THE PROBLEMS OF REGIONAL POLICY IN LITHUANIA DURING INTEGRATION INTO EUROPEAN UNION

Transcription

1 Violeta Damasiene Mindaugas Butkus Department of Economics Siauliai University Lithuania THE PROBLEMS OF REGIONAL POLICY IN LITHUANIA DURING INTEGRATION INTO EUROPEAN UNION 1. Introduction Lithuania, joining the European Union, as other countries must implement regional policy, which has an aim to decrease regional development differences and promote regional development and up growth. In Lithuania regional policy only starts its development. In our country it is defined as the entirety of purposeful means, intended to decrease economical and social differences between the regions. These National regional development objectives are accentuated: 1. To promote economy reconstruction and modernization in the industrial regions. 2. To decrease unemployment in the regions of the biggest unemployment. 3. To develop the most backward country regions a) reconstructing their economy, b) reforming agricultural production, manufacturing, and marketing structures, c) promoting the creation of new businesses and services. 4. To promote the investment of foreign, first of all European Union, countries to the Lithuanian economy. During the last few years the main assumptions of the regional policy implementation were settled Lithuanian regional policy concept, its institutional background and main instruments of the policy have the essential failings. First of all the orientation to the narrow target: to use the EU support; precluded to base the point, why the regional policy is needed in Lithuania, what should be its aims, instruments and results. There is another failing, connected with the needs of using EU support. The created system of Lithuanian regional policy assumptions does not accord not only to national public policy needs, but also it isn t going to settle the proper basis to use the EU support (Bachtler, 1997). The objective of regional policy is understood as decreasing differences in social and economical development of different regions of the country, not estimating, it means self-sufficient, intended to the social needs national regional policy implementation (Draguniene, Jankauskas, 2001). That fact induced us to analyse this question and overlook, determine the trends of regional policy development. The object of research regional policy in Lithuania. The aim of research to reveal the role of the regional policy during the county s integration into European Union and its problems. The method of research the analysis and synthesis of scientific literature and documents, which contains information on regional policy in Lithuania. 2. The Grounding of Regional Policy in Lithuania Setting the efficient governmental regional policy and the system of means for its implementation it is necessary to employ the rules of classical economy theory and

2 management, which form the theoretical basis for regional development (Bartaskiene, 1999). The part of documents carried in 1998, regulating the questions of regional policy, is not changed. For example The Outline of Lithuanian Regional Policy. Carried the law of Regional development, The National Plan of Regional Development is being created, the joint document for is being formed, Lithuanian Future Scenarios: are suggested. Now there is Lithuanian Imitation Model prepared by Norvaisa S. (2002) and other long term documents. Since 1990 there were prepared over 20 national and government supported programs in Lithuania, but the question of regional territorial dislocation wasn t essentially treated in no one of them, evaluating, estimating their saltatories. According to the regional description predicted in LR law, the role of national regional development policy is accentuated. This policy should be differentiated, but the criterions for differentiation of regions are not defined. In the policy of National regional development there are indicated only objectives to improve life quality, to use the territorial features rationally, to create favourable conditions for economical, social and ecological development (Damasiene, Rimkeviciene, 2002). It should be accentuated, that there isn t a definition for the region in Lithuania. Some cultural, identity differences, characteristic for four ethnographical Lithuanian region, are not defined administratively. Therefore the discussion about the regional policy in Lithuania started from the question, what should be treated as region in Lithuania and how to evaluate the differences between the regions. The problem was solved mechanically declaring as regions Lithuanian upper level districts. The statistic economical and social development rates were started to count accordingly. In Lithuanian periphery much less than in the centers the privet sector is developed, big and medium size old industrial enterprises dominate in the economical structure. They are nearing to the bankrupt limit the services sector is weak. Regional social rates differences are very clear too. Overall the regions can be classified: According to the main urbanized territories and their functions. According to the market potential. According to the importance of the appropriate economical activity (agricultural, industrial, tourism) in the region. The region, which is distinguished for its population concentration, industrial activity, usually is easily delineated geographically too. In the economical analysis geographical distances must be transformed into economical it means into economical social expenditures, determined by the geographical distances (Budvil, Potje, 1996). Geographically the regions are defined for example: Littoral, Central, West, South and North Lithuanian parts, and economically, for example territories with big and little income, with high or low unemployment level. On purpose to vouchsafe the efficient regional development the proper regional detachment is needed. It is emphasized that the main territorial unit - the region, where the national regional development policy is implemented is the territory of the upper level district. The government can make the regions from the several districts and municipalities having the same administrative borders ascertained specific problems and conditions of these regions. Consequently if the regions having similar problems and interests join together, there is a possibility to use recourses more efficiently and to implement projects together.

3 Present Lithuanian administrative structure is similar to the structures of the countries of EU. Lithuania is divided to 10 regions. Average population in one region in Lithuania is about 0.37 million, and in EU countries the population of the administrative units of the third territorial statistic units nomenclature level (TSUN) (the level which coincides Lithuanian upper level districts regions) is 0.36 million. The second TSUN level (upper level) regional structures should be created in Lithuania. They could be formed from the several regions on the grounds of the similar natural and economical environment. According to economical social development we can distinguish West, Central, North, Southwest, East and Southeast parts of Lithuania. According to the natural environment, landscape differences we can distinguish 10 environment protection regions. Each of them has own potential of natural recourses, distinctive ecogeographical characteristics. They are Littoral region, the regions of Central Lithuania, Vilnija, North Lithuania, South Lithuania, Southwest Lithuania, East and Middle Samogitia, East and Middle Upper Lithuania. These regions can be successfully joined and combined according to their social economical rates. From the territorial point of view there are several regions in Lithuania, which have the best economical social rates. The bigger part of the direct foreign investments is concentrated there. It is the west part of Lithuania including Klaipeda, Palanga, the districts of Klaipeda, Mazeikiai and Akmene; central part including Kaunas, Jonava, Kedainiai and Kaisiadoriai districts; Southeast part including Vilnius, and Vilnius and Varena districts. The leader of the direct investment in draft still remains Vilnius. While In the Northern, Southeast and East parts of Lithuania the agricultural production is widely developed. The most backward from the social economical point of view are Jonoskis, Pakruojis and Pasvalys districts in the Northern part of the republic, Marijampole and Lazdijai districts in the Southeast and Iganalina, Zarasai districts in the East part of Lithuania. Economical rates of these regions are the worst. Lithuanian welfare level, which could dovetail EU NUTS II region, is measured by GDP for one citizen, and it amounts a bit less then the third of average in EU and a bit more than 1/8 of the richest EU region (Hamburg) rate the poorest East Germany regions were almost two times richer than Lithuania. One of the reasons is that the country strongly dependent from the employment in the agricultural sector. The implemented regional policy involves means, which should warrant the equal standard of life and conditions to all citizens, without reference to where, in which region, do they live. 3. The Possibilities of Implementing the Regional Policy in Lithuania The main aim of the regional policy is to equalize economical level of the different regions and to make them closer to the EU average according to the main economical social rates. National Regional Development Plan generalizes national underlying targets and aims of regional social and economical development, it forms national regional development policy and projects means and ways for implementing this policy, its targets, objectives and aims (see Fig. 1). Euro-Committee

4 Branch ministry Lithuanian Republic Input into the national regional Development policy formation (Branch dimension) Financial ministry Planning of the regional development Policy; preparation of the national Development plan, control and audit. Implementing the programs of regional development Regional development (oversight) Boards Consist of the administrations of the Regional wardens, municipalities, Representatives of the main social economical partners; confirmation of the regional development plans, the functions of the boards secretariats are done by the administrations of the regional wardens. Municipalities Delegate the biggest part of the Regional development board, controls the process of planning and implementing of the regional development policy (Assignation of the main aims and objectives of the national regional development policy) National committee of regional (Assignation of the strategic work trends and directions; Home Office (directly the Department of Regional Development) does the function of The secretariat of the Committee of the National Development Plan)) Administrations of the regional wardens Input into the formation of national regional development policy (regional dimension) Social-economical partners Foreign Office (Coordination of the foreign support) Compatibility of the national regional development policy with foreign support programs Home Office (Coordination of the national regional development policy) National regional development agency (Technical support for Home Office) Agencies of regional development (Technical support for the administrations of the regional wardens) Figure 1. National regional policy formation Source: own formation. In the plan the general aims of the National Regional Development Plan are assigned: To increase real GDP growth and employment level, and develop the living standards comparing with the developed European countries. To increase economy competitive ability. To decrease social and economical differences between Lithuanian regions creating favourable conditions, environment for the social and economical development in the most backward Lithuanian regions. In the plan there is the quite detailed analysis of Lithuanian economical status, international economical environment trends are discussed, the problems of the country development and their solutions are presented only shortly considering the other documents of Lithuanian Government, such as State Investment Program or Sectorial Development Programs, without any relationship with the regional development. However the development aim, declared in such a way, to male Lithuanian living standard closer to the EU, remains unsustained by the concrete means and ways. Another failing is that the regional development is being reduced to the substantiation of use of

5 the EU support. The whole development plan without analytical part is only technical task of EU PHARE support use without any means of national regional development respectively complementing it (Streimikiene, 2002). We can state, that although the infrastructure of regional policy is expatiated, its instruments cannot become the way to solve regional differences problems. Regional policy and EU structural support can become efficient only when they become the integral part of national policy. EU support to the regional development can only help to implement the regional policy in the country, but not change it. The problems of Lithuanian economical development and EU structural funds should not be identified with the problems of the regional development and the ways to solve them. Regional policy should become the part of national development policy, which could get the structural help from EU for implementation. Swedish author Nudelk J. A. (1984) states, that direct foreign investment is the main determinant of GNP for one citizen growth in the region. Academic E. Vilkas and lots of others Lithuanian scientists think that it is the main factor in the long-term economy strategy of the country. In the conditions of globalisation regions can achieve the higher living quality not only due to foreign investment, but also with the direct and indirect support of local investment and sate institutions, which are directly responsible for the business development it is possible to work in the region efficiently and thus conduce to the growth of general country s welfare (Streimikiene, 2000). Steady state support to the region can be given when: Unemployment in the region distinctly exceeds the average state unemployment level. The living conditions in the region are much worse then in the other regions of the country. The solving of the tasks on the grounds of the principles of the regional policy is complicated and miscellaneous; it needs huge financial recourses and business development efforts, creating of the regional development programs and documents, their coordination and implementation (Martin, 1999). Nowadays we can distinguish two directions of the regional development policy in Lithuania: the implementation of the regional policy of European Union in Lithuania and Lithuanian regional policy itself. Naturally both these directions are interdependent. On purpose to get EU support for implementation of the regional policy, the well functioning and corresponding to the regulations of EU national regional policy is needed. Therefore we need: To prepare and implement the national regional social development program, reflecting regional specialization according to economical activities. To prepare for administration of the structural support programs of EU. It is important to prepare the regional policy programs in drafting private capital investment into their implementation, to support the business enterprises establishment in the regions, to create the support mechanism for the economically backward regions, to project and realise the means of the financial policy (Noble, Costa, Dutt, Kent, 1998) this is the activity of the regional development departments. The efficiency of this activity determines the amount of supporting recourses from EU structural funds. The cooperation of the various programs and their active implementation allow efficient implementation of the regional policy of the country (see Fig. 2).

6 REGIONAL POLICY AIM: to decrease the differences in social and economical development of the different state regions. LEVEL: the policy of the growth of the real GDP and employment level. KIND: the policy to increase the competitive ability of economy COMPETITIVE POLICY Compensation of market Failures Small and average business promotion Restraint of monopoly forces Infrastructure development Encouraging of the direct foreign investment Energetic policy Restructurization of Enterprises Security of the efficiency of the privatization process Simplification of the bankrupt procedures Regulation of the relations between debtors and creditors Preparation of the social means for solving restructurization problems INDUSTRIAL POLICY INOVATION POLICY Intensification (consolidation) of the Competitive abilities: Improving of business environment Promotion of the scientific research and technology development and implementation Promotion of the education and science Promotion of the clusters creation Promotion of the high technology industry branches FOREIGN TRADE POLICY Figure 2. The systemic model of the regional policy and its parts Source: own formation. Recently strategic directions for regional economics development policy until 2015 were projected 1 : To warrant favourable conditions for the investment into regional economy. To develop regional technical and social infrastructure on the grounds of the principles of the balanced development. 1 Regional Development Strategy until 2015, project prepared by Institute of Regional Research in Lithuania on March, 2002.

7 Optimise the functions of the central state institutions, responsible for the implementation of the regional policy. Increase economical development ruling functions (planning, implementing, coordination and control) in the regional administrations and municipalities. Increase the competence of the regional human recourses. To create the society of knowledge developing regional informational infrastructure. However the main aim of the regional policy is the reduction of the socialeconomical differences between regions. Foreign investment can help the backward regions to overtake economically developed regions (Achtenhagen, 2001). In Lithuania the biggest part of the industry is concentrated in the five biggest cities, in the same time increases the relish of these cities for investment. According to Streimikiene D. (2001) regional economical development depends on the industrial development in the region. It is discussed in Lithuania whether the aim of regional development policy is equalize the regions according to their economical rates, expanding production, increasing industrialization and creating new industrial branches or keeping the peculiarity of the regions develop traditional regional activities considering local resources without creating new industrial branches. It is noticed that it is important to consider regional peculiarity from the geographical, traditional point of view, consider its resources and traditional activities, to develop its economical social potential in the traditional direction, in drafting investment into these economy branches, which development is the most productive. In the project prepared by the academic Vasiliauskas A. 2 considering the present economical situation are given the trends for the strategic analysis of the country. It should be stated that the trend to investment into regional development is basic. Analysing the scientific works about regional development and policy formation the very important condition determining regional development appears. It is the efficient implementation of the strategically planned actions and means of central state institutions. In Europe regional policy has been plenty successfully implemented in the last decades. For its efficient functioning the economical, social, geographical and ruling territorial structures are needed. They would dispense financial resources rationally and optimally. Nowadays environmental changes increase the role of the regions, regional policy and its strategy, besides they establish new interregional and international relations. On the grounds of the analysis of the scientific literature it became clear, that the basic problem is due to choosing and forming regional policy strategies. Lithuanian regional policy is the new sphere in the public policy, therefore the problems, arising forming it, lie in the historical, ethnical relationship and natural environment. Implementing state regional policy also necessarily arise political problems. 2 Strategical Analysis and General Strategy prepared by Vasiliauskas A., A part from project Long-term Lithuanian Economic Development Strategy until 2015.

8 4. Conclusions Economical globalisation changes are followed by the growing role of local production systems. In these conditions regional policy got great significance, because different regions, getting the different profit from the new trade possibilities, connected with the creation of joint market, with the liberalization of general international trade, try to improve their positions, and national governments and international institutions try to reduce interregional differences. The traditional development policy, orientated to the economical dispensation of activities between developed and backward regions, is supported by ES programs. Despite all innovation attempts, the regional differences still remain big. We still continue to search for the more efficient strategies of the regional policy in the environment of economical in determination and political changes. The processes of globalisation induce to seek for the modern forms of the institutional organization of the regional policy. 1. The regional policy should be understood much wider then it is treated in the appropriate documents of our country. 2. The regional development should be connected with the adequate regional policy, rendering more liberties to the human resources. 3. EU and other counties examples show the relationship and cooperation of state institutions with business structures. 4. EU supports international and interregional cooperation and that fact motivates the regional development of the Baltic States and reduces the periphery and economical and social backwardness of our country. 5. The state government projects to implement regional development in these trends: a. Regional and local development initiatives; b. Regional development dimension integration into the programs of development of different economy sectors, to reduce the differences between the regions; c. Promotion of the international and interregional cooperation in order to support equal development of Baltic Sea region countries, to reduce the periphery of the border regions and their economical backwardness. References: Achtenhagen, L., (2001): The Role of Regional Networks in New-Venture Creation Processes, in: Twenty-First Annual Entrepreneurship Research Conference on Frontiers of Entrepreneurship Research 2001, Proceedings, Sep 15-17, Bachtler, J., (1997): New Dimensions of Regional Policy in Western Europe, Journal of The Political Economy of Regionalism, 5: Bartaskiene, D., (1999): The Objectives of Lithuania regional policy, in: International Conference on Regional Economics and Development Proceedings, Oct 21-22, 1999, pp Budvil, Z.; Potje, P., (1962): Regional Economics, Oxford University Press, New York, NY. Damasiene, V.; Rimkeviciene A., (2002): The Analysis and Evaluation of Regional Policy Strategies, in: International Conference on Development of Regions-2002, Proceedings, Oct , pp

9 Draguniene, N.; Jankauskas, A., (2001): Social Aspects of Economical Growth, in: International Conference on Development of Regions-2001, Proceedings, May 11-12, 2001, pp Martin, P., (1999): Can Regional Policies Affect Growth and Geography in Europe?, Juornal The World Economy, 21: Noble A. G.; Costa F. J.; Dutt A. K.; Kent R. B., (1998): Regional Development and Planning for the 21 st Century: New Priorities, New Philosophies, The Ipswick Book Company, Suffolk, GB. Nudelk, J. A., (1984): Multidimensional Analysis of Regional Infrastructure and Economic Development, Journal of Regional and Industrial Development Theories. Models and Empirical Evidence, 3: Sreimikiene, D., (2001): Direct Foreign Investment and regional Development in Lithuania, Journmal of Engineering Economics, 1(16): Streimikien, D., (2002): European Union Policy Implementation in Lithuania, in: International Conference on Development of regions-2002, Proceedings, Oct 3-4, 2002, pp