© Research and Development Centre of Kajaani 2003 The Case of Kainuu Development situation of a remote and sparsely populated region Director Pentti Malinen Research and Development Centre of Kajaani

© Research and Development Centre of Kajaani 2003 My background Director of the Research and Development Centre of Kajaani, University of Oulu (2000-) Researcher of Finnish rural and regional policy ( ) –Finnish Rural Typology (1993 and 2000) –Rural policy and Northern Dimension of EU Policies (1999) Evaluator of EU Programmes and Projects (1994-) –Interim evaluations of Finnish 5b, LEADER Programs –Ex ante evaluations of Finnish 1,2 and & INTERREG (2000) –Interim evaluations of Finnish Rural Dev. Programme and LEADER Expert, in international projects (1994-) –Best-practices in Local Development in the Northern Periphery –EU/COST A12 ”Rural Innovation”/ Evaluation

© Research and Development Centre of Kajaani 2003 THE CASE: Kainuu, Finland The region of Kainuu is one of the most sparsely populated areas of the EU with its inhabitants The area of Kainuu is km 2 –Compared with Belgium km 2 population density of 4 inh./km 2 –In Belgium 326 inh./km km common border with Russia

The population density varies in Finland so that it is lowest in the Northern and Eastern parts of the country © Research and Development Centre of Kajaani 2003 POPULATION DENSITY BY MUNICIPALITIES

© Research and Development Centre of Kajaani 2003 Kainuu in European context The Northern Dimension became a topical issue when Finland and Sweden joined the European Union in 1995, which meant that it included for the first time a broad, sparsely-populated region of a rural character that was climatically different from its core area and had a substantial border with Russia. EU responded this situation by the Objective 6 based on population density criterion (8 inh./km 2 )

Northern Periphery –Is area consisting the northernmost parts of Nordic Countries (Obj. 1 areas) and Highlands and Island in Scotland –Has its own specific Interreg development programme in EU Common characteristics & Challenges –rurality of the North –cold climate (long winter, short growing season) –peripherality limits but also include strengths for development –sparse population and ”thinning-out” –fast pace of structural change -> loss of endogenous potential

The most powerful national and EU regional policy measures were implemented in Kainuu region in –Objective 6 –Karelian Interreg II; Northern Periphery –LEADERII/ two LAGs –national rural and urban policy and –Centre of Expertice programme Each policy is based on slightly different principles behind their implementation, but all programmes share a general aim to strengthen the local economy. Ex Post evaluations confirm the benefits of these policies despite the development gaps within the country have not converged © Research and Development Centre of Kajaani 2003 REGIONAL POLICY MEASURES

© Research and Development Centre of Kajaani 2003 OBJECTIVE 1 PROGRAMMES oitealueet Lähde: TK/Sisäasiainministeriö

< – – – – 125 > = 125 MT:1999 Source: Eurostat Index: EU-25 = 100 © Research and Development Centre of Kajaani 2003 GDP per head by region (PPS) 2000

Unemployment rate in Kainuu has remained on the highest level in Finland (see also next slide) The core of the problem is the long-term character of umployment on the regional level © Research and Development Centre of Kajaani 2003 UNEMPLOYMENT RATE BY MUNICIPALITIES 10/2002, %.

© Research and Development Centre of Kajaani 2003 UNEMPLOYMENT RATE BY OBJECTIVES , %.

From the point of development sparse population restricts economic development –expensive to maintain economic activity (transport costs) –higher per capita costs for education, infrastructure and other public services The aim of economic and social cohesion acquires a special content in the case Kainuu and similar regions: to maintain settlement and the regional structure in long term © Research and Development Centre of Kajaani 2003 POPULATION CHANGE BY MUNICIPALITIES AND RURAL AREAS , %

Kainuu and most of the rural Finland is losing their population due to out-migration and low birth rates These problems are share by many areas in Europe but in our case the risks are much higher since the population density is already extremely low © Research and Development Centre of Kajaani 2003 SHARE OF GRID CELLS UNDER THREAT TO BE UNOCCUPIED BY DISTRICT UNITS, %

© Research and Development Centre of Kajaani 2003 AGE STRUCTURE OF KAINUU AND PROGNOS TO THE YEAR 2020 MenWomenMenWomenMenWomen

The population structure is ageing all over the Europe In Finland population trends show that the dependency rate in the future will be the worst in the Northern and Eastern Finland this means that a greater number of people have to be supported by fewer people in the long run this causes economic crisis in the small municipalities © Research and Development Centre of Kajaani 2003 DEPEDENCY RATE BY MUNICIPALITIES IN 2030 Pop. (0-14 & 65-)/ pop.15-64

Dependency rate is substantially changing over the next twenty year and this change is evitable Furthermore, this the rate of change is fastest in the Northern and Eastern Finland My question is: –should we include dependency rate as a new eligibility criteria for Objective 1? © Research and Development Centre of Kajaani 2003 CHANGE OF DEPEDENCY RATE BY MUNICIPALITIES 2002 – 2030, %.

© Research and Development Centre of Kajaani 2003 LONG DISTANCES WITHIN THE REGIONS

© Research and Development Centre of Kajaani 2003 Distance (km) to the nearest population centre by roadnet Kainuu includes ten municipalities (the local administrative units) Only the closest centres to Kajaani form a commuting area (labour market area) The remote municipalities must keep their endogenous development in order to survive and because their are small (2000 – inhabitants) this task is challenging

PERIPHERALITY IN EUROPEAN SCALE The development situation caused by low population density and long distances is possible to operationalise also by a consept of peripherality © Research and Development Centre of Kajaani 2003

As a special measure for new regional policy in Finland we have introduced the policy for centres of expertise. It is a Finnish version of capacity building policy. At the moment we have two fields of expertice selected in the Programme of Kainuu © Research and Development Centre of Kajaani 2003 DEVELOPMENT OF EXPERTICE

The idea of the Center of Expertise Programme is to utilise top level knowledge and expertise as a resource for business operations, job creation and regional development. The Programmes are selected by competition and external evaluation of applications. The Programme seeks to identify regional strengths and create economic growth; –to increase the number of competitive products, services, enterprises and jobs based on the highest standard of expertise; –to attract international investment and leading experts; and –to continually reinforce and regenerate regional expertise. © Research and Development Centre of Kajaani 2003 Centre of Expertice Programme

The most fragile including the extremely sparse populated areas need strong cohesion-oriented regional development policy on EU level supported by national integrated policy approach The most peripheral and lagging regions need capacity building - policy measures that aim at developing these regions as base for their own expertise © Research and Development Centre of Kajaani 2003 MY CONCLUSIONS MY CONCLUSIONS

© Research and Development Centre of Kajaani 2003 MY CONCLUSIONS Problems connected with remoteness are best experienced and understood at the local level, and as the will to develop the region is embodied in the local people, any attempt at development can be best implemented through an administrative structure in which maxinum resources and responsbility are assigned to local administrative authorities and development actors.

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