Download slovak republic* 1. development disparities and issues

Slovak Republic
SLOVAK REPUBLIC *
1.
DEVELOPMENT DISPARITIES AND ISSUES
In the Slovak Republic, GDP per head stood at 51.3 percent of the EU25 average in 2002.
Recent economic growth in the country is supported by on-going structural reform, e.g.
through restructuring and privatisation. Heavy industry and agriculture have both
contracted as a percentage of GDP. In 2000 industry accounted for 26.3 percent of GDP
compared to 49 percent in 1990. 1 Agricult ural output declined to 4.5 percent of GDP in
2000 compared to 6.9 percent in 1993. 2 In contrast, the share of the service sector has
increased.
The country has comparatively high levels of unemployment (17.6 percent in 2003). This is
compounded by structural shortcomings in the labour market – notably a lack of regional
mobility, disincentives from the benefit systems, wage inflexibilities and skill mismatches.3
Strengthening and diversifying the country’s employment base is a key challenge for the
future. Other priorities include: ensuring a further reduction of the general government
deficit; improving the business environment; and supporting entrepreneurship and
productivity. 4
Figure 1: Slovak Republic
Source: http://www.europa.eu.int/abc/maps/members/slovakia_en.htm
1
The Economist, Country Briefings, Slovakia, Economic Structure. Available at:
http://www.economist.com/countries/Slovakia/profile.cfm?folder=Profile%2DEconomic%20Structure
2
Ibid.
3
European Commission, Commission Recommendation on the 2004 update of the Broad Guidelines of
the Economic Policies of the Member States and the Community (for the 2003-2005 period), (European
Commission, Brussels, 2004), p. 56.
4
Ibid, p. 56-57.
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In terms of regional development, the most prosperous region of the Slovak Republic is the
capital city region. The Bratislava region has the best infrastructure, R&D potential,
concentration of Foreign Direct Investment and access to neighbouring countries in the
European Union, as well as the highest levels of GDP per capita and service sector
employment, and the lowest rate of unemployment (see Table 1).
More generally, the major urban agglomerations of the eight regional capitals and their
immediate hinterlands tend to have relatively favourable economic positions and diversified
economic structures. Industrial areas in the north-west of the country have undergone
considerable structural challenges in the course of the 1990s and, in many cases, have
suffered sharp falls in GDP and employment levels. Some of these areas have a good
underlying provision of social and technical infrastructure, a qualified workforce and a
more diversified economic structure, which together provide positive preconditions for
future development. Others face on-going structural difficulties, principally as a result of
mono-structural activities or heavy industrial or mining activity. There are also a number
of highly disadvantaged rural areas in the country. A number of these regions, located
principally in the southern border and eastern areas of the country, have a highly agrarian
structure and poor infrastructure and some of the highest levels of unemployment in the
country. The Trnava and Nitra regions in Western Slovakia are the regions most heavily
reliant on agriculture.
An increasingly significant regional development pattern is the emergence of a west-east
divide. The geographic location of Bratislava in the west, near the Austrian border, has
implications for regional development in the country, by concentrating development in the
western regions. Negative socio-economic indicators and trends are most significant in the
eastern districts, in the border districts of the south and in parts of north Slovakia. For
example, in 2003 unemployment levels stood at 21.8 percent in Eastern Slovakia but only at
7.1 percent in the region of Bratislava and at 15.9 percent in Western Slovakia. Common
problems in districts along the border areas with Hungary, Ukraine and Poland include poor
technical, transport and telecommunication infrastructures and accessibility.
Table 1: Socio-economic indicator in the Slovak Republic (NUTS II)
Slovak Republic
Population
GDP
Employment by sector
Unemployment
(000)
Per Capita, PPS
(% of total)
Rate (%)
2001
2001
2002
EU15=100
EU25=100
Agric.
Ind.
Services
2001
2003
Regions
Bratislavský
602
101.8
111.7
2.3
23.1
74.7
8.3
7.1
Západné Slovensko
1878
40.9
44.9
7.3
42.4
50.3
18.6
15.9
Stredné Slovensko
1360
36.9
40.5
6.5
40.7
52.8
20.9
20.5
Východné Slovensko
1564
34.0
37.3
6.5
39.4
54.1
23.9
21.8
Total
5403
44.7
49.0
6.2
38.5
55.4
19.3
17.6
Source: Eurostat (unemployment rates) and Third Report on Economic and Social Cohesion
(European Commission, Brussels , 2004).
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2.
NATIONAL REGIONAL POLICY OBJECTIVES
In 1998, a document The Strategy and Concept of Regional Development in the Slovak
Republic was drafted. It outlined the strategic aims, objectives, priorities and measures of
recent Slovak regional policy. The first proposed strategic aim was to support the Slovak
regions and increase national prosperity. The second proposed strategic aim was to improve
the institutional and administrative capacity for the implementation of a comprehensive
regional policy integrated with structural instruments.
According to the government’s resolutions, regional policy should be vertically integrated
between local authorities, regional authorities and central government institutions, and
horizontal integration should be ensured via territorial co-ordination of sectoral policies. On
the basis of this understanding of regional policy, the Principles of the Regional Policy of
the Slovak Republic, approved on 13 September 2000, set out a system of state support for
regional development.
The Principles were followed by the Act on Support of Regional Development, which more
clearly defines the competencies and objectives of regional policy. The Act, which came
into effect on 1 January 2002, sets out the main objectives and instruments of regional
policy and establishes eligible areas for regional support. The Act was developed in line
with the core principles of programming, partnership, concentration and complementarity.
The main objectives of the support for regional development are to:
•
provide for well-balanced economic development and social development of the Slovak
Republic;
•
remove or reduce the disparities in the level of economic development and social
development of regions;
•
prevent the formation of new regions with lower economic performance and living
standards of their populations; and
•
sustain economic and social development of regions.
3.
INSTITUTIONAL ARRANGEMENTS
3.1
Territorial Administrative Structures
In January 2002, eight regional self-governments were established, corresponding to the
NUTS III level. Transfer of responsibilities from the state administration to regional selfgovernments and municipalities was implemented in five stages from 1 April 2002.5 Further
progress with the delegation of responsibilities and, in particular, financial resources is
expected in 2005.
5
The transfer of administrative tasks and responsibilities from the state administration (regional and
district offices) to the new self-governing regions and to the municipalities is regulated by the Act
416/ 2001.
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There are four NUTS II regions, Bratislavský kraj, Západné Slovensko, Stredné Slovensko and
Východné Slovensko. All these regions, except the Bratislava region, are made up of more
than one self-governing region. Linked to regional administrative reform, existing district
administrative offices were dissolved and replaced with 50 local offices of the state
administration.
Table 2: Territorial Units in Slovakia
Unit Type
Designation
Number of Units
Statistical units + planning regions
NUTS II
4
Self-governing
NUTS III
8
Districts
NUTS IV
79
Municipalities
NUTS V
2883
regions
(so
called
higher territorial units - VÚC)
3.2
Institutional Structure for Regional Policy
National Level
The Ministry of Construction and Regional Development (MCRD), established in 1998, has
primary responsibility for the development and implementation of regional policy in the
Slovak Republic. The Ministry is responsible for coordinating the actions of the state
administration, municipalities and self-governing regions in areas such as the development
and implementation of regional development plans. The country’s Agency for the Support
for Regional Development also operates under the auspices of the MCRD.
In order to promote inter-ministerial cooperation, a Government Council for Regional Policy
and Supervision of Structural Operations is in operation. The Council is chaired by the
Deputy Prime Minister. It is responsible for the overall co-ordination of regional
development and acts as an advisory body for the Government on regional development.
Regional level
The country’s self-governing regions are intended to have an important role in regional
development. The regional authorities are responsible for establishing and meeting
development goals for the territory. According to the Regional Development Support Act,
the self-governing regions play key roles in:
•
the implementation of regional development strategy;
•
coordination of tasks related to the socio-economic development of the territory;
•
input into the creation of the National Development Programme;
•
monitoring economic and social development of the area;
•
provision of financial resources for addressing development disparities within the
regions; and
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•
coordination
of
the activities
of
municipalities,
associations
of
municipalities
(microregions) and other actors in regional development.
Local level administrations (municipalities) are expected to6:
•
prepare, adopt, implement and monitor the programme of economic and social
development of the municipality;
•
provide for collaboration in the preparation and implementation of the programme of
economic development and social development of a self-governing region;
•
provide for collaboration in the preparation of regional operational programmes;
•
co-operate on issues of common interests with other municipalities, e.g. through
establishing an association of municipalities; and
•
prepare input on the programmes of regional development.
A number of other institutions are involved in the implementation of regional development
policy at the regional and local levels. Thirty Regional Development Agencies (RDAs), which
are part of the country’s ‘Integrated Network of RDAs’, receive financial support from the
MCRD.7 Regional Advisory and Information Centres have been established as non-profit
institutions working in partnership with the public and private sectors in order to provide
support for small and medium enterprises. The Centres aim to provide comprehensive
advisory, information and training services. 8
4.
NATIONAL REGIONAL POLICY INSTRUMENTS
The Regional Development Support Act makes provision for the following assisted areas:
•
Economically weak regions that, on the basis of economic and social development
indicators, show a substantially lower level of development than the national average.
The indicators used to determine area eligibility include: labour market data; level and
structure of the economy; incomes of self-governing regions; number of municipalities
and inhabitants; and settlement density.
•
Regions with an ‘adverse’ structure, e.g. with high concentrations of heavy industry
and unemployment, based on labour market and business development indicators.
However, the Ministry of Finance announced that, following EU accession resources for
national regional development programmes would be redirected to co-finance Structural
Fund programmes. Therefore, at present, all regional policy is linked to EU programmes.
The Regional Development Support Act also makes provision for self-governing regions to
prepare their own regional development strategies and programmes. Plans for the Košice,
6
Act 416/2001 and Act 503/2001.
Creation of an Integrated Network of Regional Development Agencies was approved by the
Government Resolution No. 738 on 20 September 2000
8
National Agency for the Development of Small and Medium Sized Enterprises. Poslanie a predmet
cinnosti NARMSP. Available at: http://www.nadsme.sk/sk/onas.htm
7
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Banská Bystrica and Prešov regions have already been prepared. However, access to the
financial resources that would enable regions to undertake policy interventions depends on
the ongoing fiscal decentralisation. 9
Regional aspects are also incorporated into sectoral policies. For instance, the Act on
Support and Establishment of Industrial Parks (No. 193/2001) requires regional employment
rates to be considered. The Act on Investment Support (No. 565/2001) makes provision for
regionally differentiated state support to companies based on regional unemployment
levels. Levels of support are controlled by Act No. 231/1999 on State Aid and by
government Directives on National Regional Aid. State aid for regional development may be
provided in support of the following:
•
initial investments in fixed capital (capital expenditures) or for creating new jobs
associated with this kind of investments, and
•
operating costs (valid only in regions NUTS II with low living standard, or with a high
unemployment rate, where the GDP per capita measured in purchasing power parity for
the past three years is less than 75 percent of the Community average, that is in the
regions West Slovakia, Central Slovakia and East Slovakia).
Figure 2: Regional State Aid Map for the period 1.5.2004-31.12.2006
Source: DG Competition website
http://europa.eu.int/comm/competition/state_aid/regional/2004/
5.
EU PROGRAMMES
For the 2004-2006 period, the European Commission has approved Structural Fund cofinancing of €1.041 billion. The country will also receive €570 million from the Cohesion
Fund. The Slovak Republic receives support from Objective 1 through four multi-sectoral
regional programmes that cover the entire country, with the exception of the Bratislava
9
Vojteková Z. ‘Je Slovensko pripravené na efektívne využívanie prostriedkov zo štrukturálnych fondov EÚ?’
(2004), Listy SFPA, 26 August 2004. Availbale at:
http://www.sfpa.sk/index.php?id=98&tema=listySFPA&page=clanok
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region. The Bratislava region receives support through a regional Objective 2 programme
and through Objective 3.
The country’s strategy for Objective 1 focuses on four development priorities: increasing
competitiveness; promoting employment; fostering balanced regional development; and
promoting agricultural and rural development. 10 The Objective 2 programme includes
measures aimed at the development of small and medium enterprises, support for
entrepreneurs, activities and services associated with tourism and renovation of sites in
rural municipalities and development of the cultural and national heritage.
5.1
Implementation
The implementation framework for Structural Funds is set out in Table 3.
Table 3: Structural Funds Programmes
Programmes
Community contribution
2004-2006
Industry and Services
€151.2 million
Human Resources
€284.5 million
Basic Infrastructure
€422.4 million
Agriculture and Rural Development
€183 million
Technical Assistance
€50.1 million
Objective 2 Programme for the Bratislava Region
€37.17 million
Objective 3
€44.94 million
The Managing Authority for the CSF is the Ministry for Construction and Regional
Development. The Paying Authority is the Ministry of Finance. Table 4 lists the Managing
Authorities for each of the Operational Programmes.
Table 4: OP Managing Authorities
Programme
Managing Authority
OP Human Resources
Ministry for Labour Social Affairs and Family
OP Industry and Services
Ministry for the Economy
OP Agriculture and Rural Development
Ministry of Agriculture
OP Basic Infrastructure
Ministry of Construction
Development
5.2
and
Regional
Geographic Focus
The Slovak Republic does not have a separate regional development operational
programme.
As a result of negotiations with the Commission, proposed Operational
10
RAPID Press Release, Commission agrees on the strategy to implement structural funds in Slovakia
for 2004-2006, IP/03/1770 of 18 December 2003. Available at:
http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/03/1770&format=HTML&aged=0&la
nguage=en&guiLanguage=en
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Programmes
for
Regional
Development,
Transport
and
Telecommunications
and
Environment were merged to form the Operational Programme for Basic Infrastructure. The
main priorities of the OP for Basic Infrastructure are:
•
modernisation and development of transport infrastructure;
•
improvement and development of environmental infrastructure; and
•
building and development of local infrastructure.
The aim is to tackle regional disparities by ensuring equal access to infrastructure for local
development centres. The country’s CSF identifies the concept of growth poles within the
regions of Slovakia and the promotion of more balanced regional development. Related, the
OP for Basic Infrastructure focuses on tackling key structural disadvantages in centres of
economic importance.
6.
REFERENCES
V. Benc, Readiness of the Slovak Republic for the EU Regional Policy, in V. Benc (ed)
Readiness of the Candidate Countries for EU Regional, Policy Proceedings of Conference
held in Bratislava, 3-5 November, 2003. p. 185-198.
European Commission, Commission Recommendation on the 2004 update of the Broad
Guidelines of the Economic Policies of the Member States and the Community (for the
2003-2005 period), (European Commission, Brussels, 2004).
Ministry of Construction and Regional Development of the Slovak Republic, Operational
Programme: Basic Infrastructure (MCRD, SK, 2003).
Ministry of Construction and Regional Development of the Slovak Republic, National
Development Plan of the Slovak Republic (MCRD, SK, 2003).
A. Olechnicka, Country Report: Slovakia, prepared for ESPON 2.2.2. ESPON 2.2.2 PreAccession Aid Impact Analysis, Third Interim Report IRS: Berlin, 2003.
J. Silvan, ‘Slovak Republic’ in Bachtler, J, Downes, R, and Gorzelak, G (Eds)
Transition,
Cohesion and Regional Policy in Central and Eastern Europe (Ashgate Publishers, Aldershot,
2000).
*
This paper has been prepared by Dr Irene McMaster, Dr Vít Novotný and Chiara Polverari,
based on EPRC desk research and fieldwork material provided by Dr Vít Novotný.
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