Does Federalism Matter?
Comparing Regional Economic Policies
in Austria, Belgium, the Netherlands and Sweden
Franz Fallend
University of Salzburg, Austria
Department of Political Science and Sociology
Email: [email protected]
Paper to be presented at the ECPR Joint Sessions of Workshops, Helsinki 7-12 May, 2007
Workshop 13: Exploring New Avenues in Comparative Federalism Research
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1. Introduction
The paper attempts to answer the question whether federalism really makes a
difference regarding the decision-making processes in regional economic policy. It starts from
the assumption – borrowed from federalism research-critical authors like Keman (2000) or
Braun (2000) – that in political reality the differences between ‘federal’ and ‘unitary’ states
are not as clear-cut as is sometimes (see, e.g., Lijphart 1984; Elazar 1997) claimed. Keman
(2000: 197), e.g., argues that, first, the institutional complexion of most democracies is high
and that differences between federal and non-federal polities are ‘rather a matter of degree
than a fully fledged dichotomy’ and that, second, ‘there is little convincing evidence that there
is a direct relationship between the democratic state format, or polity, and the eventual
performance in terms of its democratic politics and material outcomes’. More specifically, he
criticises (Keman 2000: 197) that ‘the conceptual distinction between a federal and unitary
state format often confuses the matter of who has the “right to decide” as regards policymaking with what state agency has the “right to act” as regards policy-implementation’. He
complains that most studies focus on the formal, constitutional side of federalism and more
often than not neglect the real organisation and working of the federal state (Keman 2000:
202).
The research question to be explored has already been tested in several quantitative
studies (see, e.g., Keman 2000). These have, however, not produced clear results. One of the
major problems of a quantitative approach seems to be that ‘it may be difficult to isolate the
effect of one variable such as federalism without assessing its setting within an overall
configuration of institutional structures and actor constellations in a country (Braun 2000: 4).
Therefore, Braun (2000: 4) recommends more comparative, qualitative case studies,
preferably studies which compare federal with unitary states.
The paper takes up this recommendation and tries to describe and to analyse the
regional economic policy in four countries: Austria, Belgium, the Netherlands and Sweden.
The selected cases differ not only with respect to their polity format (Austria and Belgium
being federal states, the Netherlands and Sweden being unitary systems), but also with respect
to their state organisation (Belgium and the Netherlands being more centralised, Austria and
Sweden being more decentralised).
At the beginning the analytical framework is presented (section 2) and the selection of
cases justified in more detail (section 3). After a more general description of the polity format
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of the four countries (section 4.1), their regional economic policies are analysed, concerning
the degree of sub-national autonomy and intergovernmental relations (section 4.2.), the
development of ‘governance’ structures at the regional (and sub-regional) level (section 4.3.)
and the impact of the EU structural funds (section 4.4.). A conclusion (section 5) summarises
the findings.
2. Analytical framework
Keman (2000: 197) argues that ‘the “right to decide” (i.e. decision-making) and the
“right to act” (i.e. policy-implementation) can be organized differently in any democratic
polity, independently from its federal or unitary status’. With ‘right to decide’ he refers to the
constitutional rules of decision-making in relation to the level – national or not – and the
competencies involved. If the decision-making process takes place in the political ‘centre’
alone, we may speak of a ‘unitary’ system. If powers are separated across levels of
governance and decision-making also takes place on the sub-national level (or is delegated to
other, functional bodies), we may speak of a ‘federal’ system or of power-sharing. The ‘right
to act’ concerns the operational and material organisation of the state with respect to policymaking, i.e. the ‘real’ governance structures and implementation processes, including the
instrument of taxation. The continuum ranges here from central to decentral. ‘Central’
describes a situation where ‘one agency has a nation-wide authority to organize and
implement public policies’. ‘Decentral’, on the other side, refers to situations where ‘either
this authority is shared with other agencies … or is delegated to territorial or functional
bodies’ (Keman 2000: 198). The ‘right to act’ is, of course, more difficult to measure than the
‘right to decide’. Usually, financial data, such as the share of the sub-national level in tax
revenues and/or expenditures, are used as indicators.
In general, it may be assumed that regional (economic) policy is a policy field where
regional governments carry the burden of decision-making, organisation and implementation.
Only on the regional level sufficient information is available, and only here can links with
regional economic actors and citizens be established. The central state may be expected to
step in when it comes to financing; as a whole, however, it will play only a reduced role as
‘broker’ and ‘banker’. As federal states are generally deemed to have an organisation which is
‘closer’ to the citizens and their wishes, one may put forward the proposition that they are
better equipped to organise regional (economic) policy in a more ‘democratic’ (and in this
sense, more efficient) way than unitary states (Braun 2000: 18-19). The latter, on the other
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hand, will probably have better means to organise a coherent, top-down regional (economic)
policy.
3. Case selection
In order to investigate the research question, four countries were selected: Austria,
Belgium, the Netherlands and Sweden. The selection of these countries can be justified for the
following reasons:
(1) They are relatively similar with respect to important context variables, which
might have an influence on regional policy. All four are small states, regarding their
population, and their economies are approximately equally strong (measured as GDP per
capita) (table 1).
Table 1: Structural indicators of the selected countries (2005)
Population (in m.)
GDP per Capita (EU25=100)
Austria
8.2
122.7
Belgium
10.4
117.7
Netherlands
16.3
123.5
Sweden
9.0
114.7
Source: Eurostat (2007: 51, 152).
(2) Above that, all four are members of the European Union, whose structural funds
are expected to have a significant impact on the member states’ regional policy.
In addition, the four selected countries seem to vary sufficiently as far as the values on
the two major variables (federal-unitary and central-decentral) are concerned (table 2).
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Table 2: Position of selected countries on federal-unitary and central-decentral scales
Country
Austria
Belgium
Netherlands
Sweden
Federal-Unitary Scale1
0.05
0.41
-0.74
-0.89
Central-Decentral Scale2
0.65
-0.56
-0.59
1.04
Notes:
1 The values of the federal-unitary scale are the results of a factor analysis based on several
indicators developed in comparative literature (Colomer 1996; Lane/Ersson 1999; Lijphart
1984: Schmidt 1996). A positive value indicates more federalism, a negative value more
unitarism.
2 The values on the central-decentral scale are the results of a factor analysis of non-central
public revenues and expenditures (the data used were taken from Lane et al. 1997). A
positive value indicates higher decentralisation, a negative value higher centralisation.
Source: Keman (2000: 205, 207).
This means that each of the four cases fits into one cell of a four-cell matrix (table 3;
see also Keman 2000: 209). If federalism and decentralisation do really matter for decisionmaking in regional policy, the cases should therefore reveal clear differences.
Table 3: Matrix of selected countries (based on relevant variables)
Right to Decide
Federal
Unitary
Decentral
Austria
Sweden
Central
Belgium
Netherlands
Right to Act
Table 3 also confirms the worth of the distinction made between the ‘right to decide’
and the ‘right to act’ as it shows that high federalism does not automatically go hand in hand
with high decentralisation. Belgium, e.g,, today a strongly federalised system, is not
decentralised to the same extent. In Sweden, on the other hand, formally a unitary state, there
exists a high degree of decentralisation.
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4. Decision-making processes in the regional context
In the following sub-sections the situation of regional economic policy in the four
selected cases will be described and analysed with respect to the degree of sub-national
autonomy and intergovernmental relations, the development of ‘governance’ structures at the
regional (and sub-regional) level and the impact of the EU structural funds. At first, however,
the general polity format of the political systems of the countries will be depicted in order to
illustrate the context, in which regional economic policies are decided and implemented.
4.1. Overall Polity Format and State Organisation
In comparative literature, Austria, formally federalised since 1920, is usually
categorised as a ‘unitary’ type of federal state (see, e.g., Schultze 1992: 108-109): Concerning
the ‘right to decide’, its nine provinces (Länder) dispose only of a few autonomous legislative
powers (nature preservation, construction law, zoning, hunting and fishing, tourism, sports,
youth and child welfare, municipality law etc.), and they have no powers with regard to
judicial matters. Their taxing powers are limited (including the capital of Vienna, which is
province and municipality at the same time, only about 30 per cent of the whole tax revenues
go to the Länder). The second chamber of the national parliament, in which the Länder are
represented (the Bundesrat), can only delay bills passed by the first chamber, the Nationalrat,
and the decision-making of its members is completely dominated by party, as opposed to
federal, considerations. Last but not least, the Länder only enjoy a ‘relative constitutional
autonomy’, i.e., significant elements of their political system are pre-determined by the
federal constitution (e.g., the system of proportional representation for the election of the
provincial parliaments, the election of the provincial governor by parliament, the organisation
of the civil service etc.) (see Dachs 1996: 238-240; Fallend 2006: 1026-1034). As a
consequence of all this, the Austrian federal state is ‘one of the most centralized with the
constituent units often serving mainly as “agents” and “subordinates” of the federal
government’ (Watts 1999: 25; see also Erk 2004: 1). Intergovernmental relations follow the
model of ‘cooperative federalism’, focussing on the development of uniform standards. The
fact that the Länder have rather extensive administrative powers (‘right to act’) does not
compensate for the lack of legislative powers, but may be regarded as a ‘degeneration’ of the
federal principle (see, e.g., Pernthaler/Weber 1980: 340). Some authors even deny the federal
character of the Austrian polity altogether (e.g., Braun 2000: 45-47).
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Belgium, on the other hand, which has been transformed from a unitary into a federal
state in several steps between 1970 and 1993 (Deschouwer 2000: 100-103; Hooghe 2004: 7077), is composed of constitutional units (three language communities and three territoriallydefined regions), whose powers are so extensive that they are considered to belong to the
most important regional players in Western Europe today (Swenden/Jans 2006: 882). Since
1980, the regions have the ‘right to decide’ about economic development and structural
planning, the federal reforms of 1988/89, 1992/93 and 2001 added further competencies, e.g.,
in the fields of transport, energy and agricultural policy. Together with the communities
(which are responsible for cultural, health, education and parts of social policy) (Deschouwer
2000: 104-105), the regions now spend more money than the federal government (excluding
federal interest payments on public debt). However, their taxing powers are still limited. Only
about 20 per cent of their expenditures are financed by regional taxes; for the rest, they remain
dependent on (unconditional, though) federal grants (Swenden et al. 2006: 867-868;
Swenden/Jans 2006: 885). In Belgium, like in Austria, the second chamber has only a
secondary status. The central government is politically responsible to the first chamber alone
(Deschouwer 2000: 105-106). The regions (as well as the communities) also have
constitutional power, i.e., they can organise their political institutions as they see fit
(Maarten/Tombeur 2000: 143). However, central government and the central party elites are
still primarily responsible for reforming the state (constitutional amendments do not require
the consent of the regional parliaments, while the communities hold a mutual veto power in
the centre) (Swenden/Jans 2006: 881-882). In contrast to Austria, the Belgian federal state
follows the model of ‘dual federalism’, characterised by competitiveness and the overall aim
to preserve regional identities and to promote cultural, economic and social diversity
(Beyers/Bursens 2006: 1060).
The constitution frames the political system of the Netherlands in a highly centralised
way. The executive powers, i.e. the ‘right to act’, of the twelve provinces and the 467
municipalities are predominantly based on delegation and co-government and hardly on
discretionary powers (Andeweg/Irwin 1993: 163; Keman/Woldendorp 2000: 208). Provincial
and local government ‘is basically an administrative organisation that serves as an extension
of national government’ (Keman/Woldendorp 2000: 211; similarly van der Volk 2002: 205).
Though hierarchically organised, communication between the tiers of government is
characterised by a strong consensus orientation, however (van der Volk 2002: 205). In
addition, the system cannot be characterised as centralised in every respect: While in other
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countries political authority is distributed to territorial units, in the Dutch case considerable
functional autonomy is granted to public or semi-public agencies (Lane/Ersson 1999: 184–
185). These bodies are ‘in terms of policy capabilities more important than the existing tiers
of government’ (Keman/Woldendorp 2000: 228). Alas, they lack a democratic foundation; the
members of their managerial boards are either appointed by the national government or coopted from interest associations (Keman/Woldendorp 2000: 213).
The political system of Sweden is known for its unitary character and, at the same
time, its ideology of local government, which makes the assessment of the degree of subnational autonomy or decentralisation a difficult matter. The national government rules the
country, but local decision-making is exercised by elected assemblies, which have the right to
levy taxes to handle their functions. As they possess a general competence to handle their
functions, local governments enjoy a certain degree of discretion. However, the national
government has the possibility to intervene in local affairs by regulating obligatory and
optional functions as well as by setting financial initiatives. Since the 1970s, local
governments have acquired responsibility for the provision of more and more public services.
As a consequence, they have developed into large-scale organisations with heavy
bureaucracies and big budgets (Lane/Ersson 1999: 180–181). Also in comparative terms,
Swedish local government ranks among those European countries with the highest score in
vertical power relations (see, e.g., Heinelt/Hlepas 2006: 28). As far as regionalisation is
concerned, the country is divided into 21 provinces (län), each ruled by an executive board,
whose members are appointed by the central government and serve – like the French prefects
– as representatives of it (länsstyrelse). Besides, there also exists an elected body (the
landsting), which has been marginalised by the länsstyrelse, though. To make the
administrative complexity at the regional level almost inscrutable, since the 1970s about 40
central agencies have been regionalised, taking over many of the responsibilities of the
länsstyrelse (Weihe-Lindeborg 2000: 269–272). The boundaries between the different
regional organisations are still not clear (Bergmann-Winberg 2005: 447). The focus lies on
the functional, such as the labour market, regions (Bergmann-Winberg 2003: 247). The
constitution only recognises the central and the local level; consequently, the provinces have
no legislative, only executive powers. The interest of central as well as municipal politicians
to attribute more powers to the regional level is limited (Weihe-Lindeborg 2000: 276–280).
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4.2. Degree of Sub-National Autonomy and Intergovernmental Relations in Regional
Economic Policy
Regional economic policy has become a major concern for most European
governments in recent years. Academic literature is full of recommendations to strengthen the
regional level in economic policy-making in order to cope with the challenges posed by
globalised competition (see, e.g., Brenner 1999). In spite of the increasing demand to
construct adequate regional institutions, there are only a few examples for successful
innovations in this respect. Sectorally confined cooperations (e.g., in the fields of tourism or
marketing) often seem to be the ultimate thing possible; as soon as it comes to fundamental
questions of regional economic development in general terms, however, the willingness of the
involved actors (regions, municipalities) to cooperate with each other fades and individualistic
cost-benefit calculations begin to dominate (Newman 2000: 905−906).
In Austria, a formal competence for ‘regional economic policy’ does not exist in the
federal constitution. Instead, regional (economic) policy is conceived of as a cross-sectional
area, in which governments from all levels (federal, provincial and local) are involved. In
principle, the federal level has the major authority for economic and financial policy. The
provinces (Länder) enact spatial planning laws; in addition, they may − in the realm of the socalled ‘private economic administration’, for which the general distribution of state
competencies, as laid down in the federal constitution, is not valid − subsidise economic
activities (as long as they have the money for it, and as long as their subsidies do not violate
EU competition rules). Government activities in regional policy are coordinated by the
Austrian Conference on Spatial Planning (ÖROK), consisting of representatives of the federal
and the provincial governments, of the associations representing the Austrian cities and
municipalities and of the major economic interest groups (the so-called ‘social partners’). The
decisions of the Conference have no legal, binding character, though.
As mentioned above, in Belgium, in contrast to Austria, the regions are generally in
charge of economic policy-making, although federal powers in this field still appear to be
quite extensive and include (often restricted by EU regulations, though) monetary, financial,
competition, price and income policies (Maarten/Tombeur 2000: 166). The clear division of
powers has allowed the Flemish and the Walloon region to adopt quite different strategies for
economic development. At the risk of over-simplifying, one can say that Flemish economic
policy is more liberal, aims at reducing company taxes and social security costs on employers,
while Walloon politicians continue to support their (steel) industries and disadvantaged
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geographic areas. The federal government maintains a position of neutral observer
(Maarten/Tombeur 2000: 168). The wide-ranging powers of the regional governments in the
sphere of economic policy-making have further promoted the centrifugal tendencies within
the Belgian federal state and ‘strengthened the regional self-perceptions of self-contained,
independent governments hardly in need of domestic intergovernmental cooperation’
(Maarten/Tombeur 2000: 175).
The Belgian federal constitution established a great variety of cooperation (co-decision
and participation) procedures between the governments at the federal and the regional level
(the most prominent among them are the Intergovernmental Concertation Committee/ICC and
the Interministerial Conferences/IMCs) (Maarten/Tombeur 2000: 145-152). These procedures
are essentially an executive affair; the parliaments are largely excluded from the process of
formulating cooperation agreements, even when they have financial implications
(Maarten/Tombeur 2000: 149). However, the procedures are only seldom used. The main
reason for this seems to be that the federal constitution separated the powers so clearly and
attributed the policy tools outside EU control primarily to the regions (Maarten/Tombeur
2000: 167-168).
In the Netherlands, sub-national autonomy in the field of regional economic policymaking is almost non-existing and intergovernmental relations are a clear top-down affair.
Regarding financial centralisation (i.e., the share of the national government with respect to
levied taxes and expenditures) the country ranks among the top nations in Europe
(Andeweg/Irwin 1993: 159; Keman/Woldendorp 2000: 209). The central government is the
source of approximately 85 per cent of the total municipal income. Also with respect to
spatial planning, centralisation is the dominant feature: the central government issues policy
guidelines, which have to be put into practice by the provinces and municipalities (van der
Volk 2002: 2005−206).
In Sweden, coherent policy-making at the provincial level is difficult as
responsibilities are split. While the (appointed) länsstyrelse is responsible for regional
economic policy, spatial planning and agriculture, the powers of the (elected) landsting have
been gradually reduced and focus on health policy today (Weihe-Lindeborg 2000: 277–278).
Since the 1970s, the Swedish central government has tried to foster regional economic
development by an active, top-down regional policy, e.g., by directly subsidising companies
and building universities. The aim was to promote equal living conditions in all parts of the
country; as a matter of fact, Sweden is the EU member state with the most equalised regional
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structure, when we take GDP as indicator (Weihe-Lindeborg 2000: 274). So far the
establishment of specific mechanisms for coordination or conflict resolution between the
central and the provincial governments has not been necessary. The länsstyrelse seem to do a
good mediation job. In the seldom cases of conflict, the Swedish tradition of political
compromise (samförstand) is appealed to (Weihe-Lindeborg 2000: 287).
4.3. Regional Governance Structures in Economic Policy
Since the 1980s, the growing fiscal crisis of the state has changed government
structures and processes in many West European countries. The public sector at all levels is
confronted with demands to increase its performance; the state is challenged to redefine its
role in economy and society. Neo-liberal economists have argued that a highly centralised
command and control system is not adequate to meet the challenges. Instead, they have
promoted a decentralisation of public services, to be managed as close as possible to the
people viewed as ‘consumers’ (OECD 1995: 25-28). At the same time, a new mode of policymaking, labelled ‘governance’, has spread across all government levels. The new mode is no
longer based on state authority and sanctions of government, but on self-organising, more or
less stable networks between institutions and actors of the state, but also beyond its realm (cf.
Rhodes 1996). The governance networks operate more or less independently of the traditional
politico-administrative boundaries and comprise different actors in a regional context. The
result has been ‘a shift in the mode of interaction from power and control to information
exchange, communication and persuasion’ (Benz/Eberlein 1999: 343). The managerial
dimension of governance challenges the democratic-participatory quality of policy-making,
because it reduces the weight of democratically elected bodies and leads to a technocratic
style of policy-making. An optimistic view, by way of contrast, appreciates that under the
governance model popular control is exercised directly by citizens, represented by
associations, with the effect that pluralism, civic culture and discursive processes are
promoted (Kübler/Wälti 2000). In the field of economic policy-making, clusters are viewed as
an expression of the governance model, which ‘emphasizes the merging and synthesis of
traditionally separate policy fields to form more systemic, even holistic, approaches to
regional development’. Policy objectives are worked out ‘in a cooperative long-run dialogue
involving a wide variety of actors and stake-holders’ (Lundequist/Power 2002: 699; generally
see OECD 1999).
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In Austria, the new ‘governance’ mode has clearly taken roots. Stimulated by the
country’s accession to the European Union in 1995, meanwhile 35 regional development
organisations (often called ‘regional managements’) have emerged to coordinate local and
regional actors with national and EU ones in order to develop ‘bottom-up’ projects. The
regional managements comply with the ‘governance’ model insofar as they are comprised of
members of different levels (local, district and provincial representatives) and different
sectors (representatives of government, the ‘social partners’, tourist associations, banks,
private companies etc.). Their form varies from region to region. Finally, they do not consider
the politico-administrative boundaries as definite, but cooperate across the border when it
makes sense in economic terms. Their status and impact is restricted, however; they serve
above all as platforms for negotiations and information exchange and cannot be regarded as a
new governmental level with its own authority and budget. As a consequence, they do play no
role whatsoever in the implementation of EU programs, a task which was assigned to the
established national and provincial authorities (Fallend 2002: 219−220). Besides the setting
up of regional managements, numerous initiatives to create clusters of firms have been taken,
with sometimes a lot of participants (Hesina et al. 2004: 2).
In Belgium, similar developments can be traced. The regional government in the
Flemish region decided in the early 1990s to organise sub-regional platforms (SRPs) to
enhance economic development. The platforms comprised above all local politicians and
private (mainly corporatist) actors. After their programmes had been agreed by the regional
government, their operations were co-financed by the government to 50 per cent. Similar subregional arrangements have been introduced in other policy areas, such as labour market,
nature preservation, agriculture, tourism etc. A patchwork of policy networks has developed,
characterised by a great variety of types of organisation. Some have been set up or steered
top-down, others bottom-up. Some deal with one, others with more policy fields. They
comprise different geographic scales; some of them overlap with existing politicoadministrative boundaries (Voets/de Rynck 2006: 909−910).
As regards the SRPs, the central organisational innovation in the field of economic
policy-making, they turned out to be a failure, however. The participation of a broad set of
actors and the orientation towards strategy and projects were seen positively. On the other
hand, the SRPs did not reach their full potential: First, the Flemish government imposed a
uniform structure on all sub-regions, including, e.g., provisions for the rotation of the
presidency. This was ‘an expression of the traditional reflex of centralism and top-down
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(hierarchical) control, but was also inspired by the explicit demand of the traditional
corporatist actors’ (Voets/de Rynck 2006: 911), i.e., trade unions and employers’ associations.
Second, the SRPs were solely entitled to devise strategies, but not to implement them as well.
The platforms lacked real power, which made the development coalitions rather unstable. In
connection with this, third, the platforms had to rely on small teams of professionals only
(Voets/de Rynck 2006: 911). The ultimate reason why the SRPs failed, however, lay in the
fact that constant institutional battles were going on between politicians and the civil service,
but also between central departments and public agencies. Ministers, cabinets and
departments were struggling to protect or improve their positions vis-à-vis each other and
towards lower tiers of government. As a result, ‘each sectoral policy creates and changes its
own sub-regional arrangements’ (Voets/de Rynck 2006: 912). From the 1990s onwards, the
provinces began to establish themselves as the ‘right’ tier for sub-regional economic
development, democratically legitimated (with a directly elected council and executive).
However, they remained limited to coordination; no substantial decentralisation in terms of
competences and resources took place (Voets/de Rynck 2006: 912–913). Although, there are
notable exceptions (e.g., the Ghent Canal Area Project), in general terms, the Flemish
government ‘despite its network rhetoric … seems to think and act (e.g. regulate) in a rather
hierarchical and centralistic way’ (Voets/de Rynck 2006: 918).
In the Netherlands, a new spatial development approach was to be established with the
Netherlands Fifth National Policy Document on Spatial Planning 2000–2020, after intensive
discussion between levels and sectors of government. Instead of focussing on compact cities
and towns, the new plan attempted to replace hierarchy by networks, thereby taking account
of the ‘complex interactions between cities in a polycentric and highly urbanized landscape’
(Healey 2004: 53). However, the plan failed to achieve parliamentary ratification before the
dramatic overturning of government in 2002. The envisaged strengthening of the National
Spatial Planning Agency (VROM) vis-à-vis the other government departments was resented
by them, anyway (Healey 2004: 54). A decentralisation of spatial planning to regional spatial
policies was implemented, though. Since 2004, the political actors responsible for spatial
planning, economy and transport infrastructure are expected to collaborate on a regional scale
(Priemus 2007: 669–670, 679–680). That decentralisation is still a delicate matter in the
Netherlands was also exemplified by the failed reform of labour market policy, which was
decentralised in 1991, but completely re-centralised in 1996; the regional organisations of
13
workers and employers lost influence, the national ones regained theirs (Keman/Woldendorp
2000: 223–227).
In the Swedish regions, experiments with new governance structures started in 1997.
Like their counterparts in the other investigated countries, they are characterised by a high
diversity, with respect both to their organisation and the type of regions where they have been
applied (ranging from economically successful, large regions to peripheral, neglected ones).
Concretely, five different models have been applied: (1) provinces maintaining the status quo,
(2) provinces with informal cooperation, (3) provinces with institutionalised networks, (4)
provinces organised as regional associations and (5) provinces with regional assemblies
(Weihe-Lindeborg 2000: 280–286). A process of regionalisation at different speeds has
started (Bergmann-Winberg 2003: 257–258). Since 2003, the provinces may institutionalise
municipal cooperation councils for regional development, which are to comprise all
municipalities of a region. They have the task to elaborate a regional development plan and
can decide over a certain proportion of the national means reserved for regional development
(Bergmann-Winberg 2003: 249). However, this does not imply a deviation from the dominant
goals of equal growth and equal living conditions in all parts of the country (BergmannWinberg 2003: 256). The new governance structures go hand in hand with a shift away in
regional economic policy from narrowly firm-based strategies to broader development
approaches, which stress – in line with EU regional policy paradigms – the partnership
principle. However, it would be premature to talk about ‘regional government’ in this context;
competencies have not been divided, local and regional actors only cooperate to a greater
degree (Bergmann-Winberg 2003: 246).
A special focus was laid on cluster building. In 2000, the Swedish Business
Development Agency (NUTEK) set up the Swedish Cluster Focus Group (Klustergruppen),
which comprises 13 projects and brings together national and regional policy practitioners.
The regional participants are mainly civil servants from the provincial administrative boards
(länsstyrelse), which have been assigned a strategic role in the elaboration of regional growth
programmes (Lundequist/Power 2002: 686–687). In addition, the Swedish Agency for
Innovation Systems (Vinnova) launched a programme to support 25 initiatives financially as
well as with competence; most of the selected projects are based on clusters
(Hallencreutz/Lundequist 2003: 537). The practice of cluster-building in Sweden also
demonstrates, that while the state may have retreated in many countries, it still plays an
14
important role in regional economic development, at least as ‘motor’ (with a strong vision)
and as financer of such initiatives ((Hallencreutz/Lundequist 2003: 543).
4.4. EU Impact on Regional Economic Policy
As far as the impact of EU membership on regional policy is concerned, the political
science literature has not come up with clear arguments so far. While Schmidt (1999: 6)
suggests that the EU has a greater impact on unitary states than on federal states, because the
latter have largely ‘maintained the balance … between center and periphery’, Kassim (2005)
argues that especially strong regions, with a constitutional status, have been successful in
using the EU to strengthen their positions (see likewise Jeffery 2000: 12-15). Beyers and
Bursens (2006: 1074−1075) have found out that particularly in matters where regions are
strong high levels of cooperation seem to develop, as the EU (as international organisations in
general) treats its members as ‘unitary’ actors. As a consequence, federal and regional
governments have to coordinate each other to come up with a common ‘national’ position.
With respect to their own country, they conclude that ‘Europeanisation mitigates or softens
the dual nature of Belgian federalism and it has stimulated a gradual development towards
more cooperative forms of formal and informal governance’. What seems undisputed, is that
the EU, mainly through the principle of ‘partnership’ in its structural programmes, has
introduced ideas that can transform politics ‘away from nationalised and hierarchical forms …
towards more negotiated and interdependent practices in a manner that blurs the impact of
tiers of government and involves a wide range of interest groups’ (John 2000: 881). What is
more difficult, however, is to ‘disentangle the changes from European rules on partnership
from shifts in intergovernmental relationships’ (John 2000: 886).
In Austria, in particular the structurally disadvantaged provinces were able to set free
large development potentials and to improve their economic status in a European perspective,
measurable by the indicators of GDP per capita and unemployment rate. In addition to the
material profits, the immaterial changes brought about by the new EU regime seem to be
important, in particular the new thinking in perennial terms, the elaboration of integrated
regional strategies and constant evaluations of success (Fassmann 2005: 32). Evaluations of
the regional managements concluded that they have done quite a good job as regards the
development of (cross-border) regional key projects and the diffusion of external impulses
(e.g., concerning gender equality by appointing female project managers) (Wagner/Kaufmann
2005: 4).
15
In Belgium, the EU has had a double-edged influence on regional policy: In general,
most of the (optional) cooperation agreements which have been concluded between the
federal and the regional governments have been initiated because the EU (or another
international policy arena) has required a co-ordinated action (Maarten/Tombeur 2000: 152).
So it seems that even in the Belgian case, where the founding fathers of the federal
constitution, following the concept of ‘dual federalism’, had tried to construct federal and
regional responsibilities as sharply and precisely divided as possible, Europeanisation
‘regularly forces the regions into cooperation on policies which the Belgian constitution
clearly assigns exclusively to the regions’ (Swenden/Jans 2006: 886; see also Hooghe 2004:
82). On the other hand, EU membership has exacerbated, as already argued above, divergent
economic developments between the regions (and thereby intensified the Flemish-Walloon
conflict).
The Netherlands appear seldom in scientific literature dealing with the EU’s regional
economic policy. Because of the pre-dominance of the four major cities (Amsterdam, The
Hague, Rotterdam, Utrecht), regional policy has often been understood as urban policy. As a
consequence, even the EU’s partnership principle so far has not turned the provinces into
significant players in regional economic policy. However, a process has started, in particular
supported by the objective 1 region of Flevoland, which has strengthened the position of the
regions vis-à-vis the central government (Trofin 2004).
In Sweden, the increased interest in regional government since the 1990s has clearly
been induced by the EU and the prospects to profit from its structural funds (WeiheLindeborg 2000: 276). After initial problems concerning the interpretation of the ‘partnership’
principle (followed by a reprimand by the European Commission), political decisions are now
taken in close cooperation with regional and local actors. Moreover, the Swedish regions are
meanwhile involved in hundreds of bi- and multi-lateral co-operations with other regions
across the borders or the Baltic Sea (Weihe-Lindeborg 2000: 288–290).
5. Conclusions
The paper has investigated the central research question to what extent federalism
matters in the field of regional economic policy making. To answer the question, four
countries (Austria, Belgium, the Netherlands and Sweden) were selected, which vary on the
federal/unitary dimension (the ‘right to decide’, concerning the polity or decision-making
16
structure) as well as on the central/decentral dimension (the ‘right to act, concerning state
organisation and policy implementation).
Very tentatively, the following conclusions may be formulated:
With respect to the degree of sub-national autonomy, the Belgian case seems to
be very different from the rest, because of the far-reaching powers the regional
governments have been awarded in the sphere of economic policy-making. As a
result, the two major regions have pursued quite distinctive economic strategies
(this has been possible although the ‘right to act’, i.e., the financial autonomy, is
also restricted in the Belgian case). In the other federal state, Austria, as well as in
the two unitary countries (Netherlands, Sweden), more uniform policies seem to
prevail. Concerning the character of intergovernmental relations, slight
differences between the federal and the unitary states can be discerned: the former
have at least established formal mechanisms of coordination (although they are
only scarcely used and/or have only consultative powers), while the latter seem to
adhere to a distinct top-down approach, where such mechanisms are not needed in
a more extensive form. Informal cooperation, on the other side, has increased
everywhere, primarily as a consequence of EU membership and the specific EU
guidelines for structural policy.
With respect to the establishment of new ‘governance’ structures, it is difficult to
detect significant differences between the countries under study. All of them have
followed the international trend and put up network-oriented, non-hierarchical
institutions or platforms to foster regional economic development in a broad
perspective, by trying to integrate all relevant policies. What is more, the newly
introduced cooperation forums show a great variety of organisation and of
involved actors, which makes it almost impossible to trace impacts of the specific
polity or state structure. Interestingly, not only in the two unitary examples
(Netherlands, Sweden), but also in the two federal types (Austria, Belgium), the
regional (provincial) governments have defended their positions and refused to
transfer any ‘rights to decide’ to the new organisations.
The special investigation of possible EU impacts seems above all to suggest that a
strong tendency towards homogenisation emanates from the EU, which erodes
specific national political structures. In particular the ‘partnership’ principle,
17
which guides EU regional policy, has led to increased participation of actors on
different government levels and from different sectors of economy and society. In
order to be able to get the money that lies in Brussels for regional economic
development, national and regional actors have been willing to comply with the
EU’s wishes concerning more bottom-up styles of policy-making (without
changing the national distribution of the ‘right to decide’, though).
Finally, the case studies have confirmed the expectation of Braun (2000: 5) that we
have to cope with institutional complexity in all types of political systems, which makes it
difficult to find clear evidence for causal relationships between polity or state structures and
their effects on policies. Other elements of the polity may be more important and act as
intervening variables (especially corporatism, which at least in the past has been important in
Austria or the Netherlands, should probably be taken into account in the field of economic
policy-making). What is more, the results gained from the study of regional economic policy
can not be generalised. Beyers and Bursens (2006: 1062) have expressed their dissatisfaction
with the Europeanisation literature and explained the often contradictory findings with the
fact that more often than not authors do not take variation between different policy sectors
into account. Put more generally: policy matters, and studies exploring the effects of federal
vs. unitary polity formats or centralised vs. decentralised state organisations will have to take
this into consideration. So, a final, though not very inspired, conclusion would be: more
research is needed.
18
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