The Role of Community Fundsin the Dynamization

of Underdeveloped Regions

Presentation of Assessments in Regional Development – workshop

25. 04. 2013.

Hajnalka Lőcsei(Pannon.Elemző Kft.)

Aims of the AssessmentThe assessment of disadvantaged regions discovers:

1. what the primer aims, tools and institutional solutions of the development policy in relation with disadvantaged regions are;

2. how did the absorption of sources change in the regions, and how did the sources serve the solution of social and economic problems;

3. what role the local development institution system has;4. what suggestions can be formulated in relation with the shaping

up of the future application of development funds that could serve the harmonious development of disadvantaged regions.

The subject of the assessmentIn focus:

1) The 33 most disadvantaged microregions, which were supported by the initiative of complex recovery program

2) 24 truly disadvantaged microregions, of which the relatively poor socio-economic situation continued to deteriorate over the past decade

Significant findings

I. Weight of EU Fundings

II. The implementation of development intentions (NHDP)

III. The importance of the Most Disadvantaged Microregions Program

IV. Recommendations

I. Weight of EU Fundings

What is the connection between the volume of development sources in the disadvantaged microregions and the inflow of market investments and domestic financial subsidies, and to what extent the spatial patterns of those three sources are similar?

The relation between market investments and state subsidies in the counties of Hungary, 2004-06 • Market processes result regional differentiation, while state subvention policy has an affect on convergence. The first has much stronger influencing power.

• The weight of regional development sources is small, although those have larger significance in disadvantaged regions.

Source: Kullmann 2009:54

Per cap EU fundingsPer cap private investments

Per capita resources in different types of Disadvantageous Microregions

33 LHH

12 545 - 100 047100 047 - 230 619230 619 - 502 044502 044 - 1 039 8631 039 863 - 11 575 12711 575 127 - 25 333 301

1 főre jutó piaci beruházás kistérségenként 2007-2011

33 LHH

36 297 - 80 67980 679 - 150 399150 399 - 200 736200 736 - 250 906250 906 - 307 785307 785 - 662 778

1 főre jutó EU támogatás kistérségenként 2007-2011

33 LHH

0 - 1 257 1 257 - 10 28010 280 - 31 26631 266 - 42 73142 731 - 67 639

1 főre jutó hazai önkormányzati beruházási támogatás kistérségenként 2007-2011

Per capita private investments, 2007-2011

Per capita public grants for local govt. investments, 2007-2011

Per capita EU fundings, 2007-2011

Regional development funds in function of the population

0.1

.2.3

.4.5

.6.7

.8.9

1Fo

rraso

k

0 .1 .2 .3 .4 .5 .6 .7 .8 .9 1Fejlettségi sorrend szerint kummulált populáció

EU támogatások EU támogatások Jeremie

Állami beruházási támogatások Piaci beruházások

2007-2011Források elosztása

EU funding

Private inv.

Public grants for local govt. Inv.

Public grants for local govt. Inv.

EU funding

Private inv.

Cumulative population (developmental ranking) Cumulative population (developmental ranking)

Sources

Sources

II. The implementation of development intentions

(NHDP)

What did the development policy intend to do with disadvantaged regions?

To what extent was it successful to allocate resources to MDMs?

Development policy intentionsto catch up disadvantaged regions

• Various accents in concepts, strategies and plans– Regional development: important– Rural development: not treated separately– (2014-2020 EU draft plans: important)

• Important compared to neighbouring countries

Implementation

• The definition of disadvantaged microregions („DM”) is defined in governmental decree

• Institutions for catching up underdeveloped regions:– „Preference method”– MDM Program in 33 MD microregions

• Additional to NSRF:– Start labour program– Rural development (Leader Program)– Domestic decentralized sources

Differences of the structure of sources

3274 bill. HUF

396 bill. HUF

174 bill. HUF

547 bill. HUF

128 bill. HUF

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

nationalaverage

33 MDMs other 14 MDMs other 47 DMs 13 regionalDMs

NHDP (2007-2012)

NHRDP (2007-2012)

NDP (2004-2006)

Per capita granted funds in different types of microregions (The New Hungary Development Plan, 2007- Aug. 2012)

0

200

400

600

800

1000

1200

1 1,5 2 2,5 3 3,5 4 4,5 5Compex indicator of social-economic develelopment

Per

capi

ta g

rant

ed f

unds

, th

ousa

nd H

UF

33 MDMs

14 other MDMs

47 other DMs

regional DMs

otherSellyei

Kisteleki

Mórahalomi

Kunszentmiklósi

Pacsai

Over average NHDP sources flew to 33 MDMs. (Less sources were received by 14 other MDMs and regional DMs.)

Per capita paid funds in different types of microregions (NHDP, 2004-2011, HUF)

The advantage of 33 MDMs is increasing in time (14 other

MDMs, regional DMs can be considered as relative losers.)

Per capita granted funds in different types of microregions, in different Operative Programmes (NHDP, 2007- Aug. 2012)

63

96

61

67

41

149

90

133

5

45

24

210

48

109

0

20

18

159

62

137

2

19

29

144

0 50 100 150 200 250

EconomicDevelopment OP

Environment andEnergy OP

Transport OP

Social Renewal OP

Social InfrastructureOP

Regional OPs

per capita granted funds, thousand HUF

other 47 DMs

other 14 MDMs

33 MDMs

national average

The advantage of the 33 MDMs is shown mainly in ROP and Social Renewal Operational

Programme funds

The influence of Economic Development Operational Programme

is rather local

III. The importance of the Most Disadvantaged Microregions

Program

MDM Programcomplex program for 33 most disadvantageous micro-regions

• Dedicated support framework (97 bill. HUF)• The MDM Program tried to develop both

regulatory and operating environment in a positive direction– planning of complex project packages in an

iterative way,– improvement of local development capacity, – Incitement of collaboration,

– stimulating economy,– reducing inner social and regional inequalities.

Per capita EU funding sources in different types of Disadvantageous Micro-regions (The New Hungary Development Plan, 2007-2012 Aug.)

Per capita granted funds, HUF Per capita paid funds, HUF

0

100 000

200 000

300 000

400 000

500 000

600 000

nationalaverage

33 MDMs 14 otherMDMs

47 otherDMs

granted funds in MDM Program

0

100 000

200 000

300 000

400 000

500 000

600 000

nationalaverage

33 MDMs 14 otherMDMs

47 otherDMs

paid funds in MDM Program

Effects and results of the MDM Program

• All regions received supports, while NDP sources, the preference method and the investment supports of the local governments were incidental;

• Sources were directed from local communal infrastructure development towards the development of public services;

• Also the least developed territories received funds• It strengthened and developed local development

capacities• it helped to improve relationships among local and between

local and central development policy actors, it encouraged (forced) confidence, partnership, coordination and cooperation;

• Many developments were implemented, which were not mentioned in previous planning documents.

Problems of the MDM program

– It was elaborated „on the fly”– Rural development can not be linked to it– The implementation had conflicts both with central

administration and on local level– The development of disadvantaged social groups

(especially the improvement of the situation of gipsy population) have not reached the critical mass, not any significant changes happened.

– The direct or indirect enhancement of the economy, and the creation of workplaces was slightly successful

IV. Recommendations

General recommendations– co-operation, co-ordination of regional development, rural

development and the social profession;– support of regional planning;– establishing a real program which flexibly links to the problems,

circumstances and needs of disadvantaged regions, with the help of complex regional programs of the present term, such as with the use of experience of the MDM and LEADER Program, incorporating their results and avoiding their pitfalls;

– encouraging cooperation and coordination rather than competition;

– improvement of the quality of public tasks with normative or task-based financing;

– supporting the involvement of external, experienced experts in the planning processes, which moderates the economic divergence due to local lack of capacity, increases source absorption and utilization.

Average incomes, near to labour market

Usually under subsistence level, on the verge of primary labour

market

Misery, unmet demands for means of sustenance, lack of working ability, debt crisis

Free enterprise zones, supporting SMEs

Social co-operatives, protected employment

public employment, community farming as a tool for social work

Differentiated treatment of problems

Differentiated treatment of microregions

• The highlighting of disadvantaged microregions is a necessary tool, since in a competitive system the most problematic regions would receive sources with small chance– Specific delimitation and tool set should be developed in

relation with microregions and settlements having deep poverty problems

– The industrial depression areas in the agglomeration of major cities, and microregions with significant urban cores, where the traditional tools of economic development could be efficient (complemented by human resource and infrastructure development), should be treated differently.

Thank you for the attention!