Austria. Unemployment Rate (%) GDP Per Capita, PPS

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1 AUSTRIA * 1. REGIONAL DISPARITIES AND PROBLEMS Severe regional disparities are not evident in Austria, though two main types of regional problem area can be identified: peripheral rural regions, principally in the south and east and the western high Alpine areas; and old industrialised regions concentrated in central Austria and the Steiermark region. The emergence of such problem areas is associated with the decline of the old industrial heartland, the growth of urban-rural disparities, increased levels of commuting and environmental concerns. Urban problems and the links between regional centres and their hinterlands have also grown in significance. Figure 1: Austria Source: Table 1: Socio-economic indicators in Austria (NUTS II) Austria Population (000) GDP Per Capita, PPS Employment by sector (% of total) Unemployment Rate (%) EU15=100 EU25=100 Agric. Ind. Services Regions Ostösterreich Burgenland Niederösterreich Wien Südösterreich Kärnten Steiermark Westösterreich Oberösterreich Salzburg Tirol Vorarlberg Total Source: Eurostat (unemployment rates) and Third Report on Economic and Social Cohesion (European Commission, Brussels, 2004). 1

2 2. NATIONAL REGIONAL POLICY OBJECTIVES Prior to EU accession, regional policy did not enjoy a high political profile due to the small size of the country, the lack of serious regional disparities, high labour mobility and commuting levels, and the fact that the services industry (particularly tourism) compensated for agricultural decline. Only with access to the Structural Funds did the issue of regional policy become more widely debated. Indeed, the term regional policy in Austria has become increasingly synonymous with the Structural Funds, which, because of their administrative demands, are increasingly viewed as suitable mainly for standard, routine investment. In contrast, domestic regional policy focuses on the endogenous potential of regions and their integration into regional, national and international networks. The traditionally low profile attached to the policy and its associated lack of formal administrative structures has had the advantage of allowing a more flexible and innovative approach to be taken to regional development issues. The main domestic regional development initiatives are now generally classified under non-regional policy headings, including, in particular, innovation policy. Policy responsibility is spread across a number of federal Ministries, particularly those involved with technology and innovation support. The Land-level also has a significant role to play. 3. INSTITUTIONAL ARRANGEMENTS Austria is a federal State, consisting of nine Länder, which have an important political and economic role. The constitution does not specify a clear allocation of responsibility for regional policy to either the federal government or the Länder. In practice, there is an informal allocation of both legislative competence and administrative jurisdiction between different bodies at federal, Land, and local levels. At the federal level, the Federal Chancellery is responsible for the co-ordination of measures in all policy areas and has a separate department for regional policy. It has, however, only minimal financial resources for the implementation of regional policy instruments and measures. The Österreichische Raumordnungskonferenz, ÖROK (Austrian Conference of Regional Planning), created in 1971, acts as a forum for cooperation between the different actors in the regional policy field. Decisions reached within ÖROK are recommendations only and do not have legal force. However, given that many of the key policy actors are represented within ÖROK, its recommendations are usually reflected in subsequent policy decisions. Other federal Ministries are also involved in regional development activities, generally through the provision of incentives, which contain a regional dimension or regional financial weighting. These include: the Federal Ministry for Economy and Labour (BMWA) which administers support through the ERP Fund; and the Federal Ministry for Transport, Innovation and Technology which, together with the BMWA, implements important measures in the field of regional technology development and infrastructure. 2

3 The nine Länder governments have key regional development competencies for their own territories and each elaborates its own regional development programme. Following approval by the federal government, these programmes are implemented at the district level. In addition, the Länder also operate their own regional development instruments, in some cases involving the federal level more formally through federal-land agreements for co-funded packages of regional development support. Table 2: Territorial Units in Austria Unit Type Designation Number of Units NUTS I 3 Bundesländer NUTS II 9 Bezirke (districts) NUTS III NATIONAL REGIONAL POLICY INSTRUMENTS 4.1 Instruments The last significant regional grant scheme targeted at the designated aid areas (the Regional Innovation Premium, RIP) was withdrawn towards the end of 2000 in response to budgetary pressures. The only remaining spatially-targeted aid is the ERP Regional Investment Programme, a relatively minor low interest loan scheme. Incentives viewed as important for regional development now tend to be available across the country. This is particularly true of technology and innovation incentives where spatial restrictions are considered counter-productive to the prime objectives of networking and innovative development. An example of this type of support is the RIF 2000 scheme. 1 This aims to increase the innovative capacity of some 50 innovation and technology centres ( impulse centres) across Austria, in particular by strengthening the knowledge base and technology transfer capacity of SMEs in the regions. There are other federal measures which are similarly driven by innovation-oriented goals and are targeted at the innovation infrastructure in the regions (universities, technical high schools etc). The Land level, too, is heavily involved in this type of activity, with each Land having some form of economic development strategy often with a significant innovation-oriented component. A number of Länder (particularly Styria and Upper Austria) have important cluster initiatives which are viewed as central to the regional competitiveness and growth prospects of these areas. 4.2 Spatial Coverage of National Regional Policy Prior to access to the European Union, there was no formal map of the designated aid areas in Austria. The policy focus was on regional problems rather than on problem regions, with different forms of support having different spatial targets. Area designation has become 1 Regionalen Impulsförderung (Regional Impulse Support). 3

4 much more formalised as a consequence of EU membership. The aid area map for the period covers 27.5 percent of the population, a reduction from 35.2 percent over the period. Maximum rates of award authorised by the Commission range from 30 to 35 percent of eligible expenditure in Burgenland (which, as an Objective 1 area, qualifies under Article 87(3)(a)) to percent in all other assisted areas (Article 87(3)(c)). Figure 2: Austrian regional aid map Source: DG Competition website 5. EU PROGRAMMES For the period, over EUR 2.07 billion have been allocated to Austria from European Structural Funds. The country benefits from nine regional development programmes: one under Objective 1 and eight under Objective 2. The aim of the Objective 1 programme is the modernisation of the region Burgenland, at the border with Hungary. Programme s priorities are the economic and commercial activities; research, technology and development; tourism and culture and human resources. Objective 2 programmes cover areas of varying size in the remaining eight regions; some of the areas covered are though phasing out from Objective 2 and receive transitional support. Figure 3 shows the geographical distribution of Structural Funds for the period The allocation of funds among the various programmes is presented in Table 3. 4

5 Figure 3: Structural Funds for Austria, Objective 1 Objective 2 Objective 1 Objective 2 Objective 2 (partly) Phasing-out (till 31/12/2005) Phasing-out (partly) (till 31/12/2005) Source: Table 3: Structural Funds to Austria, (millions of EUR) Obj. 1 Obj. 2 Obj. 3 INTERREG URBAN EQUAL LEADER+ Fisheries Total , Source: DG Regio, The European Structural Funds ( ): Austria. Structural Funds implementation is largely integrated within frameworks for regional economic development policies. Each Land has a separate Single Programming Document, although there are a number of Austria-wide coordinating mechanisms for Structural Funds programming. For example, financial monitoring is undertaken by a central agency, and there is a coordinating forum on evaluation. Most of the Structural Funds money is channelled through existing funding schemes, whether operated Austria-wide or at Land level. A number of different federal and Land Ministries and agencies take responsibility for awarding funding and managing projects under these different funding streams. Various formal and informal mechanisms are in place to facilitate coordination between actors and funding channels. * This paper has been prepared by the (EPRC) for the Second International Conference being held in Latvia on April Inclusive of million allocated in March 2004 by the European Commission in the framework of the performance reserve for the most successful programmes. 5