An historical review of initiatives in the EU to support local development

Based on an original Chapter by Marjorie Jouen, Katalin Kolosy, Jean-Pierre Pellegrin, Peter Svegvari, Peter Ramsden and Nadege Chambon and  re-edited for LDnet by Peter Ramsden.

1. Introduction

This paper presents the emergence of local development in the 1980’s and its subsequent evolution. It will build on recent studies, especially the DG REGIO / ADETEF study of 2010.

Local development appeared during the 1980s in response to the growing employment crisis provoked by the 1979-83 recession.  From the starting of the OECD LEED programme in 1982 local development grew in stature. It provided responses to growing unemployment in distressed regions suffering from the collapse of manufacturing or traditional industries. It also promised a new future for urban and rural zones in lagging areas.

The ADETEF study (2009) identified two major periods: before and after 2000.  The year 2000 corresponds to the start of a new programming period for cohesion policy and its associated financial package, to the birth of the Lisbon strategy and, in a global context, to the  bursting of the ‘dot.com ‘ bubble.  By this time neo-liberal thinking had become dominant on both sides of the Atlantic.

The   period before 2000 was marked by continuous political effort to transform the new phenomenon of local development into a genuine component of European economic development. The approach took the form of an increasingly sophisticated array of initiatives, tools, programmes and measures. After 2000, the drive was lost and local development was neglected in favour of other priorities, either broad ones such as EU enlargement and climate change mitigation or sector-based ones like flexibility of the labour market and competitiveness through technological innovation and R&D.

The structure of this chapter follows this chronological development. Section 1 covers the 1980's and 1990's, the years of exploration, discovery of local endogenous potential and subsequent proliferaton of LD programmes. Section 2 deals with the 2000's with sectoralised programmes and a decline of local development. The chapter concludes with some lessons from the past, reassessing policy tools and added value (Section 4).


2. The 1980's and 1990's  

2.1. The years of exploration before 1989

Prior to 1989 the main initiatives that contained local development elements were:

  • The Integrated Mediterranean Programmes.
  • OECD pilots prior to the setting up of the LEED programme.
  • The French contrats de ville.  

Local development was still a series of isolated and experimental initiatives and not yet a coherent set of pan-European programmes.

According to the Inventory of EU actions in favour of local development and employment (CEC 1994): ‘The EU first manifested its interest in local development in the ‘non-quota’ programmes of the European Regional Development Fund (ERDF) in 1979 and in a consultation carried out between 1982 and 1984, organized in liaison with the OECD and covering some 50 local job-creation projects. Following a communication by the Commission to the Council and taking account of the interest shown by numerous Member States, the Council adopted on 7th June 1984 (Official Journal 1984) a resolution on the contribution of local employment initiatives to combat unemployment, in which it stated that development of such initiatives should be supported and stimulated by the Member States’ policies accompanied by specific measures at Community level. Around the same time, the Council revised the ERDF Regulation and introduced Article 15 aimed at promoting locally generated development through joint financing of assistance to SMEs.

... From 1984 until 1988, EU interventions were concentrated on research and action programmes, such as LEDA and these were subsequently completed by information and exchange programmes targeted on specific groups (ERGO, EGLEI, TURN, ELISE). Some measures, albeit modest in scope, gave financial support to certain types of local development initiatives (LEIs and Poverty programmes).'

At this stage, local development was still an emerging reality, little known and hidden, comprising mostly the aggregation of isolated initiatives. The support programmes had an exclusively experimental character, since it was essential for the promoters to understand the phenomenon and to nourish reflection. 

2.2. 1989-1993: Discovery of local endogenous potential  

The adoption of the 'Delors I Package' corresponded to a substantial increase in the budget made available for the Commission to support economic and social development, either via the Structural Funds within the framework of the cohesion policy (article 8 of EAGGF; articles 7 and 10 of ERDF; the first Community Initiative Programmes LEADER in 1991) or via sectoral programmes (LEDA, EGLEI, ERGO, Poverty III). From then on, local dynamics became the subject of close attention. Various programmes were launched in a general context geared to the achievement of the Single Market (Objective 92) and marked by the learning of regional development processes to fill the gap with  ‘Southern ‘ regions (ES, EL, PT, IT, IRL), the completion of industrial restructuring in coal, steel, defence and naval industries, and the revival of the declining rural areas.

Based on the Local Employment Initiatives practices, theories began to develop, demonstrating the value of the bottom-up approach, local public-private partnership, programming, project management, and the integrated approach.

From an EU or national point of view, the support for local development was filling a three-fold objective: firstly, it was aimed at raising awareness on the importance of soft investments and immaterial factors in territorial development processes, and thus counterbalanced hard infrastructure policies, making them more efficient and tackling the problems of marginal areas or groups (the ‘Heineken effect’ to reach parts of communities that other approaches cannot reach). This term was widely used by Graham Meadows of the European Commission during the 1990s in the context of the UK Community Economic Development priorities in Merseyside Objective 1 and the 13 Objective 2 programmes). Secondly, it was conceived as an emancipation tool, giving people at grass-root level the tools and methods to design their own future, and helping them to fully participate in the EU integration movement conceived as a freedom. Thirdly, it was thought of as a learning process at the lower level of governance, with the expectation that good practices would spill over, inspire the upper levels following a ‘natural’ mainstreaming movement, and give rise to a sustainable development model at regional level.

As regards the support programmes, the actions remained cautious and focussed on small-scale experimentation rather than on dissemination or scaling-up. The interventions tried to give the phenomenon better visibility, to connect the initiatives between them, to describe a logical sequence, and to identify good practices both on the ground and for the instruments and policies.

These measures and programmes developed in parallel with a broad decentralisation and regionalisation movement. They also tried to meet specific needs of social groups (Poverty I, II and III) and territories (LEADER for rural areas, the Urban Pilot Projects and  ‘Quartiers en crise‘ for the inner and outer cities.

The dissemination remained limited both in scientific research circles and the political sphere. Programmes were often targeted on concrete projects, helping them to develop and cooperate in networks, and more seldom on creating stable legal or financial bodies or frameworks. One significant exception was the Italian legislation of 1991 on the social cooperatives, which established a specific statute that offered a sustainable outlet to grass-root initiatives seeking to improve the well-being of the local community. A second one was the successful implementation (also in 1991) of the global grant as a new financial tool for empowering local development groups or partnerships. It enabled the starting of the Irish local development partnerships in which an institutional form was given to the local development process and later support came from an Objective 1 operational programme. But, EU-wide, this new tool of global grants provoked considerable  political opposition from national governments and was never widely used.

The support policies had themselves a pioneering character, seeking to emancipate both programme managers and beneficiaries from hierarchical relations and the traditional delivery mechanisms of the old order. Initiatives were often led and monitored directly as prototypes by desk officers at the national or European level.

Local development was grasped as a whole, as a systemic approach with hardly any framework.  It was subject to few constraints and only the goal of exploring innovative approaches to local development was fixed. In consequence, classic impact evaluations were difficult to conduct and gave poor results - except in highlighting the fact that the financial resources had been limited. These evaluation findings were in sharp contrast to the rich information coming back from exchanges of experiences and case studies.

According to Jouen (2008)  the Commission described the record of the 1989-1993 period as  ‘very modest ‘. It noted (CEC 1994) that  ‘if the majority of the instruments have fulfilled their objective of increasing the number of pilot experiments and giving depth to the methodology of local development, the amounts allocated have remained extremely small and have rarely allowed a genuine dynamic of innovation at European level to emerge’.

2.3. The 1994-1999 period: proliferation of programmes

1994-99 programming period was characterised by a series of programmes across a much wider range of Member States.  These included inter alia:

  • RITTS Regional Innovation Technology Transfer Strategies and RIS Regional Innovation Strategies, RECITE – a trans national exchange of experience programme as part of the ERDF,
  • Area based partnerships (IRL),
  • Programme intégré de développement local  (PT),  
  • Plans locaux d’insertion par l’économique  (FR), contrats de terroir » (FR) and « Plateformes d’initiative locale » (FR),
  • Melkert Plan – REWLW (NL),
  • Labour Foundations (AT),
  • Cross border PEACE programme between Northern Ireland and Ireland
  • Flagship EU programmes: URBAN, INTEGRA, B-2605 (long-term unemployed), 84 Territorial Employment Pacts financed by ESF, ERDF and EAGGF 
  • ‘PRODER ‘ (ES),  ‘Inclusion of Refugees Programme ‘ (SWE), POMO (FIN),
  • Reorganisation of regeneration funding into the ‘Single regeneration budget ‘ which in turn had built on the competitive ‘City Challenge  approach to area based regeneration (UK).

The main focus of LD programmes in this period was on employment and new sources of jobs in which every sector was explored and in particular the potential of local and proximity services.  Much of this exploration took place in the social economy and specifically in the intermediate labour market and work inclusion social enterprises (type B social cooperatives in Italy).

The LD programmes explored partnership, skills engineering, the use of global grants as a delivery strategy and ‘animation’ and activation as techniques for eliciting innovative projects from cross sectoral local partnerships.

Within the European Commission, there was a growing rivalry between ‘local’ and ‘regional’ as the relevant level for EU support. In this dispute, DG REGIO decided in favour of the regional level for efficiency and political reasons. It was also felt that it was inappropriate to create additional complexity. The management of the programmes at NUTS II  level (e.g. county or department) already constituted a revolution that was difficult enough to accept and  implement for the majority of the Member States without going down to smaller spatial levels.

A draft Community Initiative programme dedicated to local development suffered from this setback when the new programming regulations 1994-1999 were designed. However, other new Community Initiatives that focused on territorial issues were launched or maintained, such as REGIS (for islands), INTERREG (for cross-border regions), PESCA (for fishing areas), and LEADER (for rural areas). Many pilot projects were also created or maintained in the framework of Article 7 and Article 10 of ERDF, and Article 6 of ESF.

Small programmes of support for local development were sacrificed on the altar of the subsidiarity principle. The Poverty IV programme was  never launched following opposition from Germany and the UK and later reappeared in a rather different form as INTEGRA, a new strand of the ADAPT Community Initiative at the time of the mid-term review in 1996.

In 1993, the exceptional increases in unemployment rates upset the consensus. The employment crisis forced the Member States and the EU to search for methods  ‘to make growth richer in jobs’.  This had the effect of making  local development seem like a technique to exploit the ‘new sources of jobs‘ and to manage more effectively the Structural Funds instead of a longer term approach. The key text for this shift was the 1993 White Paper ‘growth, competitiveness and employment‘, especially its introduction which made explicit reference to this need.

In June 1994,  Portugal, Ireland and Denmark, focused  the attention of the European Council to the potential of local development and the partnership approach in meeting the unemployment challenge. The Commission was asked to make an inventory of the EU actions to support local development. In its working paper, it expressed concern regarding the overall coherence of local development support programmes:

After ten years during which what counted was to respond precisely and rapidly to particular needs, it would be useful to examine the overall coherence of the provision. ... The transition from the experimental phase to the dissemination of successful experiments across the Community Initiative networks, as well as through the Community Support Frameworks and operational programmes, has not been properly carried out, for lack of knowledge of the course to be followed between the successive stages corresponding to the links between different policy instruments: firstly, information and awareness-raising; then the development of a methodology, the dissemination of ‘good practice’ and the experimentation itself; and finishing with the establishment of a network. ... The importance of the human investment necessary for these specific roles in support for innovation has sometimes been underestimated.’

In the following years, Member States used a wide range of instruments to tackle unemployment (IRL, FR, AT, NL, and PT) and the EU took the opportunity of the 1996 mid-term review to start a wave of new programmes. Most of them were small-scale pilot projects and innovative actions, but a major initiative was taken with the Territorial Employment Pacts launched in 1997, aiming at using the mainstream programmes of ERDF, EAGGF and ESF in a more integrated way in order to tackle the unemployment at regional or sub-regional level (CEC 1999).

Following a call for proposals, 89 regions (NUTS II) or micro-regions (NUTS III) were selected. The public authorities committed themselves to settle enlarged partnerships to make a breakthrough in fighting against local unemployment and exploiting their local human and economic potential.

The Pacts ended up creating of 54 400 jobs over three years (1997-99) using € 1.6 billion public funds (including € 480 million from the Structural Funds). They benefited from a specific technical assistance budget for the creation and running of local projects, amounting to approximately €300 000 per pact. According to the ensuing thematic evaluation, the exploitation of  local endogenous potential had generated 16 600 jobs, including 4 630 directly linked to new services, and Local Development and Employment Initiatives.

At the conceptual level, as the essential components of local development and its characteristics were already known, researchers and policy makers concentrated their attention on the instruments (CEC 1996 and 1998). The majority of the programmes aimed at testing the effectiveness and the efficiency of the various flanking measures and the financial or legal delivery mechanisms. In addition to the cohesion policy, all the sectors were asked and volunteered to contribute: environment; culture; research; local trade; tourism; fishing; etc.

Through the technical expertise provided under the LEADER initiative, the grounds for testing a robust theoretical basis were gathered and led to the identification of a specific set of local development features.

In LEADER I, a table with four parts focusing on actions, partnership, financing and networking was used to describe how LEADER 1 worked:

- Area-based approach
- Bottom-up approach
- Innovative, integrated, multi-sectoral character
- Horizontal (Local Action Group)
- Vertical (implementation procedures by the public administrations involved)
- The global grant
- The European network & Coordination Unit
- Other networking practices at local level

(Source: LEADER I ex-post evaluation)

In LEADER II, the following diagram was adopted to illustrate the LEADER method endorsed by Local Actions Groups and based on eight principles:

(Insert diagram here)

(Source: AEIDL – European LEADER Observatory 1999)

At the political level, many of the Commission Members including the President showed a high level of commitment (CEC 1995) and the conclusions of the European Council meetings maintained pressure on the Member States twice a year, for almost 5 years up to the end of 1999. 

Programmes generally produced the expected results and lessons drawn were sufficiently rich that it seemed possible to foresee the ‘mainstreaming’ in two different forms: in the regional programmes of the cohesion policy, and in the sectoral national policies.

However, by the end of the 1990s, the internal environment changed. On the one hand, several financial scandals hung  over the European Commission and restricted its room for manoeuvre when it worked out the future ‘Agenda 2000’ package. On the other hand, Nordic countries concerned with sound management and transparency found allies in the  guardians  of subsidiarity in the  national administrations. Hence, a consensus emerged against the animation and stimulation role of the Commission in policies involving grass-root actors. It led to the decision to almost eliminate Community Initiatives and the innovative actions, to suppress technical assistance offices, to withdraw the definition of programme measures from the negiotiatons and to no longer give desk officers of the Commission the opportunity to participate in the programme monitoring committees. The URBAN II programme only survived due to  intense lobbying of the European Parliament by city mayors and the funds for URBAN were taken from the innovative actions budget.

3. The 2000's:  Sectoralised programmes, decline of local development

At first glance, the new century looked promising for local development and its multiple components, its sectoral variations and the new forms of socio-economic organisation in which it blossomed, such as the social economy. However with the passing months, the convergence of the sectoral approaches that seemed to be reached with programmes such as the Territorial Employment Pacts weakened. Gradually, each of the three major components of the European or national policies – rural development, employment and social inclusion policy,and  regional policy – started to follow their  own paths . While the aim of implementing more structured policies was stated in certain places and certain programmes (for example in Objective 2 programmes in certain Member States.  Widespread support for local development was pushed back, or even disappeared completely from the agendas of public decision-makers and  programme managers.  This process was perhaps influenced by the atmosphere of economic exhuberance that was reflected in the dot com bubble and the anticipated enlargement that served to increase the revenues of EU businesses. 

3.1. Rural development post-2000

The separation of European policy for the rural areas from the cohesion policy was conceived at the Cork Conference in November 1996, and completed at the Salzburg Conference in November 2003.  Before this change rural development had been a full part of the cohesion policy as its 5th objective, and the declining rural areas benefited from integrated programmes co-financed by the ERDF, the ESF and the EAGGF Guidance Section. The  revised regulations for 2000-2006  extended the eligibility of this policy to all the rural areas. This development took shape as from 2007 by the removal of the newly created rural development fund (EAFRD) from the Structural Funds.

This change in financial arrangements coincided with progressive separation of the rural development policy, even though financing remained theoretically possible from the ERDF and from the ESF. As regards political support for local rural development, its pathway was also peculiar as, contrary to other Community Initiatives, which raised mixed feelings, it had the constant and unanimous support from the Member States, the Commission, the European Parliament and all the stakeholders. The only criticisms concerned management procedures and the relatively small amounts of money available.

LEADER, as the first Community initiative – dating back to 1991 – comprised a full range of technical assistance tools, from support in project initiation to the exchange of experiences, including a pedagogical aid, and an observatory bringing together scientific experts. This success was attested to by the decision of several Member States including  Spain and Finland, to duplicate the LEADER method to cover almost all of their territory while the local action groups labelled LEADER were by definition only a limited number in each country.

It was also taken up again as one of the pre-accession tools in the shape of  SAPARD and the PREPARE network. One of the likely reasons for this success is the perceived flexibility of the Community Initiative and pro-activity of its co-ordinators, in the face of developments in the economic situation and of public action priorities.  The proponents were able to provide concrete examples of the LEADER contributions to job creation, social inclusion, young people's professional insertion, improvement of neighbourhood services, inter-generational solidarity, training and education needs of the population, competitiveness of the local companies, knowledge society, etc.

The third generation (2000-2006) took the name of LEADER+ or LEADER Plus with the ambition of  stimulating innovation in rural areas and consolidating the networking of the local action groups, without calling into question the ‘LEADER method’, a sort of validated methodological guide-book. However, as the technical assistance was supposed to be provided by the Member States, the methodological approach has weakened. Coupled with the large delay in setting into place the networking mechanism at EU level, it may explain why the level of cooperation between LEADER groups in different Member States remained low.

For the current programming period 2006-13, another formula was envisaged with the ‘mainstreaming’ of LEADER as one of the priority axes of the EAFRD. The financial instrument is partly based upon the principle of modulation, i.e. some of the direct payments to agriculture are progressively re-directed towards rural development support. Under its Axis 4 (LEADER axis granted € 525 million over 7 years), each operational programme has allocated funding to   local development strategies through regional or national selection processes,   inter-territorial cooperation projects and   the networking of Local Actions Groups (LAGs). It is estimated that more than 2,100 LAGS are currently implementing local development strategies throughout the EU (EU Rural Review 2009).

However, the recent CAP health check agreements may be limiting the scope and sustainability of Axis 4, as there is political consensus to use the modulated funds – as of 2010 – to address priority policy issues that have been termed as the’new challenges’ and concern climate change, renewal energy, water management, biodiversity (including support for innovation) and dairy restructuring EU Rural Review 2009 p56).

3.2. Employment, equal opportunities and social inclusion

In 2000, the ESF was subject to a new reform, following a series of reports, including those written by the European Commission, which admitted the disappointing contribution of the ESF to the resolution of the unemployment issue and criticised the adequacy of the programmes to the evolving needs of Member States, regions, social actors and civil society. For the first time, the ESF intervention fields were brought into line with the priorities of the European Employment Strategy (EES), prefiguring their setting in accordance with the Lisbon Strategy guidelines in which EES was included.

In fact, a very sophisticated mechanism was progressively settled upon and it took the name of the Open Method of Coordination. This Open Method was to involve the combination of EU guidelines, national action plans, benchmarking exercises and peer reviews. Accordingly, the approach supported by the ESF and the EES tended on the one hand to encourage the policies driven at the national level and on the other hand to focus on the labour supply rather than the demand, for labour by promoting  active employment policies, training and the idea of ‘flexi-curity’ that had been developed in Denmark.

For local development, the local employment approach was favoured and highlighted by two communications (CEC 2000 and 2001) which opened and closed a large public consultation campaign. It was underlined that the lessons of previous programming were taken on board as much regarding the local initiatives as the Territorial Employment Pacts, and the contribution of the social economy. In its 2001 communication, the Commission both pleaded for ‘coherent and integrated local strategies for employment’ and expressed some doubts when noting that the regional policies initiated by Member States had a greater impact on the creation of local jobs than local development. In 2003, the annual report of the Court of Auditors cast a shadow over local employment initiatives by questioning the efficiency of its public support.

In the mainstream programmes, the ESF regulation made room for public support to innovative approaches at local level under the ‘local social capital’ heading, which built on an Article 6 Action of the same name. This option was taken up by some Member States in their national programmes: Austria and Ireland mainstreamed the Territorial Employment Pacts; France kept its ‘PLIE’ (Plans Locaux d’Insertion pour l’Emploi) however changing their name from Local plans for inclusion through economic development in Local plans for inclusion and employment. The United Kingdom continued the partnership approach developed with PEACE and INTEGRA in Northern Ireland. Germany opted for a measure linked to its own programme called ‘social cities’.

However, the momentum weakened progressively, as each annual revision of the guidelines for employment created an opportunity to lessen the reference to the local dimension. Finally it disappeared completely at the expense of a growing priority placed on entrepreneurship. The jobs at local level tended to be treated as jobs related to social inclusion, through the development of specific services such as childcare and healthcare.

In practice the lack of motivated and vigilant ‘shareholders’ (and not only stakeholders), especially the local and regional public authorities as partners when designing the programmes,  explain this ongoing drift away from the local approach.  This lack of ownership was complemented by the often repeated concern by Member States to present employment policies as a national competence, which had been reinforced by the way that the European Employment Strategy and the Open Method of Coordination operated. In addition, the relatively comfortable passivity towards fashionable slogans consolidating top-down and sectoral approaches as well as the emphasis on technological push were factors.

In 2006, it was officially recognised that the EU was far from reaching the Lisbon Strategy objectives. As a consequence, the reference to local and regional authorities was introduced into the recommendations, but it was out of question to speak about local development. Indeed, the term ’local’ tended to be associated with a level of governance or policy delivery, not at all connected with development dynamics.

The EQUAL programme designed for the period 2000 – 2006 took as a starting point the lessons of the previous Community Initiatives such as INTEGRA. It aimed at encouraging innovative partnerships to reduce social disparities and all forms of exclusion in connection with the labour market. The Commission provided guidelines, but in order to avoid confrontation with the susceptibilities of the managing authorities, cooperation became trans-national; which meant that it was out of the scope, as in previous Community Initiatives, to support directly networks of local actors within one Member State. Instead, EQUAL tried to address the socio-economic actors’ problems through the national ‘filter’. It both supported geographical or sector-based development partnerships. The existence of local strategies illustrated the will to adapt interventions to local contexts rather than to address the geographical disparities or to create local development dynamics.  However, a weakness was that most of the partnerships in the new Member States were sector-based

For the 2007-13 programming period, reference was still made in the ESF regulation to ‘the involvement of local communities and enterprises and the promotion of local employment initiatives’ but under the ‘social inclusion and disadvantaged people interventions’ heading. EQUAL along with the other Community Initiatives was dropped for the 2007-13 programming period but the ESF regulation allowed the Commission to keep a small budget available to bring financial support to learning networks of managing authorities. Whereas the local authorities and NGOs may be involved, there is no specific focus on bottom-up integrated employment or inclusion strategies. In practice the learning networks are mostly composed of the Member States’ Managing Authorities. 

As a result of the mainstreaming process, Member States were again offered the possibility to opt for specific measures under the ‘Partnerships, pacts and initiatives through networking at the trans-national, national, regional and local levels in order to mobilise for reforms in the field of employment and labour market inclusiveness’. A review of  the national programmes shows that it represents almost 1 billion € (a bit less than 1.5% of the ESF budget) and that a few Member States have taken it up (AT, ES, PT, FR, IT, PL and RO). The Eastern and Central European administrations seem just interested in local development as a means to address the issue of social and professional integration of the Roma communities. For the time being, the innovative actions tend to focus on social experimentation in which the local dimension is often present.

In its Communication ‘A shared commitment to Employment (CEC 2009) ‘, the local dimension is shifting to business support and inclusive entrepreneurship. A new microfinance facility for employment was proposed by the Commission in June 2009 following a European Parliament motion (CEC 2009):

Whereas the current financial crisis and its possible repercussions in the economy as a whole demonstrate the disadvantages of complex financial products and the need for considering ways of enhancing efficiency and having in place all possible channels for providing financing when businesses have reduced access to capital due to liquidity crunch, in particular in economically and socially disadvantaged regions, and, at the same time, underline the importance of institutions that focus their business on local development and that have a strong local connection and offer inclusive banking services to all economic actors’.

3.3. Economic and social cohesion, regional policy

For the 2000-2006 programming period, a distinction needs to be made between EU-15 and EU-10. For the EU-15  Member States, the emphasis was put on efficient management of the Structural Funds and increased subsidiarity, all of which pushed the regions to more or less continue on the same thematic paths as in the previous programming period. Local development was sometimes used as a lever to reach other more valued priorities, such as cluster development or business creation. However, local development outputs did not raise much interest in comparison with the impressive economic and financial results of the exogenous development strategies based on an export based model which aimed at exporting products and/or attracting foreign direct investment. Contrary to regulation dedicated to rural areas, the absence of technical assistance coming from national or EU level reduced and compromised local efforts to develop new economic projects and strategies. 

With the removal of support to innovative actions in the ERDF regulation and the reduction of the number of the Community Initiatives, the pressure from the EU level diminished. Once the programmes were agreed, the Commission was not supposed to intervene to up-date or change thematic priorities. Only a few Member States chose to devote part of their mainstream regional programmes to support either local economic development as such, or partnership and integrated approach (IRL, UK...DE).

For the local development projects and their promoters, the only remaining possibility was to transform themselves into free-riders of the trans-national cooperation strand of INTERREG IIIB.  In this attempt they were completely changing IIIB from its initial purpose of focusing on  spatial planning approaches. Another solution for existing local development strategies was to submit a bid for networking in the interregional cooperation strand of INTERREG IIIC. However, the challenges or working across cultures in transnational working was often an obstacle for local actors, and match-funding rules and administrative procedures were complex which often dissuaded them. Moreover, both main priorities – technological innovation and local well-being – did not fit with the multiple dimensions of local development and the rigid selection of the projects by calls for proposals was frequently a barrier to entry.

Urban Policy

URBAN II tended to focus on strategies to fight against social exclusion at local level through area based regeneration. It explicitly promoted place-based approach as well as partnership and integrated strategy but did not support whole economic development strategies. Evidence shows that local partnership was a critical factor to the success of Community Initiatives, to the extent that it was one of the crucial conditions to meet local needs and increase effectiveness of the delivered measures. In the candidate countries, ISPA was dedicated solely to hard investment, and even if networking was formally encouraged between candidates and EU 15 regions – for example through the City twinning arrangements of PHARE – the task was not easy as the financial regulations did not always fit together. In practice, this kind of learning-by-doing method tends to be time-consuming, especially when it concerns transition countries and development models that were not accompanied by any political discourse. The ensuing period from mid-2004 to 2006 created few opportunities to make major changes as the main concern of the new Member States was to develop the institutional capacity to manage the Funds and then increase their own absorption capacity for the allocated budget. Moreover the general economic context of rapid growth and soaring property markets pushed the Eastern European countries to continue attracting inward investment as a means increase their GDP and reduce unemployment.

For the 2007-2013 programming period, the contribution to the Lisbon Agenda priorities became the main concern of the Structural Funds. The earmarking constraints pushed the regions away from local development, both because it did not fit easily with the list of themes related to competitiveness and because its holistic nature clashed with the sector-based trend.

In the urban areas, URBAN II was supposed to have played a pedagogic role in the direction of the local public decision makers. Each region was then encouraged to devote a part of its regional development programme to the cities according to URBAN methodology. The results of a first assessment of the urban dimension in the regional development programmes (CEC Nov 2008) show the continuation of a split between EU-15 and EU-12, with the new Member States being tempted to favour physical  investments at the local level. As regards citizens' participation in the programming phase and implementation of the actions, these seem to be rather weak in most of the Member States, despite their crucial importance. While foreseen and even strengthened in some EU-15 operational programmes, especially in France, Germany and Spain, the participation of the civil society is almost absent in EU-12 programmes ‘Because of the traditional centralism and paternalism, and the weak commitment of citizens at local level, the methodological experience and practice of citizens' participation at local urban level is limited’ (quoting the Romanian Ministry for development, public infrastructures and housing CEC Nov 2008).

A network to exchange experiences was created, the URBACT  programme. This was initially an exchange of experience programme for the URBAN Community Initiative. Only limited resources were available to the URBACT projects, which did not include money for implementation of pilot projects. URBACT II in the current programming period introduced a number of innovations in programme design that strengthen the impact of the programme on the ground.  The creation of local support groups in each partner city and their task of preparing a local action plan on the project topic helps to anchor the exchange of experience of the networks and working groups in practical reality and give a legacy to the actions.  However, as before any implementation is dependent on the local action plans securing support from elsewhere and particularly from the ERDF and in some cases ESF operational programmes. 

An enhanced role for the Managing Authorities within the majority of URBACT II programmes and especially among the Fast Track programmes that form part of Regions for Economic Change (alongside selected INTERREG 4 C projects)  was intended to help to secure resources for the cities.   By the mid point of the programme at the end of 2009, URBACT II had 45 projects in play with over 400 local support groups formed in upward of 250 EU Cities and involving more than 5000 local actors.  However, the flow of resources to finance their action plans was still a problem for many participating cities.  As the crisis has unfolded more and more cities are unable to find matching funding to draw down ERDF.

Since the accession of many small or medium-size new Member States, territorial cooperation became a more valued issue, both at cross-border and macro-regional levels. In many countries, the positive reaction of local and regional authorities to the introduction of a new legal instrument such as the European Grouping for Territorial Cooperation (EGTC) illustrates this concern. They quickly seized this new opportunity to agree multi-faceted cooperation projects, from the small local cross-border and single purpose EGTC, to the 10 million population EGTC comprising 5 regions with multiple purposes EGTC. It may give a new impetus to local development practices, even if, depending on the size, the chosen goal and the process of setting up, it does not necessarily involve bottom-up and partnership approaches.

Finally, despite repeated calls for innovation in political speeches and EU guidelines, a nascent dynamism created by a mix of social innovation on the ground, new ways of delivering public services and ICT-led local community awareness has still not  been reflected in cohesion policy during the 2007-13 period.

Fisheries and local development in sectoral programmes

For fishing communities, the major new initiative comes from axis 4 of the European Fisheries Fund.  This was supported by the  launching of the FARNET support unit in 2008 which aimed at building a ‘learning platform’ for areas and groups involved in strategies for sustainable development for fisheries. Its main objectives are:

  • to build capacity in integrated territorial development by providing guidance and support to assist local fisheries groups and partnerships;
  • to identify, test and transfer successful responses to the challenges facing fisheries areas;
  • to create a platform and a voice for fisheries areas by connecting local learning and innovation to broader debates.

This pure version of LEADER-type approach  to the development of coastal areas looks promising in its overall approach. In comparison to LEADER the Fisheries Local Action Groups have a much stronger focus on added value strategies within the fishing production chain itself. There is also a strong environment and sustainability strand based around strategies for sustainable forms of inshore fishing using smaller boats.

A quick look at the potential among EU sectoral policies to support local initiatives confirms both the large variety of supply and its complexity from the local actors’ point of view. The list is long and constantly changing as most of the programmes deliver support through bids and adapt their focus according to  new political priorities. This is particularly the case for the Competitive and Innovation Programme (CIP), which contains several sub-programmes for innovative local transport projects and innovative local energy projects.

For LIFE+, which focuses on environmental issues, and for PROGRESS, which is dedicated to social inclusion, and social experimentation etc. This large variety of financial opportunities does not mean that local projects are easily able to gain support, nor that local development strategies are promoted. On the contrary, they tend to isolate thematic projects from the integrated strategy and adapt it to fit with the requirements of sectoral programmes. Another potential resource derives from the 7th Framework research programme and its attempt to increase support to applied research in the socio-economic field. However, although the local dimension is present in  several research networks on urban issues, rural issues and the social economy, local development as such has not been identified as a topic.  In addition, the idea of a mutual learning process between the academic community and the practitioners is very difficult to bring about and is rarely seen in practice.  The Social Polis project Social Polis would be one positive example, although dissemination beyond original project partners is still limited.

4. Lessons from the past: re-assessing policy tools and added value

The period before 2000 saw the publication of key reports on  the relevant tools to support local development. The DG XVI Report on added value of local development and engineering, (DG REGIO 1994) presents an impressive and accurate summary of the main lessons for policy tools and methods that is still valid.

Later, the LDEIs reports drawing from the evaluation reports for specific pilot projects set out complementary aspects:

Recent experience has shown that duration, area-based approach and partnership between the sectors involved are the most essential points ... although the proximity of beneficiaries and project organisers seems to be decisive in the start-up phase, it is important for initiatives to be able to count on support both at higher level (training, social partners, etc) as well as from a uniform and solid framework at national and international level (information, legal protection, finance, standards, taxation, infrastructure ...). Partnership should be regarded as two-dimensional: rather than being considered to be only a’horizontal’ arrangement bringing together all involved parties in the private and public sectors in a given territory, there is also a’vertical’ dimension with parties at different levels.’ (CEC 1996)

While extending local and regional partnerships to include the private, voluntary and educational sectors is a relevant priority, it is worthwhile examining in detail the role entrusted to the decentralised public services, particularly those responsible for employment. They are essential partners, but they do not automatically make good local co-ordinators when it is a question of motivating a region to take charge of its own development.’ (CEC 1998)

Regarding the guidelines for future policies and improving existing systems, the considerations were already clear:

strengthening evaluation – social and environmental indicators should therefore be introduced for analysing developments and the attractiveness of a territory, integrating data relating to changes occurring locally in the private and public sectors; improving information; continue experimenting – EU support for experimentation should not be restricted under the guise of rationalisation, since it meets a need for the renewal of public assistance and is sometimes the only means of expression for local innovation; permit joint financing by the Structural Funds; ensure trans-national visibility – in any event, EU added value presupposes the existence of trans-national support and coordination structures with the task of monitoring local experiments, divulging methods and capitalising on good practice – complying with the competition rules’. (CEC 1998)

Prior to the launching of the 2000-2006 programmes, DG REGIO internally drew lessons from 15 years of experimentation. Its desk officers  had a clear view of the desirable effective framework and guidelines (the objectives, the size, the management and the delivery mechanisms, the evaluation …) for the innovative actions.  

This leads us to put into perspective the findings of recent evaluation reports. For example, the EQUAL evaluation report (EC 2006) put forward some considerations that are not new:

On the basis of our fieldwork, we found that the success factors in the formation of a trans-national partnership included: a) choosing partners working on common issues and/or with similar target groups, and with comparable trans-national budgets; b) ensuring that there is a congruency or complementarity of interests and objectives; c) drafting a precise work plan and involving all partners in this exercise; d) taking into account that the construction of trans-nationality requires time.’ (CEC 2006)

As regards financial management, the introduction of the global grant has been crucial and still represents a key delivery model for financing local development. However, the global grant despite being an effective empowerment tool is viewed as a threat by both the guardians of the subsidiarity principle and the defenders of the top-down approach. This explains why it has suffered continuous attacks, either open or hidden, and has generally been criticised by the financial controllers and auditors. During the last two decades, the ‘financialisation’ of the economy and the globalisation of the banking system pushed the banks further from the real economy and the local actors.

On the legal side, little  progress has been made at EU level: Europe still does not have a common statute for an association, nor a private company. Thus, the reality on the ground is diverse, and furthermore complicated by an anarchic blossoming of new national statutes for non-profit, organisations and social enterprise companies.  This has led to the creation of new legal forms in Finland, for Social Enterprise, France (SCIC), UK Community Interest Company  each with different rules concerning asset protection, rates of return to investors and membership. 


CEC, 1994 Inventory of EU actions in favour of local development and employment SEC 94-2199, 19 December 1994

Official Journal 1984 number. C 161 21.06.1984

Jouen M, Nov 2008 Social experimentation in Europe, Towards a more complete and effective range of the EU actions for social innovation, Notre Europe, Nov 2008    http://www.notre-europe.eu/uploads/tx_publication/Etud66-MJouen-Social-experimentation-en_01.pdf(external link)

CEC Dec 1994 Inventory of EU actions in favour of local development and employment SEC 94-2199, 19 December 1994

CEC, Oct1999  Pactes territoriaux pour l’emploi – 89 pactes locaux relèvent le défi du chômage  

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EU rural Review October 2009 number 1    http://ec.europa.eu/agriculture/rurdev/enrd/fms/documents/EU_Rural_Review1_en.pdf

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CEC, Renforcer la dimension locale d la stratégie européenne pour l’emploi COM (2001)629 (Nov. 2001)

European Commission, COM (2009)257 (June 2009)
A6 – 0041/2009 – adopted 20th January 2009

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CEC 1996.Lessons for the territorial and local employment pacts, First Report on local development and employment initiatives, Working paper of the services, OPOCE, CE 07 97 272 EN

CEC 1998 The era of tailor-made jobs, Second Report on local development and employment initiatives, Working paper of the services, OPOCE, CE 09 97 220 EN  

CEC 2006  EU-wide evaluation of EQUAL, Report

CEC 2006  EU-wide evaluation of EQUAL, Report

CEC 2006  EU-wide evaluation of EQUAL, Report

Created by Peter Ramsden3328 points . Last Modification: Saturday 08 of September, 2012 18:00:45 BST by Haris Martinos1165 points . (Version 57)