Regional development in France
The conventional approach to regional development was assumed by central governments using the levers of infrastructure, subsidies to firms, and the setting of public sector operations. Regional development policies has been superseded by a fashionable approach characterized by decentralized intervention based on integrated regional development plans and strategies, delivered and designed by partnerships of local and regional actors. Regional policy has been in existence for over fifty places especially in Western Europe. Regional policy existed in countries that were affected by the Great Depression of 1930. It became famous part of social policy intervention and widening economic undertaken by all Western European countries from 1950 to 1970. The regional policy began to change in the mid 1970s due to slow economic development and new political policies. The European Union created its regional policy with more and more resources devoted to social and economic cohesion (Funck & Pizzati, 2003).
The present economic crisis led the French government to develop measures to accelerate implementation of the operational programs with respect to digital infrastructure, sustainable development, and energy efficiency for housing. Consecutively, some regional authorities included additional measured especially in environment and innovation. The rate of implementation of operational programs is somewhat low among all regions. The differences between regions to an extent depend on the cooperation level between regional and central government. The implementation rate is lowest in sustainable development and highest in the knowledge economy. Annual implementation reports maintain that the crisis between central and regional governments had a negative impact on implementation mainly because enterprises are slow in launching projects. Analysis of regional development is difficult due to lack of comparability of the indicators and homogeneity. In addition, it poses difficult to identify achievements in comparison to the objectives (Lopriore, 2001).
It is in the policy part ‘knowledge economy’ that the key results and outputs originate: the
SRI; R&D equipment and infrastructure, and collaborative R&D projects in relation
pôles de compétitivité and poles of excellence and to regional filières.The SRI program implemented in 2009 has possibly played a affirmative function, jointly with the crisis in support of the execution of improvement support policies. There are fewer consequences for more customary policies such as support to knowledge transfer organizations and to communal actions of enterprises. United regions have focused their labors on intensifying their human resources and research potential that corresponds to a recognized need.
The second policy is accessibility and transport and is evaluated in terms of results and outputs with investment in urban transport and railways in addition to broadband infrastructure. Results and outputs in the ‘sustainable development and environment’ policy part are fairly incomplete because of prevalence of management capacity and small projects being less in comparison to creativity. The key achievements are in renewable energies and energy efficiency. In ‘territorial development’, predicaments in some urban parts are being tackled via calls for proposals, which have resulted to creation of the first concrete projects, in addition to sport, tourism, and cultural activities.
Territorial Cooperation review on operating programs reveals that there is a general equilibrium between results and outputs in the ‘knowledge economy’ and ‘sustainable development’ policy areas. SRIs have indisputably armored the obligation of officials and politicians at regional point to improvement support strategies, taking part to improve the innovation supremacy scheme, and had a patent effect in escalating wakefulness of the significance of an extra demand-oriented plan and putting more focus to non-technological innovation, service innovation as well as financial engineering. Successively, joint R&D projects have played part in nurturing customs and practice of partnership in both academic community and industry (Funck & Pizzati, 2003).
The traditions and practice of appraisal has made noteworthy development in France in the last few years at state as well as regional rank, moderately under the demands of innovative institutional, the Commission and policy system. However, the approaches remain comparatively customary, as shown in the state appraisal of pôles de compétitivité. In comparison to the 2005 concluding assessments of SPDs and ERDF, the latest appraisals concentrate on scrutinizing the effects, pointing to key issues and essential re-orientations further than the plain evaluation of the execution of the programs and strategies assessed.
The most remarkable assessments are the national evaluation of the pôles de compétitivité (2008) and various regional assessments which focus to specific problems that are serious in France such as the allotment of capabilities and the synchronization between the national and regional systems. They primarily focus on the ‘knowledge economy’ policy part and they in broad highlight once more that it is obligatory to take enhanced account of the exact features of areas or sub-regions, to perk up the authority system, to focus more on the account of non-technological improvement and service innovation , and to incorporate SMEs more efficiently. Regional development also recommends a shift from procedures behind knowledge transfer organizations to dealings supporting joint R&D projects. This is established by the evaluation of the regional improvement systems set up in the SRIs (“Regional Policy”, 2010).
The five regions that exist in France include Ile de France which is the capital region, Western regions, Rhone-Alpes, Changing or the outermost regions and the Southern regions. Ile de France takes a unique position because it accommodates headquarters of huge companies and it is highly concentrated with government offices. Capital region is also highly populated with active and young people with a life-long education at an outstanding level. Its performance is high in regard to all indicators such as competent work-force, private and public R&D expenditure as well as higher education. Ile de France contributes an approximate of 28% of national value-added. Research findings reveal that over the last decade, the capital region is slowly being undertaken by Western and Southern regions in terms of growth of GDP per capita, national value-added and research potential.
Rhone-Alpes is the second largest region in regard to GDP and population. Its national value added has slightly increased from 9.4% in 1990 to 9.6% in year 2002. The unemployment rate in Rhone-Alpes region is lower than the national average rate. It has a multifaceted structure with service center such as Lyon, banking, industrial, manufacturing spots, and a world rank R&D monopoly in Grenoble. Southern regions have a higher than average ratio of R&D expenditure to GDP. The Southern regions draw immigrants from Northern and capital regions. It has a young population with a high unemployment rate which drastically fell until 2008. There are strong intra-regional differences because of concentration of research and services in the capital cities and the contrasting significance of mountain and rural areas. Southern regions gain from pensions of retiring generations and the unemployed who move to the “sun belt”.
Western regions continue to experience high growth in terms of competent people and their cities are amongst the most gorgeous in France. The unemployment rate in Western regions is also below that of the country in general. In addition some regions do not have special features in terms of R&D, higher education and competent personnel. Low unemployment level in some regions may be caused by emigration of active generation while others have old industrial base; where despite increased labor, they still experience slow growth and high unemployment rate. French outermost regions undergo various challenges such as cost of access, remoteness, high dependence on the metropole, lack of critical mass and environment challenges. The business sector hugely depends on the government and tourism sector. The ration of minimum income support in French outermost regions is six times compared to the mainland France. There is extremely high unemployment rate as compared to the national average. France outermost regions comprises of micro-enterprises and service-related SMEs, which are mostly family owned and neither innovation nor export oriented.
Information from statistical data on GDP per capita and population reveals some of the key transforms that have occurred in various regional groups. The Western and Southern regions had the highest population growth from 1999 to 2007. The increase in population in these regions can be associated to migration from capital and other French regions.
Region Population growth (%)
Pays de la Loire +8.1
The capital region had population growth of 5.9%. The areas with lower population growth were either rural areas such as Bourgogne, Auvergne, Champagne-Ardenne, and Picardie or old industrial regions such as Lorraine, Nord-Pas-de-Calais, and Haute-Normandie.
Region Population growth (%)
The situation in the French outermost regions various immensely with growth of 12.4% in La Reunion and Quasi-stability in Guadeloupe, however there was high growth of 35.5% in Guyane due to high birth rate and immigration.
Demographic changes in most French regions raise concerns about the future prospects of France. There is low population growth in most French regions because of low fertility. These regions have an ongoing trend of population ageing and this is expected to have profound implications across French both regionally or nationally. Low fertility rates will lead to low population of working generation to support the aged people, high percentage of aged people, and reduction in number of students in education. Elderly people will require additional healthcare, infrastructure and adapted housing. The structural demographic changes will have an impact on French capacity to balance their funds, provide enough health services and pensions, and raising tax revenue (Laurent et al, 2009).
Population ageing and decline are the most demanding trends for future prospects of a country. Immigration is also a very significant factor of population growth in some French regions especially Southern region which attracts immigrants from Capital and Northern regions. Great variations in demographic patterns between French regions rely on various socio-economic aspects. Regions in the rural and peripheral places and the mountain and customary industrial areas are prevalent to de-population. The demographic rend in French regions have significant policy and socio-economic implications because they influence growth and productivity, shortage of workers, urban-rural imbalances in populations, and provision of healthcare and social services.
Demographic change is a major aspect that place concerns in levels of intervention and policy areas, which include employment plans, rural and urban planning, integration and immigration policies, social infrastructures and communication, family and gender equality policies and social protection systems. Research evidence on population trend in economic crisis reveals that recession resulted to decrease in fertility rates and birth rates (Funck & Pizzati, 2003).
Industrial structure in French regions reveals major disparities in regard to the significance of diverse operations within non-financial business economies. Regions such as capital region are highly populated with active and young generation. The population in urban and capital regions has an outstanding level of education level. Industrial structure depends on the infrastructure, availability of resources, skilled workers as well as topographic and climatic regions. Urbanization rate in France is high since people migrate from rural to urban areas seeking for employment. The urban areas also attract people from other regions; for example, western region is among the beautiful cities in France.
There are high unemployment rates in most regions which might be caused by lack of skilled personnel, continuing trend of ageing population. There is great improvement in some regions which emphasize on ICT and related services since advanced technology is also a cause of unemployment. High population is another cause of unemployment. The global crisis during the great depression also caused unemployment. GDP per capita is high in capital and urban regions which attract tourism and with skilled workers. GDP is low in rural and customary industrial regions. In other regions low GDP is caused by high number of aged people who are unproductive. Capital regions have active, educated and young generation who are productive, thus they have high GDP per capita.
The growth of the GDP per capita since 1990 to 2008 gives significant views to complement the demographic data. The highest GDP growth is experienced in Western and Southern regions.
Region Growth in GDP per capita (%)
Pays de la Loire 30.1
The GDP growth in Rhone-Alpes and Ile de France was 20.5% and 22.9% respectively. These two regions had a slightly lower GDP growth as compared to the national average of 22.9%. The GDP growth in Alsace was only 11.8%. Alsace is famous as the fourth most thriving French region. The other regions with low GDP per capita growth include Lorraine (17.3 % and Franche-Comte (15.2%), which are regions with customary industries. Other areas with low GDP per capita growth were mostly rural areas such as Centre (15.4%), and Picardie (13.2%). The French outermost regions had a significant contribution with a GDP per capita growth of 29.9% since 1990 up to 2008. The overseas area GDP per capita growth is lower as compared to the national average (22.8%). In addition, high unemployment still persists in these outermost regions such as Guadeloupe, La Reunion and Guyane.
Recent research findings brings out a paradox since the less productive regions had immense development in regard to population, employment, income and welfare, while poverty still exist in some of the most thriving regions. This implies that there is an increasing trend of discrepancy between logic of progress and logic of growth. In other instances, some regions such as southern regions depend on pension transfers which hinder them from global competition. The productive regions are the main providers of taxes and engines of French development. For example Paris metropolitan region which accounts for 30% of national GPD, but whose households only receive 22.5% of the national household income. A policy debate has led to concerns regarding strengthening of Ile de France region in terms with the concept of “Grand Paris”. This might be a classical occurrence in other European countries, but this French system is different because of immigration to Southern regions, and to some extent the Western regions. The immigration has prevailed for more than 20 years and has greatly affected the distribution of wealth and income in France (Lopriore, 2001).
The regional development policy has not been affected by the macroeconomic context. The French government failed to abide by the policies of the stability and Growth pact regarding public debt and budget deficits until 2010. The overall government investment and expenditure has exceeded EU average, there is also low than average yearly GDP growth rate, in addition, because of high investment in regional and local authorities as well as decentralization. Regional development policies have died down from being chief policies over the last few years. At operational stage, regional development policy has basically resulted from amalgamation of operational programs and contrats de plan Etat-region programs with slightly larger plans. At policy-making stage, regional development policies focus on particular areas with an aim of mountain areas, coastal and rural areas and areas with hardships in cities. Cluster policy was developed at the end of 1990, resulting to general program “Pôles de compétitivité”. Recently, Pôles de compétitivité is regarded as the most evident tool of a state policy of regional development. The other policy is Prime d’Amenagement du Territoire (PAT), which is a grant plan for business creating jobs. Pat was founded in 1996 and was evaluated in 2006.
The comparative lack of regional development policy has been substituted by investement in infrastructure such as high-speed railway system. The railway network favored the Western and Southern Mediterranean parts. The existing crisis has not affected the general structure of the regions. However, manufacturing regions has been greatly affected. The crisis has intensified social differences with outcomes for poverty in urban regions associated to high unemployment levels. The crisis has greatly raised concerns regarding the prospect of investment and expenditure in the regional and national levels. Research findings reveal that GDP declined by 0.2% in 2008 and significantly declined by 2.6% in 2009. The French government increased their investment and expenditure resulting to deficit and debts in public sector. French regions have struggled to sustain the level of investment, however local authorities are anticipated to face cut off in financial transfers from the state. A reduction in social benefits will have short-term effects on the regions subjugated by public-residential economy as well as urban predicaments.
In other instances, some regions have overcome the execution of their European Regional Development Fund operational programs in reaction to the crisis. The regional development policy based on the competitiveness and convergence regions can be evaluated through three policy document namely: the contrats se projet Etat-Region, Regional Schemes for Economic Development and the European Regional Development fund operational programs. The explanation of SRDE in every region is based on the review of 2003 Constitution and 2004 Parliament Act famous as “Decentralization Acte II” that gave French regions new competencies in the area of economic development. Documents from SRDE are basically policy proposals that do not involve financial obligations of the regional authorities. European Regional Development Fund favor for regional progress is fairly coherent with national policy because there is a solid relationship between the ERDF operating programs and CPER. The coherence between the regional development policy and CPER/ERDF operating programs can be analyzed through appraisal of SRDE. Generally there are no principal differences between CPER/ERDF operating programs and SRDE.
Schémas Régionaux de Développement Economique (SRDE) outlines the significance of training, education and employment in regard to the anticipation of social and economic change as well as internalization. European Regional Development Fund is complementary to area expansion policy and does not include latest priorities. French regions have given priority axis to innovation and research, competitiveness, fight against greenhouse effect and sustainable development. Accessibility and transport are other priority axis emphasized by the regions. Terriotorial development is another aspect found in the regions priority axis either as a common policy theme occasionally connected to accessibility, cohesion and attractiveness or focusing on particular fields. Aquitaine is the only region that supports ICT. ICT is also supported by other large-scale projects in Languedoc-Roussillon. Lorraine and PACA fully support competitiveness and innovation while Rhode-Alpes support accessibility. Guyane and Martinique support social cohesion and health, La Reunion focus on human resource development while Auvergne is the only region which supports financial engineering (Ockwell, 2002).
It is also vital to recognize other priority axis emphasized by other regions such as European and international dimension. This includes international environment and competitiveness found in Pays de la Laoire and La Reunion. In regard to financial obligation, competitiveness and the knowledge economy seem as the first policy area, while sustainable development and environment takes the second position. In some instances, some aspects of transport policy and territorial development can be linked to sustainable development. There are some discrepancies between convergence and convergence and employment and competitiveness regions. Convergence regions emphasize on the significance of human resource and education development via the ERDF, they also have priorities focused to the reparation for the structural handicaps and ultra-peripherality. In contrast, competitiveness and knowledge economy regions get minimal share of allocation (“Regional Policy”, 2010).
It must be highlighted that all regions incorporate support to poles in the proximity axes devoted to competitiveness and knowledge economy. Poles de competitivite are regarded as part of primary structure of regional development. French region incorporate territorial cooperation operational programs with faintly analogous priorities. The global economic crisis begun to have significant effect on the French economy in 2008. The crisis had distinct impacts depending on the French regions and their economic configuration. For example, Midi-Pyrenees was not greatly hit because it specialized in space industry and aeronautics, while customary industrial regions such as Nord-Pas-de-Calais and Lorraine suffered adversely. The French Government incorporated various measures to combat the crisis especially the implementation of European Regional Development Fund operational programs as component of its “plan de reliance”, in particular to speed up the execution of the operating programs, and focus on ‘Lisbon’ priorities, digital infrastructure, and energy efficiency for housing as well as sustainable development. Other regions incorporated additional strategies to combat recession; for instance, PACA included vocational training, social watch and economic strategies.
There is discrepancy between the original and newest allocation of ERDF financing in the five regions, corresponding to changes which were vital in the initial programming stage. There is reduction of initial allocations in Poitou-Charentes and Bourgogne. The reason behind reduction of allocation was the fact that the procedures were not adequately attractive, and, for sustainable non-road transport in Poitou-Charentes and the need of undertaking preliminary technical and feasibility studies. In Lorraine, Pays de la Loire and Franche-Comte, some priority axes have been cut short while others are improved with a depressing net impact.
The implementation rate in the convergence regions such as Guadeloupe, Guyane and Martinique is approximately 5-7% and 11.9% in La Reunion. The higher implementation in La Reunion is due to existence of shared strategic vision among its members in addition to solid partnerships. Generally the priority measures and axes dedicated to economy, competitiveness and innovation have a comparatively higher execution rate compared to other policy areas, except in La Reunion where the highest execution rates are in transport and accessibility and sustainable development. In the employment and competitiveness regions the execution rate is highest for the priority axes devoted to the innovation, knowledge and competitiveness of enterprises in regions such as Limousin, Centre, Alsace, Haute-Normandie, Auvergne, Aquitaine, Champagne-Ardenne, Provence-Alpes-Cote-d’Azur, Languedoc-Roussillon, Midi-Pyrenees, and Pays de la Loire. The situation of the regions may differ greatly since in some regions, it is innovation and knowledge economy that have high implementation rate, while in others is financial engineering or competitiveness of enterprises. In most regions, implementation rate ranges from 8 to 14 percent.
On standard, the priority axes devoted to environment, sustainable environment and energy have a lower implementation rate. Nine regions had an implementation rate between 2 to 5 percent and nine other regions in a 7-10 range while Bourgogne had the highest implementation rate of 15.4 percent. The priority axes devoted to transport and accessibility, including ICT, has the highest implementation rate in Bretagne. Bretagne has an implementation of 14.5% associated to the construction of the high-speed railway. Generally, the regions have a lower implementation rate as compared to the priority axes devoted to the innovation, competitiveness and economy. The regions devoted to particular aspects such as territorial development have lower implementation rate in general except Franche-Comte. Franche-Comte has an implementation rate of 24.8% which dedicated its efforts at balancing intra-regional development. The intra-regional development involves expansion of the mountainous region of the Jura. The discrepancies in the implementation rates between different priority axes can be explained using various factors. Implementation rate in energy and environment policy area is mainly affected by the existence of less established agencies and administrations. The region also experienced a tricky reorganization in the foundation of the Directions regionales de I’environnement, de I’ amenagement et du lodgement (DREAL), in addition to involvements with undersized projects (“Regional Policy”, 2010).
The innovation, knowledge economy and competitiveness policy area have a relatively high implementation rate because these regions experience a well-established administration, strong links with enterprises, good relations with the SRI, amd from the emphasis and momentum on innovation. In some instances, new measures have not impacted full impact such as the Grenelle de I’ Environnement in comparison with the mantra on knowledge economy and innovation caused by the Lisbon plan, and reinforced in France by the (SRI) Regional Innovation Strategies, which were implemented in all French regions in 2009. The implementation rate in transport and accessibility policy areas is influenced by the need to carry out a lot of feasibility and preliminary studies before construction work sets off.
Apart from the crisis issue, the implementation of operation programs had to deal with some organizational and institutional problems. For example, Franche-Comte implemented 2007-2013 operating programs together with final step of 2000 to 2006 SPD. The economic actors and administrative staff had to understand guidelines and objectives in order to cope with the implementation process. The implementation procedure lacked knowledge of officials and adequate time particularly while undertaking innovative projects in Alsace as well as highly technical issues such as high-speed railway network in Bretagne. Other projects were abandoned because they were too complex and would take long duration to be implemented. An example of such project is innovation company creation in Languedoc and Rhone-Alpes regions. In addition some parts of ERDF policies were problematic to some regions; for example income-generating projects in Article 55. The general implementation rate might be low, but commitment rate gives a clear elaboration. France lags behind in ERDF commitment in competitiveness region at the end of 2009.
ERDF commitment rates EU27 France
Employment and competitiveness objective 30.4% 27.6%
Convergence objective 25.2% 26.1%
The convergence regions had a commitment which is relatively higher than EU27 convergence average and relatively lower than the competitiveness and employment regions. This implies that local and state regions have made efforts in managing structural funds, regardless of the customary problems encountered in the overseas areas, even if most of the EU27 regions are in the EU12 with inadequate knowledge of executing cohesion policy schemes. France has devoted efforts in innovation support for SMEs, risk and environment prevention as well as transport. On the other hand, EU devoted its efforts in ICT and related fields. There is a shift in strategy priorities towards innovation and the environment. There is relatively high commitment rate for innovation support for SMEs is somewhat noteworthy since it has posed difficult to implement projects of this type in French overseas regions. They have placed more emphasis on innovation.
ERDF commitment rate EU27 (%) France (%)
Enterprise environment 32.6 17.1
ICT and related services 32.3 32.9
Innovation support for SMES 20.7 32.9
Human resources 17.5 38.3
Transport 22.3 35.2
Energy and environment 16.1 37.9
Energy infrastructure 12.1 18.5
Risk prevention and environment 16.8 39.5
Territorial development 32.9 20.7
The commitment rate in the competitiveness regions is lower than the EU27 average as regards territorial development and transport because urban and transport projects are indulge long schemes before work begins.
ERDF commitment rate EU27 (%) France (%)
Enterprise environment 33.8 30.5
ICT and related services 24.1 42.4
Innovation support for SMEs 29.2 18.4
Other investments in firms 54.7 42
RTDI and associated activities 32.2 36.3
Human resources 17.7 37.5
Transport 27.8 22.8
Energy and environment 20.2 22.2
Energy infrastructure 18.5 27.1
Risk prevention and environment 21.3 18.8
Territorial development 34.8 28.3
Commitment rates are high in enterprise support where the rates are particularly high for other investment firms and ICT and related services. The crisis greatly affected commitment rate of innovation support for SMEs. High commitment rate in innovation, knowledge economy and competitiveness signifies existence of competent administration and reluctant emphasis on innovation. Lower commitment rate in energy and environment signify lack of technical skills in agencies and administrations in addition to investment in large number of undersized projects as well as complex procedure of reorganization.
It is not easy to highlight the achievements from the programs because of the difference between initial and programmed objectives. Research reveals that only a few projects have been implemented due to time required for implementation process. Annual Implmentation reports of 2009 reveal that first achievements are beginning to be realized and this is an explanation why AIRs place more emphasis on the programmed projects rather than the achieved programs. In other instances, various indicators in AIRs make comparison efforts very difficult. Regional indicators might be emphasized by some regions, while neglecting EU and national indicators. In some regions, there are no reports or mentioning of the indicators. Comparison might also be difficult because of the likelihood of inappropriate naming of the indicators. In addition, the approaches and the sources used while reporting the indicators continue being imprecise in various regions (“Regional Policy”, 2010)
The major achievement across French regions prevails in 2009 Regional innovation strategies. Generally, the highest rates and achievements are very crucial in large majority of regions. Urban problems are solved by improving urban transport in cities such as Limousin, Nord-Pas-de Calais. The regions with geographic handicaps develop high speed railway to improve access. There is also improvement of energy and renewable energy in rural areas as well as Southern regions. The evaluation carried on sustainable development and innovation reveals that policies devoted to sustainable development did not consider social issues. Regional innovation strategies have contributed immensely amongst all French regions to the improvement of innovation authority system, expansion of culture of innovation in regional and state administrations, and homogenization of interest in innovation. SRIs emphasize on non-technological innovation and service innovation in addition to financial engineering (Laurent et al, 2009).
In conclusion, regional development is very vital since it will ensure equitable distribution of resources among all regions. Regional development mainly focuses on sustainable development, energy efficiency for housing as well as digital infrastructure. The main regions in France include Ile de France, Southern regions, Western regions, outermost regions and Rhône-Alpes. The central region holds an exceptional place since it is concentrated with governmental offices and headquarters of large companies. The major differences in these regions reveal themselves in terms of unemployment rate, population and GDP per capita. French outermost regions face a lot of problems such as cost of access, remoteness, geographical handicap, high dependence on metropole, lack of critical mass and environmental challenges. High population in some regions is because of high birth rate and immigration. Regions with lower GDP are either rural areas or regions with customary industries. Research reveal that only a few projects have been implemented since some of the projects are very complex and will take long time to implement them. It is also to identify the achievement of the implemented projects because there is difference between initial and programmed objectives. Regional development was greatly affected by the Global crisis, organizational and institutional issues. Regional development efforts were also affected by lack of time and competent officials especially when handling highly technical issues.
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