Territorial impacts of globalization on European Regions (Tiger) Van Hamme Gilles IGEAT-ULB Aalborg ESPON seminar,

2/25 The TIGER project Lead partner : IGEAT-ULB Partners Pp2 (UK): School of real estate and planning. University of Reading Pp3 (France): CNRS (mainly Université de Normandie) Pp4 (Italy): Dpto Studi Europei e Interculturali, Sapienza Università di Roma Pp5 (Sweden): Internationella Handelshögskolan i Jönköping AB Pp6 (Bulgaria): Institute of Geography BAS

3/25 The scales of globalization 1. Globalization can be defined by unprecedented intensity of flows and interdepedencies between territories across the world. But NOT as undirected interconnections of territories across the world because distance and power relations (core vs periphery) remain decisive 2. Cities and macro-regions are the scales at which global processes operate Global cities are the places where global firms really operate; The macro-regions are large areas of intense internal economic relations. However, the state remains a major actor and most of all the main regulatory level at national and international

4/25 I. The macro-regional scale: Europe in the world

5/25 1. The regionalization process : « natural economic regions » The areas of intense trade relations (2008) In Europe, the share of internal links are very high (ESPON): - 84% in maritime links - 86% of air connections; - 70% of trade; - 80% of FDI - 40% of migrations (up to 64% when neighbourhood is included) - 32% of cities links within APS networks

6/25 2. Regionalization vs globalization Two simultaneous processes; Europe is more and more open but remains a rather closed economy.

7/25 3. Europe as a major yet declining power Share of in interregional trade Western Europe29,424,223,521,2 Central and Eastern Europe (former USSR included)5,34,14,87,7 Northern America and Mexico19,819,418,113,8 Latin America7,24,64,44,9 China1,94,16,313,7 Southern Asia2,31,7 3,2 Japan, Korea, Taïwan9,016,917,112,1 1.The decline of old core powers 2.The rise of China but no spectacular rise from other « Bric ».

8/25  It results in a shrinking geography of influence in the world

9/25 However, Europe keeps a very high position in the international division of labour

10/25 Europe as a major power -26.5% of interregional trade of services, (22% for NAFTA and 4% for China) -39% of outwards and 24% of inwards of interregional flows in FDI (NAFTA is 30% and 34%; China 10% and 1-2%) -Western Europe concentrates 40% of the headquarters of the 500 biggest world firms, before Northern America and Japan, with respectively 33 and 15% in The most attractive place for human flows Etc..

11/25 4. Europe’s relations with the rest of the world

12/25 5. Policy implications Three main facts 1)Functional Europe goes beyond institutional borders but flows are unbalanced between core and peripheral extra-EU functional Europe; 2)But territories that matter for Europe are not necessariliy where Europe’s influence is the highest 3)Europe is increasingly opened but still a rather closed economy. large developed economies like the EU mainly rely on their own markets and producers, even in integrated global sectors such as the automotive industries

13/25 Policy implications Two major issues: 1.The openess vs protectionist debate - Despite globalization, Europe is a strong continental and integrated economy that mainly rely on its own markets - Openess is not territorially neutral because openness and vulnerability to global competitive pressures are unequal at regional level

14/25 Policy implications 2. The neighbourhood policy - “The Europe 2020 strategy is not only relevant inside the EU, it can also offer considerable potential to candidate countries and our neighbourhood and better help anchor their own reform efforts. Expanding the area where EU rules are applied, will create new opportunities for both the EU and its neighbours” -in its relations with the neighbourhood, the EU focuses on strategic issues such as energy, security and immigration -However, this is not part of a full development strategy for the neighbourhood though neighbouring countries do receive large shares of EU development aid

15/25 II. European territories in the global economy

16/25 1. European regions in the global economy Openess rate of European regions/nations to global trade (share of extra-EU trade to GDP) :  Regions are unequally open to global economy  It varies from 0.1% (Corsica) to 31% in Flanders

17/25 European regions in the global economy The geography of the relations of European regions European regions have differentiated relations with the rest of the world (hence different interests for the different parts of the world): - West-European profile (Blue) - Global profiles (pink; green) - neighbourhood profile: red and orange

18/25 European regions in the global economy Functional and sectoral specializations of regions and vulnerability Different types are distinguished : - Gateway cities - low vulnerability area specialized in medium/high functions - high vulnerability areas specialized in low functions; - « In between » areas - low participation to the global economy

19/25 2. European cities in the global economy : advanced services A shift to Asia at global level The good and stable position of European cities, beside London and Paris

20/25 European cities in the global economy : Cities’ functional specialization The position and and networks The position and specialization of European cities in different types of functions and networks - Most global cities have diversified functions (advanced services, airports, stock exchanges, real estate) - Except port gateways; - small and medium cities are more specialized  A scale rather than functional specialization of cities

21/25 European cities in the global economy : Cities’ geographical specialization Like regions, cities have differentiated relations with the rest of the world: - Global cities have the more global profile (red and brown) - we distinguish different neighbourhood profiles (eastwards in blue, southwards)

22/25 Position of cities in global networks and competitiveness Neither in the US nor in the EU, we found a relationship between cities connectivity and economic performances after 2000

23/25 3. Policy implications 1)European territories are unequally open to external global competitive pressure 2)The position of territories in the international division of labour and within integrated value chains may explain unequal vulnerability to global economic competition in both the service and manufacturing economies. 3) No simple relationship between territorial economic competitiveness and position in the global economy

24/25 Policy implications Policy alternatives are: 1.To invest mainly in the global cities, which are the gateways of globalization, in order to improve Europe’s position in the world. “Metropolitan areas play an important role in sustaining the EU’s global competitiveness” (EC, 2011). However: 1. The link between economic growth and city connectivity/size cannot be clearly established by empirical evidence; 2. The idea that the wealth of major European and national cities will benefit non metropolitan territories is not empirically proven; 3. The impact of public investments toward the most developed areas of the EU can be questioned since, by definition, it will concentrate in cities endowed with developed infrastructures ;

25/25 Policy implications 2. Or, by putting the emphasis on territorial cohesion, should the EU instead persist in a redistributive regional policy aiming at providing conditions for better performance in less developed regions?  Combining an opened up Europe with a shift toward major cities as a motor of growth in EU regional policy raises the issue of vulnerability of different types of regions toward globalization, in particular: 1.The high vulnerable areas specialized in low functions 2.The “in between areas” facing increasing internal and external competition because of higher labour cost though unable to move up in the value chains (with no control on value chains)  this is typically what non metropolitan Mediterranean regions are facing now and central-Eastern Europe could face in a near future.