POLAND * 1. DEVELOPMENT DISPARITIES AND ISSUES After a record of strong growth during most of the 1990s, Poland experienced a sharp economic slowdown in 2001-2002. Since the end of 2002, the recovery has gradually gained strength, and real GDP growth accelerated to 3.7 percent in 2003. In 2004, growth was expected to reach its potential level, estimated at around 4.5 percent. Despite this, Poland faces serious structural problems that may impair its capacity to stay on a path of strong growth: rising unemployment rate (currently at about 20 percent, the highest among the EU10 countries); and a deteriorating fiscal position as a result of both cyclical factors, the relaxation of fiscal policy and high public debt ratio. Recent public finance reform envisages substantial spending cuts and fiscal adjustment but the extent and impact of these reforms remains uncertain. Figure 1: Poland Source: http://europa.eu.int/abc/maps/members/poland_en.htm Post-communist transformation has seen the industrial and agricultural sectors shrink in relation to GDP; at the same time, the service sector has grown rapidly. These shifts have an important spatial dimension. 1 Regions that relied on heavy industry, or which had concentrations of uncompetitive light industry, were expected to suffer. The textiles 1 G. Gorzelak Szanse polskich regionów w zintegrowanej Europie, Studia Regionalne i Lokalne, z. 2-3, 2002 Benchmarking Regional Policy in Europe 1 European Policies Research Centre
industry in Lodz was one early casualty, and it was widely expected that Upper Silesia, with its high concentration of heavy industry based on coal and steel, would become an economic disaster zone. However, Silesia has so far gone through the transformation process without major social upheaval, partly because of the relatively slow pace of restructuring in heavy industry, and partly because of the extremely rapid growth of the private sector. Conversely, the north-east and other areas that were dominated by state farms have suffered from the demise of agricultural subsidies, and these areas continue to have the highest levels of unemployment. The most successful business locations tend to be the large cities in the west of the country, although Warsaw, for obvious reasons, has been a boom city during most of the post-communist era. These areas tend to be the recipients of substantial levels of Foreign Direct Investments, although foreign ownership still plays a limited role in the overall economy. Against this background, challenges facing Poland include: addressing the deep-seated structural problems in the labour market; ensuring a reduction of the general government deficit on a sustainable basis and long-term sustainability of public finances; improving conditions for increasing productivity, speeding up the restructuring of the economy and accelerating privatisation in industry; and improving the business environment. Table 1: Socio-economics indicators in Poland (NUTS II) Regions Poland Population (000) 2001 GDP Per Capita, PPS 2001 Employment by sector (% of total) 2002 Unemployment Rate (%) EU15=100 EU25=100 Agric. Ind. Services 2001 2003 Dolnoslaskie 2971 41.6 45.6 9.5 32.4 58.2 23.7 26.0 Kujawsko-Pomorskie 2100 37.0 40.6 19.1 29.4 51.4 20.0 21.8 Lubelskie 2230 28.6 31.4 39.4 18.1 42.5 14.7 16.0 Lubuskie 1024 36.3 39.9 10.2 31.3 58.5 24.3 24.5 Lódzkie 2638 36.9 40.5 19.8 30.6 49.7 19.8 19.7 Malopolskie 3238 35.3 38.8 23.7 27.0 49.3 13.0 18.0 Mazowieckie 5075 63.7 69.9 20.4 21.6 58.0 14.6 16.3 Opolskie 1083 33.2 36.4 18.5 32.9 48.7 18.1 18.3 Podkarpackie 2130 29.2 32.0 30.8 28.2 41.1 18.0 17.7 Podlaskie 1221 31.0 34.0 36.5 18.6 45.0 16.0 17.8 Pomorskie 2202 40.6 44.6 9.5 31.1 59.4 18.5 20.5 Slaskie 4840 44.6 49.0 4.1 39.5 56.4 19.7 20.2 Swietokrzyskie 1321 31.2 34.3 31.0 24.9 44.2 18.0 19.1 Warminsko-Mazurskie 1469 29.6 32.5 17.9 28.1 54.0 23.5 23.9 Wielkopolskie 3363 43.4 47.6 20.3 32.7 47.0 17.7 17.1 Zachodniopomorskie 1735 40.5 44.5 8.3 29.6 62.2 22.4 25.5 Total 38641 40.9 44.9 19.3 28.6 52.0 18.2 19.6 Source: Eurostat (unemployment rates) and Third Report on Economic and Social Cohesion (European Commission, Brussels, 2004). Benchmarking Regional Policy in Europe 2 European Policies Research Centre
2. NATIONAL REGIONAL POLICY OBJECTIVES In the initial years of Poland s transformation, the State s economic policy was dominated by macroeconomic priorities designed to establish a new order after the centralized command system. Lack of public funds for regional development and the perception that regional differences were relatively small, meant that state interventionism was reduced just to cases jeopardising social peace. Nevertheless, the persistence of these disparities, realisation of institutional weakness in the regional policy field and preparations for administration of EU regional aid in the context of accession negotiations, pushed regional policy reform back up the Polish political agenda in the late 1990s. Beginning in 1998, legislation (including the Law on regional self-government (Dz. U. nr 91, poz.576) and the Law on the principles of supporting regional development (Dz. U. nr 48, poz. 550)) reformed the Polish regional policy system. The reforms introduced new programming arrangements, new institutional structures and capacities, and new emphasis on the EU principles of decentralisation and partnership. According to the proposed National Strategy for Regional Development 2007-2013 (NSRD), the fundamental purpose of Polish regional policy is to improve the economic competitiveness of all regions, initiating regional development through the better utilisation of endogenous regional potentials, the preservation of diversity and rational management of resources, aiming to secure greater cohesion for Poland. 2 It is worth noting that, in general terms, this modifies the policy direction set out in the previous NSRD and in the last National Development Plan, giving more emphasis to improving competitiveness in all regions rather than targeting marginalised or struggling regions. 3 3. INSTITUTIONAL ARRANGEMENTS 3.1 Territorial Administrative Structures The basic levels involved in regional development are summarised in Table 2. Table 2: Territorial Administrative Structures in Poland Unit Type Designation Number of Units Regions (Voivodships) NUTS II 16 Subregions (only statistical) NUTS III 45 Districts (districts and cities with district status) NUTS IV 315+65 Municipalities NUTS V 2478 As of January 1999, Poland adopted a three-tier administrative system. There are now 16 regions with NUTS II status and a dual self-government/central government character. 2 Ministerstwo Gospodarki i Pracy Departament Polityki Regionalnej (2004) Zalozenia Narodowej Strategii Rozwoju Regionalnego na lata 2007-2013. 3 Narodowa Strategia Rozwoju Regionalnego 2001-2006, Ministerstwo Rozwoju Regionalnego i Budownictwa, Warszawa 2000, Narodowy Plan Rozwoju 2004-2006, Ministerstwo Gospodarki, Pracy i Polityki Spolecznej, Warszawa 2003. Benchmarking Regional Policy in Europe 3 European Policies Research Centre
The Prime Minister still appoints the voivod, who safeguards the interests of the state at the regional level. The voivod is the superior to all employees in the general state administration, controlling the legality of decisions taken by the territorial governments on all three tiers. The voivod has the final say in the implementation of provincial policies and, as representative of the state treasury, controls finances. However, regional councils (sejmiki), now elected in direct proportional elections, represent the regional government. They elect the chief executive officer (marshal) who represents the region. Though subordinate to the voivod, these new regional units of self-government have important new powers in the field of programming regional economic development. The district level has been reintroduced between region and commune levels in order to assume responsibility for areas that cannot be dealt with by the commune. Districts are responsible for issues concerning more than one commune - high schools, local roads, clinics and hospitals, law and order etc. Communes, established in 1990, continue to be the primary and fundamental vehicle for local communities to perform public tasks on their own behalf. Directly-elected municipal councils have responsibility for the municipal economy, water supply and sewage systems, roads and public transport and are expected to cooperate with each other and the regions in developing economic development strategies. 3.2 Institutional Structure for Regional Policy National Level The Ministry of the Economy is the dominant actor in the regional policy field. The Ministry, through its Department for Regional Policy, has overall responsibility for regional planning and the co-ordination of regional development initiatives between national and subnational levels (see Table 3). The Polish Agency for Enterprise Development, answerable to the Ministry, also has a regional development section and is responsible for managing enterprise and human resources development projects. In 2002, the Ministry of the Economy was designated as the Managing Authority for future Structural Funds from the EU. The Ministry of Finance, responsible for overall financial monitoring and control of regional programmes, has been designated as the future Paying Authority for Structural Funds. Recent years have witnessed a shift towards a more coherent and coordinated central government approach to the development and delivery of regional policy. However, traditional lack of communication between central institutions and fluidity of the institutional environment inevitable in a period of systemic transformation - remain obstacles to the fully effective central administration of regional policy. Several ministries still continue to operate their own regional policies, with their own budgets, programmes and regional offices or agencies. Benchmarking Regional Policy in Europe 4 European Policies Research Centre
Table 3: Sectoral Ministries and Regional Policy Ministry The Ministry of Economy and Labour The Ministry of Labour and Social Security The Ministry of Agriculture The Ministry of Finance Ministry of Transport Regional Policy Competence Cooperation with organizations associating the units of territorial selfgovernment within social-economic issues of the development of the country. Cooperation with the units of territorial self-government within the regional development. Drawing up projects of national strategy of regional development, negotiating, monitoring and evaluating regional contracts. Coordination within the programming and use of Structural Funds and Cohesion Fund. Drawing up a national development plan which is the basis for the conclusion of a contract between the Government of the Republic of Poland and the European Commission, defining Poland s use of Structural Funds. Managing European Union and State budgetary funds earmarked for enterprise and human resources development - in particular for small and medium-sized enterprises - through the operation of the State Agency for Enterprise Development (PARP). Employment policy and training; maintains regional labour offices. Rural renewal, through the operation of regional offices of the Agency for Restructuring and Modernisation of Agriculture, and the Agency for Agricultural Market. Various financial instruments for regional development; distribution of funds to sub-national governments; and Paying Authority for Structural Funds. Provision of national and local infrastructure, especially motorway construction. Regional Level Though still in their infancy, regional units of self-government have emerged to play a more active role in steering economic development on their own territory as part of a more integrated approach to regional policy-making. 4 The Act on the Principles of Supporting Regional Development, which came into force in 2000, introduced Regional Contracts as a new instrument for supporting regional development. On the basis of the provisions made in the National Strategy for Regional Development, the boards of regional self-governments submit grant applications. Negotiations on the application take place between the marshal of the regional self-government council and Department for Regional Development in the Ministry of Economy. The contract then has to be approved by the Council of Ministers and the regional self-government council. Assistance mainly comes in the form of grants from the Ministry of Finance, channelled to beneficiaries through the voivods. The resources (from the state budget, EU funds and co-financing) to be allocated to self-governments for the realisation of regional strategies and programmes of development are calculated within the framework of the contracts. 4 G. Gorzelak and B. Jalowiecki (eds), Analiza procesu wydrazania i skutk?w reformy terytorialnej organizacji kraju, Europejski Instytut Rozwoju Regionalnego i Lokalnego, Instytut Spraw Publicznych Warsaw (2001). Benchmarking Regional Policy in Europe 5 European Policies Research Centre
4. NATIONAL REGIONAL POLICY INSTRUMENTS There are five key priorities in the current National Strategy for Regional Development (NSRD). These are outlined below, together with their share of the total budget for the period 2003-2006: construction and modernisation of infrastructure to strengthen the competitiveness of regions (40%); restructuring of the economic bases of the regions and creating conditions for their diversification (15%); development of human resources and strengthening the institutions of regional policy (15%); support for areas requiring activation and threatened by marginalisation (20%); and development of international co-operation between regions (10%). Another important aspect of this new programming role for regional self-government is the preparation of Regional Development Strategies (Strategia Rozwoju Województwa). These are designed as inputs from the regional level which feed into the generation of the NSRD. The majority of strategies are prepared in the offices of regional self-government marshals through consultation with regional policy experts and a range of representatives from public and private organisations. Strategies generally contain diagnoses of the existing state of the region, usually including a SWOT analysis, followed by a hierarchy of aims, objectives and monitoring strategies. The strategies provide the framework for Regional Operational Programmes produced by the marshal s office, which feed into the Integrated Regional Operation Programme (IROP) in the National Development Plan (NPD). Regional Operational Programmes include analyses of the socio-economic base of the region, a section on how the Programme relates to the aims of the NDP, a set of priorities and activities to be undertaken and a description of the process of consultation, monitoring and financial arrangements. The NSRD and IROP anticipate some differentiation in levels of regional support according to varying socioeconomic conditions. In the NSRD, preference is shown to regions in which GDP per inhabitant is less than 80% of the national average, the rate of unemployment exceeds 150% of the national average, or employment in heavy industry is 125% greater than the national average. 5 The IROP states that 10% of the funds allocated for its implementation are to be divided proportionally to the number of inhabitants in the regions in which the mean level of GDP per capita from 1997-99 was less than 80% of the national average. Other strategies have targeted specific regions: 5 National Strategy for Regional Development 2001-2006 [NSRD] Adopted by the Polish government 28/12/00 p48. Benchmarking Regional Policy in Europe 6 European Policies Research Centre
regions with structural problems for instance, the social and economic problems of the mining, iron and steel industries in the regions of Upper Silesia and Malopolska have been targeted through specific restructuring programmes; economically weak regions have been supported through the creation of Special Economic Zones that offer tax breaks to investors. The impact of these initiatives has been questioned and the European Union has sought to limit their expansion as they threaten competition rules; 6 regions with environmental problems or affected by natural disasters (e.g. the flooding of the Odra). Figure 2: Regional State Aid Map for the period 1.5.2004-31.12.2006 Source: DG Competition website http://europa.eu.int/comm/competition/state_aid/regional/2004/ 5. EU PROGRAMMES 5.1 Objectives Poland will benefit from Community co-financing of 8.276 billion during the period 2004-2006. During the same period, the Cohesion Fund will make an additional 4.179 billion available to co-finance infrastructures in the environment and transport sectors. 7 The five basic objectives of the 2004-2006 NDP are: 6 Specjalne strefy ekonomiczne zasady i efekty funkcjonowania, MGPiPS, Warszawa 2003. 7 RAPID Press Release, Commission agrees on the strategy to implement structural funds in Poland for 2004-2006, IP/03/1779 of 18 December 2003, Brussels. Benchmarking Regional Policy in Europe 7 European Policies Research Centre
achievement and maintenance of high GDP long-term growth; increase in employment and education level; incorporation of Poland into European transport and information infrastructure networks; intensification of the process to increase the share of high-value-added sectors in the economy structure; development of the technology of information society; and participation of all regions and social groups in Poland in the development and modernization processes. 5.2 Implementation The implementation framework is set out in Table 4. Table 4: Structural Funds Programme 2004-2006 Programmes Community Support Framework (Obj.1) Community contribution 8,275.81 million OP Improvement of the competitiveness of the economy 1,251.10 million; OP Human resources development 1,470.03 million OP Restructuring and modernisation of the food sector and rural development 1,192.69 million OP Transport and maritime economy 1,163.38 million OP Fisheries and fish processing 201.83 million Integrated Regional Operational Programme 2,968.47 million Technical assistance 28.30 million Source: Community Support Framework, pp.128-129. The Ministry of Economy, Labour and Social Policy (unit created on the basis of the current Department of Regional Development Programming) performs the duties of Managing Authority and coordinates the implementation of the Community Support Framework (CSF). The Paying Authority for all Structural Funds and Cohesion Fund is the Foreign Assistance Fund Department in the Ministry of Finance. The Managing Authorities for individual operational programmes are set out in Table 5. Benchmarking Regional Policy in Europe 8 European Policies Research Centre
Table 5: OP Managing Authorities Operational Programme Improvement of competitiveness of the economy Human resources development Restructuring and modernization of the food sector and rural development Fisheries and fish processing Managing Authority Ministry of Economy, Labour and Social Policy Ministry of Economy, Labour and Social Policy Ministry of Agriculture and Rural Development Ministry of Agriculture and Rural Development Transport and maritime economy Ministry of Infrastructure Integrated Regional Operational Programme Technical assistance Source: Narodowy Plan Rozwoju 2004-2006, p.147. Ministry of Economy, Labour and Social Policy (in co-operation with self-governments of 16 regions) Ministry of Economy, Labour and Social Policy Arrangements for programme implementation and intermediary bodies are detailed in the programmes and the relevant programme complements. 5.3 Geographic Focus Due to the low competitiveness of the Polish economy, expressed by low GDP per capita in relation to the average level of the EU, all regions in Poland qualify as Objective 1 areas for the 2004-2006 period. The country will also be covered by the intervention from the Cohesion Fund. The final IROP framework focuses on the following priorities: development and modernisation of the infrastructure used to enhance the competitiveness of regions; strengthening of the economic and human resources bases; and local development. General responsibility for IROP management lies with the Ministry of Economy, Labour and Social Policy, which delegates part of its functions within this remit to the regional level. Decisions on the concrete realisation of projects are made at the regional level. Assuming the increasing effective use of funds, management of regional programmes co-financed from Structural Funds will be transferred to the regional level after 2006. 8 6. REFERENCES RAPID Press Release, Commission agrees on the strategy to implement structural funds in Poland for 2004-2006, IP/03/1779 of 18 December 2003, Brussels. 8 G.T. Grosse, Narodowy Plan Rozwoju 2007-2013 - czy mozliwa jest regionalizacja zarzadzania? - Instytut Spraw Publicznych Analizy i Opinie nr 28 (2004). Benchmarking Regional Policy in Europe 9 European Policies Research Centre
Departament Polityki Regionalnej (MGiP) Raport o polityce regionalnej (Warszawa, 2004). G. Gorzelak, Szanse polskich regionów w zintegrowanej Europie, Studia Regionalne i Lokalne, z. 2-3 (2002). G. Gorzelak and B. Jalowiecki (eds), Analiza procesu wydrazania i skutk? w reformy terytorialnej organizacji kraju, Europejski Instytut Rozwoju Regionalnego i Lokalnego, Instytut Spraw Publicznych Warsaw (2001). G.T. Grosse, Narodowy Plan Rozwoju 2007-2013 - czy mozliwa jest regionalizacja zarzadzania? - Instytut Spraw Publicznych Analizy i Opinie nr 28 (2004). Ministerstwo Gospodarki i Pracy Departament Polityki Regionalnej, Zalozenia Narodowej Strategii Rozwoju Regionalnego na lata 2007-2013(2004). Narodowy Plan Rozwoju 2004-2006, Ministerstwo Gospodarki, Pracy i Polityki Spolecznej, Warszawa 2003. Narodowa Strategia Rozwoju Regionalnego 2001-2006, Ministerstwo Rozwoju Regionalnego i Budownictwa, Warszawa 2000. Specjalne strefy ekonomiczne zasady i efekty funkcjonowania, MGPiPS, Warszawa 2003. * This paper has been prepared by Dr Martin Ferry with Chiara Polverari, based on EPRC desk research and fieldwork. Benchmarking Regional Policy in Europe 10 European Policies Research Centre