime one. As a result, economic activity would tend to be even more regionally concentrated than in the US, where activity is more evenly distributed, despite its land area being twice as large as an enlarged EU and its population being much smaller (270 million inhabitants, 44% less than in the EU).

Four separate areas of global importance in economic terms can be distinguished in the US, each with over 15 million people and with GDP per head above the US average in all the individual States included. These areas together account for 28% of the total US land area, 49% of the population and 54% of national GDP and, accordingly, display a much lower level of concentration than in the EU, though physical geography is clearly a contributing factor

(Table 4 , Graphs A.5, A.6, in annex and Map A.8).

2.See, in particular, Integration and the regions of Europe: how the right policies can prevent polarisation, Braunerhjelm et al

3..Canary Islands, Guadeloupe, Martinique, Guyane, Réunion, Açores and Madeira.

4..Source: ESDP study programme

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