Saturday

1st Oct 2022

Magazine

Centralised states bad for economy, study shows

  • Centralised states are set to have bigger troubles with the economic crisis (Photo: Duchamp)

European countries where regions have more powers and responsibilities in terms of taxation, legislation and education policies tend to do better economically than centralised ones, a Swiss study shows.

"Centralism hammers development of countries at the cost of its citizens," Klaus Klipp, secretary general of the Assembly of European Regions, an umbrella network of regions from 33 European countries, said on Monday at the launch of the study, which was commissioned by his organisation.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The study, developed by the Swiss-based BAK research centre, measures the impact of decentralisation on the economy, as well as the quality of education and innovation in 26 European countries, including non-EU members Switzerland, Norway and Croatia and excluding Luxembourg, Slovenia, Cyprus and Malta – because of their small size.

The country ranking as most centralised was EU newcomer Bulgaria, followed by the Baltic states, Greece, Croatia, Norway, Ireland, Denmark and France.

At the other end of the scale, Switzerland – famous for deciding almost everything by referendum - ranked first, followed by Germany, Belgium, Spain, Austria and Italy.

The index was drawn up after a series of different factors were taken into account, for instance if public servants are employed on a national or regional level, if university or kindergarten policies are decided in the capital or the regions, if taxation is fixed only at a national level or also at local and regional levels.

The findings show that decentralisation has a positive impact both on GDP per capita and economic growth, although many of the new EU member states are still relatively centralised and have experienced high growth in the past 10 years.

But the authors of the study underline that these countries started off from a very low level and could have progressed even further if their regions and local authorities had more powers.

University performance, especially when it comes to patents and applied sciences, also flourishes when regions have the power to decide on educational policies - for instance in the German region of Baden Wurttemberg, where technical schools are strongly connected to the local high-tech industry.

Regional politicians, in Mr Klipp's view, tend to be more involved in hands-on solutions for their constituencies, to whom they tend to have a closer connection than national decision-makers. He gave the example of a high-speed train between Paris and Strasbourg which was inaugurated after years of intensive lobbying by the regional authorities in Alsace.

A mayor in Transsylvania also managed to push for his town, Sibiu, to get an international airport, although initially the national government excluded it from the list. Sibiu was EU capital of culture in 2007 and has developed into a major hub for German small and medium enterprises.

Yet national competences should not be excluded or minimalised, especially during the economic crisis, Tomas Ekberg, representing the southwestern Swedish region of Vasetra Gotaland said. His region is home to carmaker Saab which is about to lay off some 4,000 people plus an estimated 6,000 people working in the car-supplying and service sector.

"We're not here to say we don't need nations – the labour market remains a competence of the national government. But it's a question of responsibility and efficient spending of the taxpayer's money," Mr Ekberg said.

Although the findings do not come as a big surprise, with federalists and economist for a long time arguing that delegating powers from the centre to the regional and local governments improves economic performance, the Swiss academics say they are the first to have scientifically proven this theory.

"It is not just anecdotal, it is now a scientifically proven fact and we hope that it will give regional politicians more leverage when dealing with national decision-makers," Urs Muller, the main author of the study, told this website.

Magazine

A deep dive into the EU regional funds

While the regional funds account for a full third of the EU budget, they are somewhat under-reported. EUobserver's latest edition of the Regions & Cities magazine looks at the EU's cohesion policy.

Magazine

A tourist's guide to EU-funded Amsterdam

When it comes to projects paid for by EU regional funds, most people think of roads in Romania or bridges in Bulgaria. But richer regions also receive money. EUobserver takes you on a tour of selected projects in Amsterdam.

Magazine

Tug of war between 'top-down' and 'bottom-up' cohesion money

The European Commission has promised greater flexibility for local authorities when it comes to delivering on-the-ground results - but it has also tied cohesion policy to the European Semester, a tool used to coordinate macroeconomic policies.

Interview

Commissioner Cretu: the EU budget is 'very emotional'

Despite Brexit and new priorities, it is important to keep EU funds for all regions - rich and poor - argues the regions commissioner. But more controls, including a link to rule of law issues, are part of the discussion.

Magazine

A deep dive into the EU regional funds

While the regional funds account for a full third of the EU budget, they are somewhat under-reported. EUobserver's latest edition of the Regions & Cities magazine looks at the EU's cohesion policy.

Magazine

The EU Agencies Race

In this edition of EUobserver's Regions & Cities magazine, we take a closer look at some of the EU agencies, exploring how their location matters and the benefits for cities and regions to host them.

News in Brief

  1. EU ministers adopt measures to tackle soaring energy bills
  2. EU takes Malta to court over golden passports
  3. EU to ban Russian products worth €7bn a year more
  4. Denmark: CIA did not warn of Nord Stream attack
  5. Drone sightings in the North Sea 'occurred over months'
  6. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  7. New compromise over EU energy emergency measures
  8. 15 states push for EU-wide gas price cap

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Editor's weekly digest: A week of leaks
  2. Putin declares holy war on Western 'satanism'
  3. Two elections and 'Macron's club' in focus Next WEEK
  4. EU agrees windfall energy firm tax — but split on gas-price cap
  5. Ukrainian chess prodigy: 'We are not going to resign ... anywhere'
  6. Going Down Under — EU needs to finish trade deal with Australia
  7. MEPs worry Russian disinfo weakens support for Ukraine
  8. Everything you need to know about the EU gas price cap plan

Join EUobserver

Support quality EU news

Join us