1 IntroductionBy mid-decade of the new millennium, the project of European integration found itself at a historical juncture. The most extensive and daring enlargement had just been carried out, delivering a final and crushing blow to the cold-war division which had plagued the Continent for the second half of the twentieth century, and bringing in a rich variety of new cultures, languages and territories under the umbrella of the European Union (EU).
At the same time, Europe was faced with formidable structural challenges. With the 2004 enlargement, the EU had also inherited the largest levels of territorial inequality in its history, threatening solidarity, and with it, the European Social Model. Meanwhile, the Lisbon Strategy was being challenged by disappointing interim results. These great historical developments and the fundamental policy dilemmas they produced cast great uncertainty on the future of Europe. Because of this, no simple line can be extrapolated to predict the future social, economic or territorial development of the European Union. Instead, one must work with scenarios that allow for different developmental pathways to be identified on the basis of policy preferences. This contribution discusses the results of the thematic economy scenarios drawn up in the framework of the ESPON 3.2 project (see editor’s introduction). Two of the four economy scenarios will be elaborated to illustrate the dilemmas surrounding the implementation of the Lisbon Strategy and two to illustrate the dilemmas of solidarity and integration in the wake of European enlargement.
The thematic scenarios for the economy were created for the 2005-2030 period using mainly qualitative methods (literature review and expert opinion). The first step for looking 25 years into the future was to examine the trends and driving forces of the previous 25 years of European economic development. This analysis, called the ‘scenario base’ in the ESPON 3.2 study, provided perspective on how much change was possible during the scenario period as well as some indication of the most important variables driving the economy and the relative importance of government policy, particularly at the EU level [1, pp. 77-114].1
The scenarios produced were of the
The logic of the scenario selection is linked to policy orientation on the one hand, and the intensity of policy application on the other, creating four distinct possible futures. The vertical axis comprises the degree to which the EU strives to enhance its ‘competitiveness’ as understood in EU policy documents and political statements such as the Lisbon Strategy. The horizontal axis comprises the degree to which the EU strives to achieve equity or cohesion within Europe. These four scenarios are illustrated in the diagram below.
The presentation of the scenarios takes place in two parts. First, the high competitiveness-oriented scenarios (Best Foot and EuroTigers) are discussed against the backdrop of the Lisbon Strategy. Each scenario is elaborated by discussing the political context, the policy strategy and implementation and finally the potential effects on the economic and spatial structure. Second, the remaining two scenarios will be discussed with respect to enlargement and solidarity. Like the first two, after sketching out the situation at the beginning of the scenario period, each scenario will be treated by first providing the political context, policy strategy, implementation and potential effects.
Because the timeframe of all the scenarios is 2005-2030, one must take a small step back into the recent past to arrive at the starting point. At that time, the uproar surrounding the budgetary woes, the non-ratification of the European Constitution and the potential accession of Turkey had claimed most media attention, but according to internal EU politics the most urgent issue facing Europe was the economy, or, more specifically: how to ‘face the challenge’ of global competition.2 According to some influential reports on competitiveness published by the European Commission [2-4], the public sector still has an important role to play. The economy may be generally determined by private sector forces, but it is also impacted by governmental decisions like whether or not to participate in a particular common market (NAFTA, EEC), monetary union (euro) or other regulatory framework (WTO, Kyoto protocol, services directive). Public investment in strategic sectors - oftentimes which otherwise would not be profitable - can also produce a competitive advantage, or if done poorly, place an extra financial burden on the economy.
Although the European policy literature seems rather specific and clear about what ‘competitiveness’ entails and what kinds of measures are required to enhance it [5, pp. 4-5], there is less agreement in the academic community. Eminent scholars such as the economist Paul Krugman have criticized how the term has been applied in policy discourse, pointing to the fact that governments are fundamentally different from firms, and that economic prosperity is not necessarily a zero-sum game [quoted in [6]]. In the search for what competitiveness actually means, one quickly encounters the problem of which indicators to use [7]. In general, there seems to be a growing consensus that the competitiveness of regions is tied to sustainable production (labour productivity and employment), which in turn is determined by factors such as foreign direct investment, research and development, the presence of a skilled labour force, good networks and institutions, a knowledge/creative class and good accessibility. Different theories abound regarding which factors are most determinative. Neoclassical economics focuses on assets such as land, labour, capital and entrepreneurship, while endogenous growth theory emphasizes the role of knowledge. For the ‘new economic geography’ spatial agglomeration and spillovers are themselves determining factors for (regional) competitiveness. The model which was constructed to evaluate the ESPON scenarios is an endogenous regional growth model (see Dammers’ paper in this special issue, and for a full description [8, pp. 11-37, 9]).
As the scenarios open, the main driving forces in the economy are globalization and the transition in advanced economies from an industrial to a post-industrial society. The key to ensuring prosperity in Europe would be to capture a dominant position in the burgeoning knowledge-based economy [10-12]. This is the reasoning behind the Lisbon Strategy, which set as its goal for Europe to become in 2010 “the most competitive and most dynamic knowledge-based economy in the world, capable of sustainable economic growth, with more and better and greater social cohesion” [quoted in [13]]. This is also the main objective in both the Best Foot Forward and EuroTigers scenarios. Only the means by which to achieve this is different: Best Foot Forward strives to do this by targeting investment to the proven top regions and sectors, while EuroTigers seeks to promote areas with high potential.
The stark mismatch between the Lisbon ambitions and sluggish economic growth comprise the scenario backdrop. The main countries behind the Best Foot Forward philosophy include the United Kingdom, Austria, Denmark, Sweden, Finland, and the Benelux-and particularly the business sector in these countries. Sympathisers but not overt proponents include France and Germany as both countries contain some elite regions, but clearly lagging ones as well (Britain, despite the fact it clearly has lagging regions, also has a more liberal tradition than Continental countries). Countries such as Italy are divided on the issue, whereas Ireland, Spain, Portugal and Greece are opposed on economic and ideological grounds (all have experienced the benefits of cohesion policy). Interestingly, most new member states join the Best Foot Forward coalition, transcending narrow short-term gains, because it resembles a US-style strategy, which, more than the Western European model, is seen as preferable for achieving rapid economic growth. The citizens of Europe seem convinced of its necessity: according to the 2004 Eurobarometer Report, “European public opinion is ready for solutions in order to foster growth and address crucial issues like unemployment or the future of pensions” [14]. Public opinion also shows that a vast majority believe that a knowledge-based society is the best way to deliver this, placing pressure on the European Parliament - where the liberal parties enjoy an electoral gain - to help Europe put its best foot forward [14].
The strategy entails massive injections of funds into technological development, education in hard sciences, support for ICT infrastructure and the like in order to bridge the investment gap with Japan and the US in terms of per capita GDP (both public and private investments). Best Foot Forward is an inherently pro-EU strategy, as the European level will be relied on to deliver many of the changes via regulations and direct financial support. It is also emphatically Europhilic in nature as it wishes to champion the best aspects of Europe, allowing the EU to act as a beacon for the best minds on the globe [15,16].
Since the ultimate goal is to attract, retain and put to use the world’s best human capital in the knowledge economy, additional investments are required to enhance the quality of facilities and amenities in Europe’s most competitive regions. This means that the European Union must “ensure that our universities can compete with the best in the world” [17, p. 9]. Specific measures include the creation of a European Institute of Technology as mentioned in the midterm review of the Lisbon Strategy [4, p. 22]. However, the Best Foot Forward strategy goes further than this: funds are directed to disseminating an image of Europe’s elite universities as a unified alternative ‘ivy league’ rather than an archipelago of excellence, as they are now commonly perceived. Educational credentials are standardised and streamlined throughout Europe, and rankings published regularly according to the ‘name, fame and shame’ method. The most successful institutions are rewarded with EU-top status, entitling them to additional funding and other benefits such as preferential treatment in land-use conflicts regarding physical expansion where the EU has jurisdiction (Natura2000, environmental standards, state aid), relaxations of immigration laws in order to draw top professionals and students, and benefit packages (subsidised travel and housing schemes) for students and staff. Additional funding would be earmarked towards research facilities and networking activities designed to attain spill-over to the business community.
In Best Foot Forward, the structural funds retain their funding, but are retargeted towards supporting initiatives that facilitate the creation and maintenance of elite regions. Innovative firms in the knowledge economy that are ideally situated and well-connected are supported by regional policy under the motto of linking innovative potential to geographical advantage. With respect to allocation at the regional level, aid is linked to the proven ability to fulfil the Lisbon objectives. Consequently, the regions receiving the most aid are displayed on the ESPON map below regarding past achievements on this indicator [18] (Fig. 1).
R&D policy is one of the most vital spearheads for the Lisbon Strategy, and hence Best Foot Forward. Budgets of the Framework Programmes are increased dramatically, infused by links to the structural funds and significant CAP reductions [19], allowing the EU to meet and even exceed the R&D Lisbon targets of 3% of GDP. The theme of the sixth Framework Programme (Information Society Research) will be carried on indefinitely in this scenario. Since funding in these programmes is awarded on the basis of merit, it is mainly a select number of large multinational companies and universities that should benefit.
In Best Foot Forward, efforts are also stepped up to make the single market more dynamic. This entails better coordination between regulatory and competition policies to encourage market access for new entrants and to introduce a more pro-active policy to support labour mobility. State aid regulations are lifted for certain kinds of industry, particularly knowledge-intensive small business start-ups, if a community wide interest exists.3 On the other hand, state aid will be strongly discouraged if it interferes with or inhibits private-sector investment. The EU has to remain vigilant that promotion of elite organisations and sectors does not stifle healthy competition, and therefore existing anti-trust legislation and rules on public procurement remain vigorous. This scenario also calls for intensifying the freedom of movement of jobs, labour and capital in Europe, starting with the liberalization of the services sector. Finally, environmental and nature protection measures are relaxed if they are seen as impeding economic competitiveness, or subsidies given (e.g. to highly urbanised areas) to clean up pollution.
Before discussing the impacts of the scenario, a few words need to be said about the current territorial distribution of the economy in Europe, which displays a higher degree of geographical variation than for example the United States [20]. At the highest level of scale a few large developmental blocks can be identified which can be worked out into typologies. One can make a distinction, for example, between the urbanised core of Europe - the ‘pentagon’ region as delineated in the European Spatial Development Perspective (ESDP) [21] - and the periphery.4 Disparities in socioeconomic development in the EU traditionally showed a north/south pattern. Although this is still visible, some southern (Mediterranean) regions are catching up, partly due to sustained injections of structural funds, partly due to a flourishing tourist industry. Since the 2004 enlargement, disparities in Europe are most evident along the east/west divide, although here too a catching-up process is underway. Another important distinction for assessing the distribution of territorial effects is that between metropolitan regions and rural areas.
The territorial effects of the Best Foot Forward strategy are directly linked to the pattern of investment (see Fig. 1). Since the main carriers of pan-European competitiveness on the Lisbon indicators are located in the pentagon (e.g. 75% of R&D investment had occurred in the pentagon [22, p. 4]), this receives most of the investments in Best Foot Forward. In particular, subsidies are targeted to improving infrastructure in the pentagon (to counteract congestion) and to companies and organisations affiliated with Lisbon Strategy goals.
According to the scenario storyline, as Europe becomes more competitive in the knowledge economy, this will result in overall higher economic growth, but widening disparities. Larger metropolitan areas with sufficient facilities will profit from the shift in EU policy, particularly in the pentagon. At the same time, transport infrastructure in these areas becomes overburdened in the short term (new funding in this scenario will only have an effect in the long term due to lengthy planning procedures and construction). This will result in higher pollution, particularly in the Randstad-Brussels corridor where additional economic activity is accompanied by a relaxation of environmental standards. Another result is more frequent use of air travel and high-speed rail. Less populated regions decline further in Best Foot Forward, especially in the eastern and southern periphery (and thus exacerbating both the north/south as well as the east/west divides). This is partly a consequence of CAP reductions, increased freedom of movement and the removal of trade barriers.
The Lisbon Strategy comprises the point of departure for Best Foot Forward: to catch up with the US and the Far East with respect to competitiveness and growth. In this scenario, EU investment is channelled to high-tech and competitive sectors of the economy and away from cohesion and agriculture.
The midterm review of the Lisbon Strategy was published a few months after the 2004 enlargement, carrying with it a tone of urgency for all member states. The “lack of commitment and political will” signalled in the Kok report becomes a rallying call for banding together to ensure that Lisbon becomes a reality. In order to raise the necessary political support, a strategy is devised to unite old and new member states by stressing the complementarity of competitiveness and cohesion. Ireland is extolled as a EuroTiger, a shining example of successful use of structural funds, and a model for the new member states. Its progressive stance on intra-EU migration is also praised. The idea that value-for-money in EU-level investment requires a strategic polycentric approach rapidly wins political ground, as it had a decade earlier for the ESDP [23]. Like spatial development, the motto is that polycentricity constitutes the golden mean between equity/welfare and efficiency/redistribution [17, p. 12]. In the end, not only countries identified as EuroTigers themselves (e.g. Ireland, Spain, Estonia, Latvia, Lithuania, Poland the Czech Republic, Slovakia and Hungary) actively support the strategy, but also those countries concerned with the effectiveness of EU-funding such as Denmark, the UK and the Netherlands. The broad base of political support and the lack of ideological opposition quickly allows the EuroTigers strategy to become a reality.
The essence of the EuroTiger strategy is to identify specific areas and sectors that hold the most promise for rapid and sustainable economic development. Unlike Best Foot Forward these are not necessarily the elite: EuroTiger proponents view devoting resources to the best performing areas as conceptually flawed. On the one hand, they already have such formidable resources so that any extra support provided by the EU would be very small in proportional terms. On the other hand, since these top-performers are already successful (by definition), it is likely that they will have enough momentum to remain competitive even without EU assistance. The EuroTiger strategy, in contrast, seeks out instances where the EU can make a decisive contribution to competitiveness. The principle is akin to that of regional policy where funds are only given as a critical extra push for a project, rather than comprising a significant share of the total costs.
With regard to regional policy, the tenets of the policy proposed in the Third Report on Social and Economic Cohesion [3] are largely consistent with the EuroTiger strategy, insofar that both competitiveness and cohesion are objectives. However, EuroTigers goes further in linking the two, taking full heed of the recommendation of ESPON [19] to facilitate coordinated implementation of regional and R&D policy. The same report has shown that R&D investments in less developed regions may deliver more value-for-money as the impact on accelerating the ‘catching up process’ is greater. These investments would be aimed at allowing regions to realize their potential by providing the necessary infrastructure (transport and ICT). The regions poised to receive the most EuroTiger funds are those whose economy is best equipped to make the most of the investment towards Lisbon Strategy objectives. These are not necessarily the best performing regions as in the previous scenario. The areas displayed in the map below [18, p. 19] give some indication of which regions are potential EuroTigers. The darker colours show where recent growth has occurred and the various MEGAs (metropolitan growth areas) indicate areas where enough critical mass exists to take up funds to the end of stimulating the knowledge economy. Particular attention should be paid to ‘potential MEGAs’ residing in a region of high growth (Fig. 2).
Like Best Foot Forward, this scenario foresees significant additional EU-investments in R&D. Unlike the previous scenario, more attention is paid to supporting the most dynamic sectors and regions, rather than the strongest ones. With regard to the Framework Programmes, an evaluation of FP6 showed that it was “almost impossible” for SMEs to participate in the Networks of Excellence programme and that it was particularly difficult for newcomers to become partners [24]. In EuroTigers, this problem is remedied with specific measures to ensure that new and smaller organisations also reap the benefits of R&D policy.
With regard to competition policy, as in Best Foot Forward, internal market rules (including public procurement) are rigorously applied as the development of new markets necessitates the unobstructed flow of capital and labour. Markets must not be distorted with national state aid schemes (usually to failing industry), but instead aid must be given at the EU level with the goal of acting as a catalyst to allow promising new businesses to gain their footing in the global economy.
This scenario envisions the implementation of the Lisbon Strategy as formulated with reference to cohesion and sustainability. There is an obvious link to be made between the ambitions of EuroTigers and the three-pronged strategy of the ESDP regarding sustainable spatial development. The outcome of the scenario is slightly higher total GDP growth than the Best Foot Forward scenario and considerably higher growth than the next two scenarios, due to more efficient use of EU funds.
The geographical distribution of effects differs from the previous scenario (see Fig. 2). Rather than following a core/periphery logic, EuroTigers is more differentiated. In an analysis of regional disparities in Europe, Kramar [25] found a significant rise in internal disparities in rapidly growing accession countries, while those of the EU15 remained more stable over time. Bearing this in mind, one can expect that EuroTigers increases cohesion at the macro-level of Europe, but decreases it within countries, especially within the tigers themselves. Regarding migration, the EuroTiger strategy of targeted investments in R&D and education should accelerate the trek to capital cities, with urban sprawl and the abandonment of land in peripheral rural areas as a likely consequence. Another consequence is increased traffic within booming urban centres like Prague, Budapest and Warsaw. Due to poor highway and rail connections and rising demand for long-distance transport in these areas, a major increase in air travel (and its environmental effects) is an unavoidable consequence of EuroTigers.
With its periodical enlargements, the European Union became ever more heterogeneous; this was most pronounced in the 2004 enlargement. Heterogeneity poses, without doubt, a threat to community governance, but simultaneously it is an opportunity. If it wishes to retain its credibility, the European Union has to apply a more differentiated approach to countries and regions in very different geographical situations and at different developmental levels. This is where a spatial approach is seen as having added value. Following the tenets of the European Spatial Development Perspective (ESDP) [21], this scenario seeks to implement the Lisbon Strategy using strategic territorial indicators to not only produce economic growth but territorial cohesion as well. Instead of concentrating funds on the existing elite as in Best Foot Forward, EU investments are targeted to regions with high growth and high growth potential. In practice, these are areas with GDP levels below the EU-average. The philosophy is that competitiveness does not necessarily have to come at the expense of cohesion. Like Best Foot Forward, the most lagging regions are viewed as beyond help and largely written off as having little promise.
The second two scenarios both score low on their attention for European competitiveness. For this reason, a different policy orientation needs to be found as a backdrop than the Lisbon Strategy. This has been sought in ideals of solidarity,
Before proceeding, a few words need to be said about socioeconomic cohesion and convergence. Although the European Commission has been rather consistent in its assertion that structural funds are significant in reducing disparities in Europe, the academic literature is divided on this topic, both in terms of the magnitude and bearing of policy effects as well as on the ‘natural evolution’ of regions in the European common market. According to neo-classical economic theory, for example, lagging regions and the individuals in them should eventually catch up to those with higher productivity [26]. Endogenous growth theory and the new economic geography are more pessimistic about autonomous market forces leading to convergence. In the former, the more knowledge and technology spillovers are localized, the more labour and capital will concentrate in leading regions, perpetuating or even exacerbating disparities. Empirical research on European regions has revealed that although the national level is important for understanding regional growth, the performance of surrounding regions can explain this even better [27]. In the new economic geography, which examines those tendencies, agglomeration forces cause increased concentration of economic activities and increased concentration causes higher economic growth. This self-enforcing mechanism can be inhibited by agglomeration disadvantages such as congestion. The effect of agglomeration on disparities in the new economic geography is to intensify “core-periphery equilibria and persistent differences in productivity” [6, p. 8]. It is also important to note that there are more possibilities than convergence and divergence when comparing regions. In fact, the dominant trend at the global level is polarization: a situation where convergence is occurring at two distinct levels with a hollowing-out of the middle [28,29]; this phenomenon can also occur with many peaks (stratification). When a group of economies converges towards a particular peak, they can form a ‘convergence club'; within a club, some members may be declining while others are rising. As regards the impact of government policy such as the structural funds on these tendencies, there is little scholarly consensus (see [30] for an overview). Some authors agree with the European Commission as to the effectiveness of policies in reducing disparities, while others argue that particularly physical infrastructure investments tend to benefit strong regions more than weak ones [31-33]. These matters will be returned to in the discussion of effects in the two scenarios focused on convergence and solidarity.
The scenario period opens with the accession of 10 countries into the European Union in 2004, most of which had been under communist control for decades and had only a few years to adjust to the capitalist system [34]. While taking a considerable step forward in uniting the Continent in geographical terms, the enlargement brought with it the largest divisions in socioeconomic development in its 50-year history and has raised tensions about the future role, nature and size of the EU. According to ESPON, “Geographically, the enlargement of 2004 increased the population of the European Union by 28 percent and expanded its territory by 34 percent” [35, p. 3]. Economically, however, the 10 new member states had added only 5% to the total GDP of the EU [13, p. 47] as 92% of their population were living in regions under 75% of the EU average, the cut-off rate for aid under the structural funds [36]. If solidarity in terms of socioeconomic equality were to remain a cherished ideal of European life, this would signify far-reaching redistribution towards its new members.
The enlargement necessitated a broad and fundamental debate about the kind of Europe desired for the future, and the amount of institutional integration and cohesion measures that would be needed for this. By the mid-decade there was a latent but growing dissatisfaction of the unsustainable path being followed by Europe and a perceived blind willingness to emulate the North American model. The costs of this approach in terms of urban sprawl and mobility are made apparent by a number of reports critical of neo-liberal discourse: Europe must compete in the world in terms of joie de vivre and not purely on sterile GDP indicators. The 2004 Eurobarometer report also found that the European public does not necessarily equate quality of life with economic performance [14].
The scenario is based on an emergent consensus that a strong, united and egalitarian Europe is required to provide a humanitarian alternative to North American hegemony. The prevailing disparities within Europe are unacceptable for achieving this goal. Another motivation for the Blühende Landschaften strategy is more opportunistic, as it would allow a large number of lower-income regions to continue to receive structural funding after the enlargement.
The ideal of the Blühende Landschaften strategy is to produce a Europe based on the idea of balanced economic development and cultural/ecological responsibility. The most pressing task is to bring up the most lagging regions to a level worthy of the European Union. Some undeveloped areas will be able to benefit from the introduction of contemporary and environmentally friendly technological solutions without having to pass through the phase of dirty industry. Once a certain level of economic development has been achieved throughout Europe, the emphasis will shift on maintaining the high quality of life, peace and stability. Not surprisingly, Blühende Landschaften is championed by member states that stand to gain the most: the 10 countries entering the EU in 2004, together with member states that in other instances would lose structural funds eligibility in many regions, such as Italy, Spain, Greece and Germany.
Like the other scenarios, the implementation of Blühende Landschaften relies on adjusting a number of sectoral EU policies towards the end of cohesion. The most important instrument for this, in addition to the structural funds is the CAP. As the least privileged regions in the enlarged Europe are generally rural, CAP will continue to command a large portion of the total EU budget. A major revision is necessary, however, to allow it to be targeted to the poorest areas. To do this, less emphasis is placed on production, and more on the conservation of natural and historical heritage. Regions in the wealthiest member states are excluded from CAP support. Instead, these member states are given the option to provide similar support from their own national budget if they wish to do so.
With regard to competition policy, state aid restrictions are relaxed if they are used to sustain industries in poorer regions. Under the burden of increased cohesion spending, the Framework Programmes lose support, unless R&D investments benefit poorer regions (e.g. subsidising exchanges of personnel and information to lagging regions). Regional policy retains and intensifies its orientation towards socioeconomic convergence. This is largely done through building infrastructure to connect peripheral regions (congestion in the pentagon is not viewed as a community priority, but something to be tackled at the member state level), where more emphasis is put on sustainable modes of transport. Finally, open space in peripheral regions is harnessed to generate renewable energy, and subsidies are available for this purpose via regional policy.
The Blühende Landschaften strategy is expected to be flexible and robust enough for allowing the European economy to advance without major crises and shocks, but inadequate for producing higher growth. As the Lisbon Strategy was placed on the back burner, the gap between EU and US recorded in the early 2000s widens. Inefficiencies continue to exist regarding the linkage between industry and science and the underdeveloped competition between universities [3, p. 179]. Nothing has halted the brain-drain towards the US or facilitated recruiting from outside the EU. The equity-oriented policies pursued by European and national authorities to ensure adequate public services do have an equalising effect on living standards: no region is left completely behind. Despite this, younger, well-educated residents continue to migrate towards agglomerated spaces outside their region or abroad. The pentagon loses some of its competitive edge in the world economy as EU funds are redirected to other regions, and a net loss of efficiency is produced as subsidies are disbursed according to need rather than promise. A result is lower disparities across the north/south and east/west divides than, for example, Best Foot Forward. Similarly, environmental quality, the protection and maintenance of cultural qualities and the standard of living improve in previously lagging areas, and are under less pressure in the pentagon than the two previous scenarios.
The term ‘Blühende Landschaften’ was coined by former German Prime Minister Helmut Kohl to describe the developmental approach to be taken to integrate the new eastern states following the collapse of the German Democratic Republic. This entailed massive investments, particularly in infrastructure, to modernize the country. Ultimately, the aim was to allow the new states to compete on an equal footing with the rest of Germany. This scenario mimics this approach at the EU level: lagging regions are to be bolstered in order to allow them to share in the prosperity of the European common market and ensure a decent standard of living. Gradual but steady economic growth is seen as preferable to the booms and busts that typify more laissez faire economies. Finally, matters of sustainability and cultural heritage are also important in this scenario as assets to be cherished and preserved.
A political backlash against Europe was already manifesting itself at the onset of the scenario period. The EU was viewed as hopelessly out of touch with the concerns of its citizens [37]. While Eurocrats busied themselves with the continuous enlargement of the European Union, the constitution or the Lisbon Strategy, it was terrorism, fears of job loss (partly brought on by EU initiatives such as enlargement and the services directive) and complaints of ‘net payer’ status that had captured the hearts and minds of citizens. In addition, trade unions, farmers and other professional organisations rally against specific imports, migrant labourer, and foreign businesses. The defeat of the draft constitution in French and Dutch referenda demonstrated the popular resistance to the EU developing itself into a super-state. Similar sentiments became manifest in the new member states, as the EU was compared to the Soviet Union in the popular media. In other countries, the common currency and the enlargement are blamed as contributing to sluggish growth and high prices. As the EU lost legitimacy, member states step in to fill the political vacuum.
In this scenario, Europe is deemed incapable of delivering results like economic growth and cohesion, and the EU scale irrelevant for tackling the most pressing issues. Curtailing EU policies in favour of reductions in EU-contributions is widely advocated. In terms of policy direction, no real change is made from the current situation. Instead, the EU is expected to perform its tasks with more limited means and at lower levels of ambition.
Responsibility for the Lisbon Strategy remains a matter of the member states. Some countries are in a position to build or maintain world-class R&D facilities, but without EU subsidies the amount of intra-European scientific exchange wanes. Similarly, EU cohesion policy is cut back and a re-nationalisation of regional policies occurs. Structural funds are given to lagging countries rather than regions, and administered at the member state level. As a consequence, various different policy strategies are employed at the national level.
This scenario differs to the others in respect of the fact that a multiplicity of approaches are taken at the national level to address the issues of economic growth and cohesion, while at the EU level, the emphasis is on retrenchment and deregulation. CAP, for example, is reduced significantly, being retained only insofar as it is necessary to prevent gross trade imbalances from emerging. Some countries continue to administer agricultural funding, particularly those with a significant rural constituency and sufficient means. Similarly, EU regional policy is slashed and targeted to the poorest member states, with the expectation that after a number of years they will become self-sufficient. Member states may still - at their own discretion - conduct transfers to aid lagging regions, such had been the case in countries like Italy and Germany. Finally, with the cutbacks in the Framework Programmes, researchers have less incentive to work outside their own language, creating a reorientation along linguistic lines (Spain with Latin America, the German block in Europe, etc.) and ad hoc scientific research network development with Asia and the United States. Some member states are in a much better position to participate in these networks than others.
With respect to competition policy, the National Revival strategy still advocates the abolition of state aid, liberalization of public companies and enforcement of anti-monopoly regulations. Member states are encouraged to follow this strategy, but no new EU-level rules are implemented to enforce it. The environment remains one of the few areas where the EU remains indispensable due to its inherently transnational nature. However, a more critical view is taken at the specific measures taken: they must all pass the test of subsidiarity, or be decentralised. Natura2000, for example, is blamed for blocking projects vital for economic development and competitiveness in some countries and is renationalized.
The National Revival strategy is expected to have ramifications for not only the spatial distribution of wealth, but also net economic development in the EU. According to Commissioner Barroso, the ‘costs of non-Europe’ have been substantiated through a large volume of academic evidence. One can argue with the figures, of course, such as the contention by the European Commission, that GDP is almost 2% higher and foreign direct investment twice as high as it would have been without the creation of the internal market [5]. Nevertheless, it is reasonable to assume that if the workings of the internal market were to be undermined, as in the latter part of this scenario, that this would have some negative impact on economic growth.
With respect to cohesion, since regional policy is decentralised, poor regions in poor member states will probably not get the help they need, unlike poor regions in wealthier member states. Like Best Foot Forward and EuroTigers, the weakest regions in Europe are written off. There will be a widening of disparities between nations with respect to the other scenarios, as countries in the pentagon take advantage of agglomeration economies. Within nations, disparities could decrease, depending on the degree to which national-level cohesion policies are implemented.
Changes in rural development are highly dependent on national politics. As a whole, CAP is reduced, but so too are competition policy controls on how much state aid can be disbursed to various industries, including agriculture. Rural areas under favourable natural and economic circumstances or with generous national subsidies fare rather well, while others remain among the most problematic areas of the EU in terms of unemployment and poverty, In those areas, emigration leads to land abandonment and, consequently, increased risk of environmental hazards and deterioration, something which tends to further increase the east/west divide in economic development.
In the National Revival scenario, the European Union takes a more modest approach to developing its territory. The official argumentation for this position is the subsidiarity principle in the EU-treaty, but an undercurrent of popular dissatisfaction with the EU is also distinctly palpable. In National Revival, national governments re-evaluate their commitments to European policy objectives and regulations. In some countries, obstacles to free movement of labour are maintained, and the period of derogations extended. EU competition policy is also more frequently evaded. Over time the advantages of integration become less and less perceptible and explainable to the electorate. As the policies of national governments become increasingly diverse, the developmental trajectories also become more divergent and spatial structures more heterogeneous.
This contribution recounted the inputs and outputs of four policy-oriented scenarios on the economic development in Europe created in the framework of the ESPON 3.2 project [1]. According to a scenario logic of policy orientation (competitiveness/cohesion) and EU influence (high/low) four distinct futures were posited and elaborated. For the purposes of discussion, these scenarios have been linked to the Lisbon Strategy and the European Social Model as contrasting (and, depending on one’s point of view, contradictory) ambitions.
It should be pointed out that the scenarios, and thus the spatial and economic effects in the scenarios, were developed to explore the limits of decision-making at the European level. Because of this, some policy decisions described in the scenarios are unlikely given existing institutional and political constraints (e.g. veto rights). More likely is a mix between competitiveness and cohesion, usually (as was the case in EuroTigers) underpinned with argumentations of synergetic effects. In addition, a word of caution is in order with respect to the magnitude of the effects as described in the scenarios; these are mainly the product of expert opinions based on the driving forces identified in the scenario base, and should be understood as relative to one another, rather than absolute. Moreover, as EU policy is the variable which serves to distinguish the scenarios, its effects may (and probably are) structurally overestimated. In fact, the results of an econometric model run on similar scenarios [9,38] for the first half of the scenario period found only slight impacts on total economic growth and disparities in absolute terms. This is unsurprising given the modest financial means (approximately 1% GDP) at the disposal of the EU. It is with these caveats in mind that the differences between the scenario outcomes should be understood.
With regard to European competitiveness and the Lisbon Strategy, obviously Best Foot Forward and EuroTigers score better than Blühende Landschaften and National Revival (although the latter does provide room for excellence at the member state level). The beneficiaries in the scenarios and the spatial effects differ however. Best Foot Forward results in more concentration of economic activity in the pentagon and southern Scandinavia and thus to increasing disparities at the European level. At the national level, metropolitan areas are favoured above their hinterland and peripheral regions are allowed to decline and depopulate. EuroTigers produces similar, but not identical results. Economic growth is slightly higher than Best Foot Forward due to the focus on rapidly developing regions, but less progress is made towards the Lisbon Strategy.5 Beneficiaries are mainly capital regions in the new member states, resulting in reduced disparities at the EU-level but, like Best Foot Forward, increasing disparities at the national level. Finally, it can be added that both scenarios reinforce existing market trends towards agglomeration in cities and rescaling at the regional level [39,40].
Some interesting trade-offs arise when Best Foot Forward is compared to EuroTigers in terms of sustainability. Best Foot Forward would obviously compound negative agglomeration effects in the European core area such as congestion, pollution and lack of open space. On the other hand, the longer distances between growth centres in EuroTigers could more than compensate for this due to a reliance on air travel, especially if more net economic growth is produced. This could lead to the rather uneasy conclusion that a strategy inspired in part by the ESDP - where sustainable development is a guiding principle - could conceivably be the most environmentally damaging.
With regard to cohesion, Best Foot Forward and EuroTigers both produce polarization between urban and rural areas. The membership of the Best Foot Forward ‘convergence club’ of urban winners is more exclusive than that of EuroTigers. In addition to the distribution of gains and losses of GDP across the European territory, one must also consider the impacts this has on society and the environment. In general, economic growth is accompanied by pollution and loss of open space. In addition, property owners and workers with skills in inelastic supply stand to gain from economic growth, while the underclass experiences increasing rents and negative agglomeration effects [41]. These tendencies, already visible in prosperous cities like London [42], will spread to capital regions in East Europe in EuroTigers. The last two scenarios also produce mixed results on cohesion. In relative terms, Blühende Landschaften does seem to deliver what its name suggests: rural areas are less disadvantaged than in other scenarios and become more liveable in terms of environmental quality. Although there is less relative migration to the cities and core areas of Europe, this does not turn the tide significantly, and the European Social Model, as interpreted as the right to live and work in one’s own region, continues to erode because the policy instruments (CAP and regional policy), are relatively weak compared to structural demographic decline and economic agglomeration forces. In National Revival, migration may be restricted by member states, creating a de facto Social Model, but not one based on choice. Some member states will be more successful than others in keeping their countryside liveable, while others may pursue a Best Foot Forward strategy, allowing urban/rural disparities to accelerate.
In conclusion, the four ESPON economy scenarios function as a rhetorical device to place policy choices into a territorial perspective. Their value is not in their prognosticative capacity - which admittedly is rather limited, given the broad brush approach and lack of rigorous quantitative modelling - but in the way that insight is gained into trade-offs regarding the distribution of costs and benefits in the European territory. Each scenario carries with it its own set of advantages and disadvantages. European policy documents on the economy or the Lisbon Strategy (e.g. the competitiveness reports), generally neglect the territorial consequences of their policy suggestions, and focus narrowly on the ‘profit’ dimension. These scenarios seek to show that decisions regarding competiveness and cohesion will have different and sometimes unforeseen impacts on ‘people’ and ‘planet’ and that the spatial distribution of this varies in the long term. In this sense, the scenario exercise directly supports the informal political process which has produced the territorial agenda [43] and the green paper on territorial cohesion [44]. Both documents insist that geography is not neutral; it structures the prospects for economic development and affects the impact of generic policy.
A final note must be added as regards the time that has elapsed since the opening of the scenario period (2005). As the scenario exercise was carried out prior to this date, some words can be said about the four scenarios in light of the events which have since transpired. At the time, Best Foot Forward and EuroTigers were seen by the project team as the most realistic since they coincided with recent trends and policy ambitions. The National Revival scenario, regarded as the least likely during the scenario exercise, has become increasingly plausible following the results of successive referenda on the European Constitution and Reform Treaty and calls to renationalize regional policy. Regarding Blühende Landschaften, the notion of solidarity is still very central in European politics, and the budget of the convergence objective of the structural funds is still dominant. This became even more so during the French and Czech presidencies as the structural funds were reframed as weapons against the economic crisis. It may not be until the formation of the next European Commission or the publication in 2010 of the definitive - and surely disappointing - Lisbon Strategy results that the first two scenarios will again gain in probability. This demonstrates the value of making scenarios that do not necessarily conform to the conventional wisdom of what is a ‘realistic future’ but cast the net wide to capture a fuller range of possibilities. While surely less accurate in the short term, these kinds of scenarios usually prove to be more robust over time in informing policy decisions on fundamental issues such as competitiveness and convergence.
The writing of this paper has been made possible by the ESPON programme. I would also like to thank the referees for their constructive comments.
1
Since a large portion of this article refers to the same ESPON study, no further references will be made to it.
2
Now, 5 years later, the state of the European economy continues to dominate the policy agenda. The main difference is that the prospects of European competitors seem equally as bleak.
3
This was already the thrust of
4
The ‘pentagon’ is defined as the area between London, Paris, Milan, Munich and Hamburg. Although the pentagon has a higher density of population and GDP than the rest of Europe, there are certain regions within the pentagon that exhibit peripheral characteristics (rural France) and some areas in the periphery that function as pentagon regions (southern Scandinavia).
5
This poses an interesting dilemma: Best Foot Forward seemed to make a more convincing case when it came to realizing the best knowledge-based economy, but then for a rather select few. If there is little spin-off, this could still be a suboptimal model in terms of total economic growth. This also raises a more fundamental question: can Lisbon still be called a success if Europe has the best R&D and/or creative class, but only for a small elite?
