SPAIN * 1. REGIONAL DISPARITIES AND PROBLEMS. Figure 1: Spain. Spain
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1 SPAIN * 1. REGIONAL DISPARITIES AND PROBLEMS Conventional policymaker analysis divides the problem regions into four groups: first, regions affected by industrial reconversion (e.g. Asturias, Cantabria and parts of Galicia); second, regions with low population density and low economic growth (e.g. Galicia; Andalucia away from the coastal area; and parts of Castilla-Leon); third, regions experiencing high levels of out-migration (Extremadura; Castilla-La Mancha; and parts of Castilla-Leon); and finally, regions in a special geographical situation (the Canaries and Ceuta and Melilla). These concerns are reflected in the aid area map. Figure 1: Spain Source: 1
2 Regions Table 1: Socio-economics indicators in Spain (NUTS II) Spain Population (000) 2001 GDP Per Capita, PPS 2001 Employment by sector (% of total) 2002 Unemployment Rate (%) EU15=100 EU25=100 Agric. Ind. Services Noroeste Galicia Princ. de Asturia Cantabria Noreste Pais Vasco Comunidad Foral de Navarra La Rioja Aragón Comunidad de Madrid Centro Castilla y León Castilla-la Mancha Extremadura Este Cataluña Comunidad Valenciana Illes Balears Sur Andalucía Región de Murcia Ciudad Autónoma de Ceuta Ciudad Autónoma de Melilla Canarias Total Source: Eurostat (unemployment rates) and Third Report on Economic and Social Cohesion (European Commission, Brussels, 2004). 2. NATIONAL REGIONAL POLICY OBJECTIVES There is a constitutional commitment to balanced regional development in Spain. The Spanish constitution specifies that the public authorities will promote the conditions favourable to a more equitable distribution of income and states that to guarantee the realisation of the principle of solidarity the State will oversee the establishment of a fair and adequate level of economic equilibrium between the different parts of the country. 2
3 3. INSTITUTIONAL ARRANGEMENTS Regional policy at the national level is the responsibility of the Directorate General for EU Funds in the Ministry of Economy and Finance. The Directorate is divided into four sub directorates, one with responsibility for regional incentive policy and the other three for the implementation of the Structural Funds (namely, the ERDF, the Cohesion Fund, and evaluation and programming). As already noted, the two policy areas are closely interrelated, with the Structural Funds co-funding the Regional Investment Grant in Objective 1 areas. In the Spanish constitutional context, the Autonomous Communities clearly have an important policy role, not least in terms of economic development. A key feature of the administration of regional incentive policy is the close collaboration between the national authorities and the Autonomous Communities. This reflects the need to find a balance between involving the Autonomous Communities and preventing competitive outbidding between regions for mobile investment. Table 2: Territorial Units in Spain Unit Type Designation Number of Units Groups NUTS I 7 Comundidades Autonomas NUTS II 19 Provincias NUTS III NATIONAL REGIONAL POLICY INSTRUMENTS 4.1 Instruments Reflecting the severity of the Spanish regional problem in the European context, two of the four principal elements of Spanish regional policy are measures of European cohesion policy (the Objective 1 CSF and the Cohesion Fund). Moreover, the Regional Investment Grant, the main regional incentive, is co-financed from the ERDF in Objective 1 areas. The two main national policy instruments are: regional aid policy and the inter-territorial compensation fund (Fondo de compensación interterritorial, FCI). The aim of the FCI is to finance investments by the Autonomous Communities (the Spanish regions) and to correct interregional economic disparities resulting from differing levels of income. Regional aid policy comprises a single instrument, the Regional Investment Grant. The scheme takes the form of a capital grant available to manufacturing and some service sector projects that meet minimum investment targets. Maximum rates of award vary between 10 percent and 50 percent of eligible expenditure, depending on location. 4.2 Spatial Coverage of National Regional Policy The Regional Investment Grant (RIG) is available in designated aid areas. These fall within areas approved by the European Commission which cover 79.2 percent of the national population 58.3 percent under Article 87(3)(a) and 20.9 percent under Article 87(3)(c). 3
4 However, the RIG is not available in all the areas the Commission has approved (as set out in the map). This reflects the view that more prosperous Autonomous Communities have the capacity to fund their own aid schemes and that national resources should focus on priority areas. The RIG areas cover 60.7 percent of the Spanish population. On the other hand, the scope of the map is important since it determines where, within their jurisdictions, the Autonomous Communities can offer financial aid and at what level. Figure 2: Spanish regional aid map Source: DG Competition website 5. EU PROGRAMMES For the period, more than EUR 62.4 billion have been allocated to Spain from European Funds. Spain benefits from Structural Funds through 42 development programmes: twelve regional and eleven multi-regional programmes under the Objective 1 Community Support Framework; in Objective 2 regions there are seven regional programmes and an Objective 3 Community Support Framework comprising a further 7 regional programmes and 5 multiregional programmes. Additional aid measures are received from the Cohesion Fund. General Objective 1 priorities for Spain are: competitiveness and development of the productive sector; knowledge society (R&D, innovation, information society); environment, natural environment and water resources; human resources, employment and equal opportunities; local and urban development; transport networks and energy; agriculture and rural development; fisheries and aquaculture structures. Objective 2 regional programmes cover areas of varying size in seven regions: Catalonia, Madrid, Basque Country, Aragon, Balearic Islands, Navarre and La Rioja. General priorities of these programmes are: the competitiveness of the productive sector; knowledge society; environment, natural environment and water resources; transport networks and energy alternative sources; local and urban development. Figure 3 shows the geographical distribution of Structural Funds for the period The allocation of funds among the various programmes is presented in Table 3. 4
5 Figure 3: Structural Funds for Spain, Objective 1 Objective 2 Objective 1 Objective 2 Phasing-out (till 31/12/2006) Objective 2 (partly) Phasing-out (till 31/12/2005) Phasing-out (partly) (till 31/12/2005) Source: Table 3: Structural Funds to Spain (millions of EUR) Obj. 1 Obj. 2 Obj. 3 INTERREG URBAN EQUAL LEADER+ Fisheries Total 42,982 2,986 2, , Source: DG Regio, The European Structural Funds ( ): Spain. The Ministry of Economy and Finance, Directorate General for EU Funds, is the Objective 1 CSF Managing Authority. The Ministry of Labour and Social Affairs is the Managing Authority for Objective 3. The high level of decentralisation in Spain means that there is also strong regional involvement in and implementation of Structural Funds programmes. * This paper has been prepared by the (EPRC) for the Second International Conference being held in Latvia on April Inclusive of 1,940 million allocated in March 2004 by the European Commission in the framework of the performance reserve for most successful programmes. 5
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