copy the linklink copied!Chapter 3. Governing mining regions to attain sustained and inclusive growth

This chapter offers an overview of the national and regional governance structure in Finland and the distribution of competencies to implement the regional policies relevant to Outokumpu. It then examines how the mining policy framework can better support regional development in the country and finishes by analysing the mechanisms to improve co-ordination between different levels of government for a successful strategic programme in the region and municipality.

    
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Box 3.1. Assessment and recommendations

Assessment

  • Finland’s mining policy and regulatory framework lacks a territorial approach and this results in missed opportunities. The policy does not take into account the special characteristics of the region and there are no incentives for municipal or regional co-operation to steer investments or conduct joint mining projects.

  • There is an opportunity to develop a more cohesive long-term vision for regional development that translates into a portfolio of projects. The strategic fora (working groups) in the regional council appear to be more focused on accessing European Union (EU) funds rather than on planning long-term strategies. Furthermore, the region of North Karelia lacks formal incentives for co-ordination among municipalities to implement the regional development plan.

  • Outokumpu Municipality is administrated with a strong corporate vision but there is some disconnect with the priorities of the region and neighbouring municipalities. The municipality has undertaken efforts to improve the efficiency of public services, create a sound business environment and attract new business. However, a “silo approach” to local economic development is a pressing issue in Outokumpu. Its municipality’s economic strategy has scope to enhance co-ordination with the strategies established at the regional level and with other municipalities. The successful implementation of its economic plan will rely on co-ordination and alignment between different levels of governments and stakeholders.

Recommendations

Strengthen the functioning of regional policymaking and integration with the national mining framework:

  • Better link national mining policy instruments with regional characteristics (the Ministry of Economic Affairs and Employment). Actions for this are:

    • Enhance participation of regional councils and municipalities in any future review or revision of the national Minerals Strategy (2010) and articulate the role of the subnational level in the development of mining in Finland.

    • Work with regions to map local mining clusters and identify their strengths and complementarities in the context of national policy.

    • Support the development of a network of mining regions and municipalities to co-operate on joint projects, co-ordinate promotion and investment attraction, and share knowledge and good practices.

    • Partner with regions and municipalities in the international promotion of Finland as a destination for mining investment and in relation to mining technology services.

  • Adjust the scope of the working groups to undertake long-term planning and capacity building. Two priority areas are in relation to entrepreneurship, and skills and workforce development (North Karelia Council).

  • Develop a strategy that is inclusive of different areas and size of companies within the local labour market. For this, Business Joensuu should better adapt strategic programmes to reach businesses outside of Joensuu (e.g. supporting small business to access EU financial instruments) and act as a broker to co-ordinate and integrate municipal assets and companies with regional programmes (e.g. the mining camp in Outokumpu) (Business Joensuu).

Enhance the benefits of EU funds to support the future development of the mining value chain:

  • Work with the local mining industry and Geological Survey of Finland (GTK) to develop a portfolio of projects that are designed to increase mining investment, promote innovation in mining technology services, and address bottlenecks to growth, including land use, skills and specific opportunities associated with photonics and information and communication technology (ICT) (Business Joensuu).

  • Develop a cohesive approach to using European Structural and Investment Funds (ESIF) to implement these projects (North Karelia Council and Business Joensuu).

Improve co-ordination and alignment in regional development policies between the regional council, municipalities, universities, industry and other actors:

  • Promote a unified vision of development for the region and ensures co-operation among municipalities (North Karelia Council). Actions for this are:

    • Create a strategic platform for dialogue between North Karelia Council and municipalities. This platform can serve various purposes, such as developing a common long-term development vision, improving co-ordination, pooling resources and efforts, and resolving conflicts.

    • Formalise the dialogue in order not to depend on occasional meetings or personal relationships. This should be institutionalised to ensure continuity over time.

    • Include different stakeholders with equal participation and ownership in the platform.

  • Develop a monitoring framework to track and co-ordinate the accomplishment of the objectives in municipal development plans. The framework should cover all the municipalities in the region to help the council benchmark align and compare the performance of strategic plans (North Karelia Council).

Improve co-ordination among municipalities:

  • Improve co-ordination among municipalities with incentives for co-ordination that promote the joint implementation of projects among municipalities (North Karelia Council).

copy the linklink copied!Introduction

Improving the territorial development in a state or municipality depends largely on the institutions, frameworks and processes shaping the territory’s public governance structure. The strength of this structure and its adaptability to changing circumstances are prerequisites to meet the state or municipality objectives (OECD, 2017[1]).

The previous two chapters have underlined the challenges and strengths to be addressed by Outokumpu and proposed a number of policies and programmes that North Karelia and Outokumpu can follow to unleash the mining potential and attain higher levels of productivity and well-being. The municipality has scope to mobilise its geographic location and industrial fabric to become a key partner for national mining development. It can also open new growth opportunities through greater diversification of its economy by supporting service activities, upskilling labour force and enhancing entrepreneurship.

Implementing these policies will require an integrated vision of growth and a collaborative approach between different levels of government, business and communities at regional and local levels. This chapter offers an overview of the national and regional governance structures in Finland and the distribution of competencies in regional policymaking and implementation. It then examines how the mining policy framework can better support regional development in the country. Finally, the chapter analyses the mechanisms to improve co-ordination between different levels of government to attain regional and municipal development goals.

copy the linklink copied!Towards an integrated regional development policy with mining activities

Outokumpu’s proximity to Joensuu, its mining potential and its industrial fabric offer untapped opportunities of growth. However, the municipality faces a number of challenges for sustained economic growth (Chapter 2). To harness the assets and address the challenges in Outokumpu, a clear distribution of roles and a co-ordinated action among the stakeholders involved in regional development is needed.

Key actors and roles on regional development in North Karelia and Outokumpu

Finland is a unitary country, with a local government system composed of 313 municipalities and 1 autonomous region (Åland). In Finland, different levels of governments have strategic responsibilities on regional economic development. The national government sets the regional development strategies following the overarching Regional Development Act. Its implementation is mainly the responsibility of subnational governments. Finland is, in fact, one of the most decentralised countries in the OECD, where local authorities are responsible for a very large share of public expenditure (40% of total public expenditure in 2018).

The Minister of Employment and Economic Affairs is responsible for establishing the policy framework for regional development and supporting its implementation, through decentralised regional authorities. The ministry manages 15 Centres for Economic Development, Transport and the Environment (ELY Centres), which are state regional bodies in charge of the regional administration of labour, agriculture, fisheries, forestry and entrepreneurial affairs (they also join together a number of responsibilities from other ministries). In addition, the ministry has a number of national agencies including Business Finland, which conducts programmes to promote foreign investment and the internationalisation of local companies, and Finerva, which provides financing for small- and medium-sized enterprises (SMEs) and bank guarantees for investment.

Regions are responsible for the regional development plan, business development and regional land use planning. Regional councils are the government authority of the regions, subject to an assembly that is composed of representatives from the municipal councils. The assembly elects the administrative board of the region, which carries out the executive functions. It also appoints the head of the council, who is the managing director of the regional staff office (the staff in North Karelia Council is approximately 45 people). The council elaborates the policy framework for regional development, based on the parameters set by the national strategy and the European Regional Development Fund (ERDF) (OECD, 2017[1]). The regional council does not have power of taxation and is funded by the municipalities. To implement the strategic programmes, it counts with resources from the European Union and the national government.

To oversee and co-ordinate the implementation of regional development initiatives, North Karelia Council has established nine thematic working groups that underpin the smart specialisation strategy. These thematic working groups cover the main topics of the strategy including forests and the bioeconomy, Russia, education and foresight, transport, tourism and mining. They also support the definition of funding mechanisms for the strategic plans and facilitate the linkages between the EU funds and the regional plan.

North Karelia also relies on a decentralised agency, Business Joensuu, to implement and monitor the strategic programme of the regional plan with EU funds. This company aims to improve the business environment in the region, attract foreign investment and support the internationalisation of local business. North Karelia Council has delegated the co-ordination of the mining industry and the local value chains to Business Joensuu. It also manages the Science Park, which hosts and provides development services to around 130 organisations and 1 500 people (Box 3.2).

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Box 3.2. Business Joenssuu

The new Business Joensuu started operations in 2019. The company provides services for investment in the area, start-ups, growth, development and internationalisation, as well as space, community and event services for the Science Park. In addition, Business Joensuu produces operating environment development services for different industries, which create the best conditions for companies to operate in Joensuu.

The company is governed by a board of directors that is selected by the following institutions:

  • The City Council of Joensuu.

  • The University of Eastern Finland

  • Joensuu University Foundation

  • Riveria training consortium.

In 2019, representatives from the above-mentioned institutions plus representatives from the National Coalition Party and from private companies (Outokummun Metalli Oy, Blancco Oy) formed the board of directors.

The service areas of Business Joensuu include:

  • Business growth and development services.

  • New businesses, businesses and internationalisation services.

  • Placement and attraction, marketing services.

  • Space, community and event services for the Science Park.

Overall, the company managed 25 programmes focused on different sectors including export capacity in the region (ExportGrowth), the bioeconomy sector (Vitality for Digital Forest), business digitalisation (Joensuu Smartcity, Digital Training) and entrepreneurship (Women Entrepreneurship). It is also involved in two active EU programmes to support the mining sector (REMIX and MIREU).

The services are typically 1-3 year-long customer-oriented development projects. They are initiated by designated industry-responsible experts who are responsible for promoting the business environment of their businesses, starting with the business needs of their companies.

Source: Business Joensuu (Business Joensuu, n.d.[2])(Business Joensuu, n.d.[2]) (n.d.[2]), Homepage, https://www.businessjoensuu.fi (accessed on 15 Mars 2019).

Municipal governments in Finland are administrative units, governed by an elected council. The council defines the strategic plan for the municipality, manages land use and urban planning and can levy income tax. Municipalities are responsible for delivering most of the public services (41% of total public expenditure in 2016), primarily healthcare, social services and education as well as sports, youth and cultural services. However, this role is likely to change with the forthcoming regional reform that will give regional governments the competencies of most of public services at the local level (see next section).

In the case of Outokumpu, the municipality also controls a number of public companies to provide some essential services including energy and housing. It owns an industrial park and a public tourism company, which are key players in the definition of economic strategy at the local level. For Outokumpu, the success in the implementation of the economic strategy relies on a co-ordinated interaction of the different level of governments with a range of stakeholder present in the area (Table 3.1).

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Table 3.1. Stakeholders for the development policy of Outokumpu

Organisation

Role (selected)

Type of organisation

Ministry of Economic Affairs and Employment

In mining policy: Secures Finland’s raw material supply and ensures sustainable use of national resources, international competitiveness, responsible use of natural resources and vitality of Finnish regions.

Public-national level

Business Finland (ex Tekes)

- Promotes investment from foreign companies.

- Supports Finish companies (generally focuses on most competitive ones).

Public-national level

Tukes

- Supervises activity.

- Issues mineral reservations (areas to conduct activity).

- Surveys condition of mines.

- Issues mining permits.

Public-national level

Finnvera

Provides financing for the start, growth and internationalisation of enterprises and guarantees against risks arising from exports.

Public-national level

Finnish Minerals Group

Develops the Finnish battery and mining ecosystem. It owns, manages and develops companies, an investment programme and research and development (R&D) projects related to the Finnish battery.

Public-national level

North Karelia Council

- Authority responsible for regional development and the elaboration of the Regional Development Programme.

- Sets the framework and priorities for the implementation of the European Regional Development Fund (ERDF).

Public-regional level

Business Joensuu

- Promotes investment from foreign companies.

- Supports companies and SMEs in North Karelia.

Public-regional level

University of Eastern Finland (UEF)

R&D activities in mining and other extractive industry areas.

Public-regional level

Riveria Vocational School

Education organisation whose main function is to provide qualified vocational education in the county of North Karelia.

Public-regional level

Green Park of Joensuu

- Business park designed especially for companies related to the wood product industry, cleantech and mechanical engineering.

- 550 industrial jobs (2017).

Public- co-ordinated by Joensuu Business premises

Joensuu Science Park

- Offers services for business development and innovation process, and hosts service companies related to bioeconomy, photonics, and ICT and game industry.

- 120 companies and 1 450 jobs.

Public

Municipality of Outokumpu

- Land- use planning.

- Budget permit.

Public-local level

Geological Survey of Finland (GTK)

- A leading European competency centre on assessment and sustainable use of geological resources. Provides expertise that serves the interests of stakeholders.

Public-national and regional level

Industrial Park

Currently hosts 50 industrial companies.

- Constructs and finances premises for clients.

- Offers rental spaces.

- Manages state companies of Outokumpu.

Public-local level: 94% owned by municipality of Outokumpu

Main companies inside the Industrial Park of Outokumpu

Outotec

- Develops leading technologies and services for sustainable mining.

- Turula OY - Factory in Outokumpu focuses on building mining machinery and structures.

- Around 120 workers in Outokumpu.

Private

Finelcomp

- Produces electric enclosure mechanics. Manufactures solutions for housing and fastening mechanics for electric distribution.

- Around 100 workers in Outokumpu.

Private

Oyoutokummun Metalli Oy

- Manufactures forestry machinery, some of them sold under John Deere and Waratah brands.

- Around of 146 workers in Outokumpu.

Private

Challenges in the interaction of actors for regional development

While Outokumpu Council plays an active role in implementing the municipal development strategies, the overall definition of long-term goals is structured at the regional level. The Regional Strategic Programme 2018-21 (POKAT2021) is a guiding strategy for municipal councils to establish their local development plans (Chapter 2). North Karelia Council builds the regional programme following a participatory process to include the vision of municipal councils and other stakeholders. This planning process is an asset in the region and fosters comprehensive and clear long-term development goals.

However, there are some gaps in the execution of the vision and the strategic plans in the region. As mentioned in Chapter 2, there is no clarity as to what extent the mining sector can contribute to the regional economy. The bioeconomy and forestry sectors receive the most attention within the strategic programmes relative to other sectors. As the regional council has the power to decide on the use of state funds, unlike the municipal council (OECD, 2017[1]), the allocation of resources at the regional level drives the implementation of the development agenda. It can, in turn, end up giving less attention to the financial support of key municipal economic strategies (e.g. mining development in Outokumpu).

Furthermore, the working groups in the regional council appear to focus more on designing programmes to access EU funds rather than on long-term strategies to address main regional challenges. Broadening the scope of these groups to a more proactive and strategic role should be a priority for the council to implement strategies related to entrepreneurship and skills and workforce development, for example.

There is a lack of clarity on the main responsibilities of implementing some of the policies needed to address the challenges in North Karelia and Outokumpu; indeed, a number of actors are involved in addressing policy challenges in different areas, including the mismatch of skills in the local labour market, innovation and SME support. These include universities, the ELY Centre, the regional and municipal councils and Business Joensuu. Each of these actors conduct their own programmes but do not co-ordinate effectively on the same strategy. For example, the ELY Centre plays a key role in facilitating national programmes on skills development at the regional level, while Business Joensuu implements EU-funded programmes on upskilling labour force and Outokumpu Council strives, for instance, to link secondary education and local company needs (Chapter 2).

Furthermore, the different actors involved in policymaking do not offer a single picture of the labour market. For North Karelia Council, most of the efforts to improve workforce skills and a business environment rely on building a strong Joensuu municipality to attract new business, while municipalities have their own agendas to pull in skilled residents. Thus, the range of actors need a single platform to further co-ordinate these policies with clear responsibilities in overseeing the strategy.

There is also fragmentation of data on workforce and business characteristics and no clear leader. There are gaps in the main responsibility of co-ordinating and maintaining granular data on economic and social aspects in the region. Identifying particular local assets and challenges with precise and reliable data is required for successful regional planning. For this, Business Joensuu should take an active role in close co-operation with the municipal councils to develop databases on the most pressing areas in the regional economy, including the profile of local SMEs, the type of entrepreneurs, suppliers to the global firms established in the municipalities and the profile of workers commuting every day among municipalities.

Business Joensuu plays a key role in the implementation of the regional economic strategy but has faced challenges to deliver a cohesive business policy throughout the territory. In the last few years, some municipalities raised concerns about the effectiveness of the services provided by Josek (the former business development agency in North Karelia). These concerns led the municipalities of Kontiolahti and Liperi to reduce the number of services ordered from Josek and developed business consultancy services in house. This led to a reform in the development agency and thus the constitution of Business Joensuu (Box 3.2).

Business Joensuu has scope to play a stronger role in the regional development of North Karelia. The recently formed Business Joensuu is currently defining its strategic vision and action plan. While the former Josek was much more focused on short-term solutions to business, Business Joensuu supports businesses through a combination of a short-term and transactional approach (e.g. addressing specific needs for funding, skills) and strengthened long-term strategies to improve the business environment (e.g. implementing EU programmes such as REMIX). The update of Business Joensuu strategy should also serve as an opportunity to develop a strategy that is inclusive of different areas and size of companies within the local labour market. For this, it should better adapt the strategic programmes to reach businesses outside of Joensuu (e.g. supporting small businesses in accessing EU financial instruments) and act as a broker to co-ordinate and integrate municipal assets and companies with regional programmes (e.g. the mining camp in Outokumpu).

Better linking mining with regional development

Given the municipality’s potential to contribute to the development of the mining sector in Finland (Chapter 2), a key aspect for national and local governments is to co-ordinate the national mining policy with local economic strategies. For this, a clear picture of the mining governance in the country is key to understanding the role of Outokumpu within the national strategy.

Mining sector governance in Finland

Finland is undertaking efforts to become a worldwide leader in sustainable mining and make the mineral sector one of the key foundations of the Finnish national economy. One of the key aspects of this process is to develop a clear and trustworthy regulatory framework that ensures sustainability and attractiveness and reduces the harmful impact on the environment. The Finnish mining regulatory framework is comprised of a set of different regulations and laws (Table 3.2), which are recognised as transparent and clear for international investment (Finnish Trade Organization, 2016[3]).

In Finland, mining strategies are mainly defined at the national level. The Ministry of Economic Affairs and Employment is the national entity in charge of elaborating the strategy for the mining sector (Chapter 2). The ministry controls and co-ordinates a number of organisations to promote, finance and implement the mining activities:

  • Business Finland supports the implementation of strategic projects.

  • FINERVA provides funding for business growth and internationalisation.

  • Industrial Investment Ltd invests in and develops mining-related companies.

  • The Finnish Minerals Group acquires and manages companies to build a cluster of battery production.

  • The Safety and Chemicals Agency (Tukes) is the licensing and surveillance authority for the sector that monitors the activities and issues mining permits.

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Table 3.2. Main mining regulatory instrument in Finland

Instrument

Instrument in Finland

Laws specific to mining

- 2011 Mining Act

- 2012 Decree on Mining activities

Other laws

- Environmental Protection Act

- Nature Conservation Act

- Act on the Protection of Wilderness Reserves

- Act on Environmental Impact Assessment Procedure

- Land Use and Building Act

- Water Act

- Radiation Act

- Reindeer Husbandry Act

Guiding principle

- Guidance for stakeholder engagement in exploration

- Guidance for practices supporting environmental regulation and socially sustainable mines in the north

Source: Tukes (2019[4]), Mining Activity, https://tukes.fi/en/mining (accessed on 6 February 2019).

The Ministry of Economic Affairs and Employment conducts the National Mineral Policy steered by two main documents: the 2010 Mineral Strategy and the 2011 Mining Act (Ministry of Economic Affairs and Employment, 2019[5]). The main goal of the 2010 Mineral Policy is to secure Finland’s raw material supply and ensure the sustainable use of national resources and international competitiveness. This strategy, elaborated with the support of the Geological Survey of Finland, sets the vision and the policy priorities of the mining sector for 2050 (Chapter 2).

The core mining legislation in Finland is the 2011 Mining Act with the subsequent 2012 Decree on Mining Activities. The main goal of the Mining Act is to ensure mining is conducted in a socially, economically and ecologically sustainable manner. It represents an improvement on the old legislation in terms of environmental governance, participation possibilities of local communities and rights of Sami people (Tiainen, Sairinen and Sidorengo, 2015[6]). The Mining Act outlines the key process and responsibilities linked to mining activities, including:

  • Exploration periods and compensation levels for landowners. This establishes a fixed monetary compensation for the landowner plus a share of the value of explored and utilised minerals.

  • A mechanism for landowners, local organisations and citizens to submit their opinion during the permit approval process, before any decisions are made.

  • An opportunity for local municipalities and environmental authorities to give their views on the project.

  • The content of the application, the hearing process and the mitigation of negative impacts, among others.

Overall, to open a mine in Finland, companies require permits issued by three government levels. The national entity Tukes grants the authorisation of the deposit and issues the exploration and mining permit, as well as the safety permit and the permit for handling and storing chemicals and explosives.

At the regional level, the Regional Administrative Agency (AVI) issues environmental permits and constructs mining dams, supervised by the ELY Centre. North Karelia Council has also established a regional strategic group of extractive industry. The group is in charge of updating the regional strategy of the extractive industry in North Karelia and holds sporadic meetings to discuss the main challenges for mining development, including land-use planning and the mining law.

At the local level, the municipality is in charge of zoning and construction permit plans and the municipal environmental protection authority issues particular environmental permits.

Enhancing the mining governance framework through a territorial approach

Finland’s mining regulatory framework lacks a territorial approach and integration with regional development plans. The Ministry of Economic Affairs plays a central role in the definition of the mining strategy and investment attraction, while subnational and local governments have an auditing role, issuing opinions and statements about the projects and approving land-use and construction plans. Local government is however key to ensuring an optimal environment for mining companies and good interaction between the communities and the mining sector. Involving local governments from the beginning of the strategic definition of projects and licensing decision-making can be a powerful practice to gain support from local communities in the mining sector. For example, close co-ordination with municipal governments is instrumental in reducing any uncertainty mining companies may have regarding the approval of zoning and construction permits.

Finland’s mining policy framework can further develop mechanisms to promote co-operation amongst regions and municipalities. Alongside low recognition of local mining clusters, the mining framework does not envisage incentives for municipalities and regions to steer joint investments and conduct projects to enhance local conditions for mining activities. In fact, as the promotion and attraction of investment are mainly co-ordinated at the national level (Business Finland), regions have more incentive to co-ordinate directly with national government and agencies than amongst themselves. Creating a more supportive framework for regions and municipalities to conduct joint mining activities could improve the investment and operational climate for mining in Finland.

To attain a sustained mining strategy, the Ministry of Economic Affairs and Employment needs to better link the national mining policy instruments with the regional level. For this, the ministry should enhance the participation of regional councils and municipalities in the elaboration of mining policy strategy in international promotion activities. This involves strengthening the interaction between the national agencies regulating mining (e.g. Tukes) and the local governments. Furthermore, localising the activities of the Mining Finland initiative by acknowledging the regional assets will help attain co-ordinated promotion activities.

At the regional level, North Karelia’s regional extractive industry strategic group has scope to play a more active role in developing the mining sector. Frequent meetings involving other actors from the regional mining sector, exploring joint initiatives with national government to better align regional and national strategies or conduct foresight activities to identify the needs of the local mining cluster can boost the sector’s dynamics. The regional reform offers a good opportunity for the national government to integrate mining national policy with local strategies. With a greater concentration of responsibilities in regional councils, the national government would have a reduced number of interlocutors to co-ordinate mining policies and set up implementation mechanisms. If well managed, the regional reform could facilitate the development of co-ordination mechanisms for mining development policies at a subnational level.

Enhancing the benefits of EU funds to support mining development.

European Structural and Investment Funds (ESIF) are the EU’s main investment tool to deliver on the EU objectives of the current programming period (2014-20). Finland has focused on a number of priorities linked to the current Europe 2020 strategy, including: promoting innovative and competitive business and research environments; increasing labour market participation; and reinforcing the sustainable and efficient use of resources for environmentally friendly growth (OECD, 2017[1]). There are three EU funds relevant to regional development in Finland: the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the European Agricultural Fund for Regional Development (EARDF) (Box 3.3). For the period 2014-20, North Karelia has been allocated 12% of ERDF and 7% of ESF funds for Finland, slightly less than Lapland (12% and 10% respectively) but higher than the share allocated to other three north-eastern regions (South Savo, Kainuu and Central Ostrobothnia) (OECD, 2017[1]).

North Karelia Council has scope to enhance the use of ESIF to achieve their objectives for mining-related development. The regional council should promote active involvement from municipal councils and other stakeholders in setting regional priorities for the allocation of the ESIF. For example, integrating other actors’ vision within the working groups in North Karelia Council could enhance local engagement in regional projects.

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Box 3.3. The European Structural and Investment Funds (ESIF)

European Regional Development Fund

The European Regional Development Fund (ERDF) is one of the components of the ESIF. The main purpose of the ERDF is to address regional inequalities in the EU to achieve economic and social cohesion. The four key priorities of the ERDF are: i) innovation and research; ii) a digital agenda; iii) supporting SMEs; and iv) low carbon economy. The level of development of a region determines the allocation mechanisms of ERDF: 80% of the funds should target at least two priorities in more developed regions, 60% in transition regions and 50% in less developed regions. Special attention is given to geographically disadvantaged regions, such as remote, mountainous or sparsely populated areas, as well as outermost regions.

European Social Fund

Another key European Structural and Investment Fund is the European Social Fund (ESF). The main difference with the ERDF is that the ESF directly targets people instead of regions. The main purpose is to improve employment and education in the EU and it focuses on the most vulnerable people. In particular, human capital is the top priority with an investment of more than EUR 80 billion from 2014 to 2020. Youth employment is also a key objective of this fund. The ESF is based on the principle of “thematic concentration” and the four thematic priorities are: i) employment and labour mobility; ii) social inclusion and the fight against poverty; iii) education, skills and lifelong learning; and iv) institutional capacity and the efficiency of public administration. A key objective is to increase local, community-based activity and participation.

European Agricultural Fund for Rural Development

A key funding mechanism for rural (economic) development is the Rural Development Programme (RDP). The programme is the common tool for the implementation of the European Agricultural Fund for Rural Development (EAFRD) under Pillar 2 of the Common Agricultural Policy (CAP). The RDP in Finland has a strong focus on ensuring the future viability of agricultural activities by addressing natural constraints caused by poor soil conditions and the extreme climate. Environmental preservation and resource efficiency constitute two-thirds of the total budget.

Source: OECD (2017[1])OECD Territorial Reviews: Northern Sparsely Populated Areashttp://dx.doi.org/10.1787/9789264268234-en.

Furthermore, these funds can help to mobilise public and private investment in the region, thus promoting co-ordination with other actors. The ESIF provide a significant amount of additional resources to North Karelia to invest in productivity-enhancing initiatives and fund pilot projects. The co-ordinating nature of these funds can be used by North Karelia to enhance the operational environment for mining clusters, especially in areas where it fosters private sector investments and cross-regional/municipal benefits. For example, investments to support infrastructure improvement (ICT and road network) or give rise to local projects to integrate mining value chains (e.g. mine tailings sampling pilot in cold geographies within Outokumpu’s mining camp) can be a trigger for mining development.

Making the most of the social acceptability of mining in Finland

With increasing mining activity in the country, environmental and social impacts of mining have been brought into the mainstream discussion. Overall, surveys seem to outline that Finnish people have a positive attitude towards mining activities (Tiainen, Sairinen and Sidorengo, 2015[6]). However, high profile cases have caused social and environmental concern in the country. The best known was the case of the Talvivaara nickel mine in Kainuu in 2012 that involved a series of pollutant uranium leaks into nearby lakes and rivers.1

To address possible environmental and social conflicts, the current regulatory framework allocates high relevance to the public acceptability of mining. The 2010 Minerals Strategy set the basis to strengthen the role of open and transparent dialogue between the various actors involved in mining activities. Furthermore, the environmental and social procedures rely on sound pre-operational environmental and social permits. The Evaluation Impact Assessment (EIA) is then key for any mining activity and is mainly divided into two stages: an assessment programme and an assessment report, with two hearings, one in each stage of the process (Tiainen, Sairinen and Sidorengo, 2015[6]).

In the case of Outokumpu, the social license for mining is seen as a competitive advantage. During the mining period, the mining company provided many of the municipal services, including healthcare, police, fire and rescue and recreational services for families such as libraries and sports facilities. This mining history has laid the foundations for a high recognition of the benefits of mining activities in the community. Furthermore, the municipal council advocates the benefits of mining activities and places the sector high in its development vision.

North Karelian Council and Business Joensuu could better use the social acceptability in Outokumpu to promote investments in the sector and attract foreign companies. The community’s understanding of the impacts related to mining operations creates a more stable investment and operational environment for the private sector (OECD, 2017[1]). The regional and national mining strategy can leverage the pro-mining attitude in the region as an asset to promote and develop mining activities. It is key that the national mining policy acknowledges the importance of regional and municipal councils to build community support for mining.

copy the linklink copied!Enhancing governance in Outokumpu to attain sustainable growth

The municipality of Outokumpu is governed by an elected municipal council composed of 27 elected politicians. The council appoints the municipal mayor (or municipal manager). A subsection of this council, a municipal board of nine people, manages the municipal government and monitors the implementation of council decisions. The current municipal council was elected in April 2017 with a mandate that runs until 2021.

The municipality of Outokumpu is administrated with a strong corporate vision. Outokumpu has a number of affiliated municipal companies, including the industrial park, the energy company, the Outokumpu rental-housing company, real estate companies and the tour operator. A management team conducts the executive tasks in the corporate government of the affiliated municipal companies, including the study and preparation of policy proposals. This management team consists of CEOs of city’s affiliated companies and is co-ordinated by an ownership board comprising three politicians and the municipal mayor (Figure 3.1).

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Figure 3.1. Municipal corporate management team of Outokumpu
Figure 3.1. Municipal corporate management team of Outokumpu

Source: Information provided by Government of Outokumpu.

The policy strategy and its implementation are defined through a collaborative process with the affiliated municipal companies. The industrial park gathers concerns and proposals from private companies in the municipality and brings them to the management team to elaborate actions and proposals. The city town mayor introduces the proposals to the municipal board, which in turn introduces the policies to the municipal council for approval.

Outokumpu has undertaken a municipal plan to improve attractiveness for people and businesses. The municipality has developed strategies to improve the efficiency of public services and support local firms through a private-led approach. Specific strategic actions of Outokumpu’s development plan underline the relevance for the municipality to work in close co-operation with the private sector and attract new companies to the local economy (e.g. active marketing, customer orientation and business co-operation).

Some of the challenges faced by Outokumpu can be attributed, to some degree, to the endogenous characteristics of a small subnational government with significant decision-making power over the territory’s administration (Box 3.4). In Outokumpu, two main features of such characteristics stand out. First, the limited scope of goals and activities given the small size of the staff’s municipality administration. In some cases, affiliated companies of Outokumpu Municipality are run by no more than two people (e.g. municipal tourism activities). Additionally, the council faces a multifunctionalism of civil servants and organisations. For example, the CEO of the industrial park of Outokumpu performs other planning and strategic tasks within the council.

These characteristics are inherent to the financial capacity and size of the municipality and are not necessarily negative. In the case of Outokumpu, for example, despite the small size of the municipal corporate management team, the municipality counts with a comprehensive reporting and monitoring mechanism of policy proposals. Thus, the ability of Outokumpu municipal government to design and implement development strategies depends less on population and staff size than on its capacity to co-ordinate with other levels of governments and stakeholders.

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Box 3.4. Characteristics of small-state public administrations

Early research into the characteristics of small state governments highlighted five interrelated characteristics that are common to some degree across such states. While developed after studying sovereign nations, some or all of these characteristics can be relevant to administrations where individual provinces or regions have significant autonomy and decision-making power over the territory’s administration as well as policy design and implementation.

  1. 1. Limited scope of goals and activities. Small state administrations have to fulfil certain public prerogatives, such as maintaining health and education systems, regardless of the size of the country. Small states, therefore, need to prioritise and limit the number of goals and activities they pursue, the scope of action, and the means of delivery (e.g. production versus purchase of certain public goods).

  2. 2. Multifunctionalism of civil servants and organisations. Public officials in small administrations tend to have many, diverse responsibilities compared to their peers in larger administrations, who have more opportunities to specialise in a particular field. This is also seen in state bodies; for reasons of scale and resource sharing, there is a greater tendency to merge units (e.g. ministries, agencies, etc.) than to establish or maintain separate entities.

  3. 3. Informality of structures and procedures. Formal co-ordination mechanisms are more limited in small states and there is a tendency for structures to adapt to individuals rather than individuals to fit in formal organisational frameworks. While personal relationships are important in any system, senior civil servants in small states are more likely to use informal means of communication to consult and inform one another. Civil servants depend on these relationships in order to properly execute their responsibilities. These relationships can also serve as a bridge between executives and lower levels of organisations.

  4. 4. Constraints on steering and control. Independent scrutiny and reporting mechanisms tend to be less frequent in small states than in large ones due to limited resources, lack of specialisation and political partisanship. The political-administrative interface is usually less clearly defined in small states, with greater mobility between the administrative and political spheres. Senior civil servants, therefore, can have more autonomy in smaller states due to less formal oversight.

  5. 5. Personalism” of roles and functions. The multifunctionalism, informality and limited control in small states allow a limited number of individuals to exercise a fair amount of influence based on their competencies, networks and personal qualities. While this can support agility and problem solving, it also leaves room for ad hoc decision-making and subjective judgement.

These characteristics are not “good” or “bad” in and of themselves, but their interaction influences the governance contexts. For example, aspects of personalism that might be perceived as “leadership” in a system with institutional checks and balances can take on a less benevolent aspect in the absence of counter-balancing forces.

Sources: OECD (2016[7])OECD Territorial Reviews: Córdoba, Argentinahttp://dx.doi.org/10.1787/9789264262201-en; adapted from OECD (2011[8]), Estonia: Towards a Single Government Approach, http://dx.doi.org/10.1787/9789264104860-en; Sarapuu, K. (2010[9]), “Comparative analysis of state administrations: The size of state as an independent variable”, Halduskultuur – Administrative Culture, Vol. 11(1), pp. 30-43.

Enhancing Outokumpu’s development plan for a long-term development vision

The council elaborated the Outokumpu Development Strategy 2018–21 though a consultation process with different stakeholders. It consisted of a four-step process of around seven months that started with statistical analysis and surveys of main stakeholders. Following the initial survey’s results, the council organised a strategy seminar to set the scene and issue preliminary findings. After this, the council drafted the agreed strategies and conducts a final seminar to make the decision on the action points.

Despite its small size, the municipal administration has developed a comprehensive and detailed municipal development plan. For each strategy, the plan has defined the implementation mechanism, the timeframe and duration of the project with desirable outcomes. For example, the strategy of “improving the overall look of the municipality” will be implemented through the renovation and maintenance of green areas, cleaning of forests and parks in the municipal centre and improvement of land plots in the city. Reconstruction and cleaning are carried out on an annual basis, while improvement of land plots to be done in 2018.

While the municipal development plan of Outokumpu distinguishes between short- and medium-term goals, it could better identify long-term strategies that go beyond the current administration. For example, the aim to create “a secondary education that is versatile and linked with the market” (see Table 2.6) requires a long-term vision of the policy output, which will go beyond the mandate of the current administration. Therefore, Outokumpu administration should define goals in a timeframe and further distinguish which priorities should be achieved in the short term and which ones require long-term government commitment.

In terms of implementation of the plan, the budget is the most important tool to define the municipal’s annual operations and the application of different strategies (Outokumpu Municipality, 2018[10]). In addition to the budget, the strategy is implemented through operational programmes and plans, the most relevant being the welfare plan, the welfare report and the operational programmes of the affiliated municipal companies (Outokumpu Municipality, 2018[10]).

Outokumpu has established easily measurable policy objectives, with a monitoring instrument based on performance indicators. Easily measurable objectives are essential to steer government actions but also to improve accountability and communication with citizens and other levels of government. This municipal planning and monitoring framework represents an important step towards efficient implementation and policy results.

Nonetheless, the performance indicator mechanism could be improved by clearly differentiating between output and outcome indicators. Indicators such as “time of response to business contacts” and “occupancy rate of premises rented from the business centre” have the same level of relevance without a clear sense of measuring the ultimate outcome of the economic policy for the municipality (e.g. a lower unemployment rate). Outcome indicators are the primary reason for implementing the policy (Schumann, 2016[11]). They will monitor the specific objectives that the government wants to achieve, taking into account regional challenges, needs and potentials. Output indicators, on the other hand, track the actions needed to achieve the specific objectives. The monitoring framework of Outokumpu could be strengthened by considering prioritising a limited set of objectives and including lower-level objectives in a hierarchical structure (several objectives contributing to achieving one higher-level objective).

Individual efforts of policy planning and monitoring, such as in Outokumpu, can have a greater impact if they are co-ordinated with the ones of other municipalities in the region. A homogenous set of performance indicators of the local strategies in North Karelia will help the council benchmark, identify bottlenecks and unleash synergies among municipal strategic plans. Norway and several provinces in Canada have established performance indicators and bases of comparison for their municipalities, which have proven effective in terms of planning and policy outcomes (Box 3.5). North Karelia Council, through Business Joensuu, should support the development of a comprehensive monitoring framework across all the municipalities in the region.

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Box 3.5. Performance measurement

In 2000, the Province of Ontario, Canada, introduced the Municipal Performance Measurement Program (MPMP) as an accountability mechanism and to help local authorities make more informed decisions, and its use became mandatory in 2001. Ontario’s 444 municipalities – regardless of their size – are all responsible for reporting on 12 core service areas, resulting in 54 measures of efficiency and effectiveness. These service areas include local government, fire, police, roads, transit, wastewater, storm-water, drinking water, solid waste management, parks and land-use planning.

The MPMP has not only improved reporting but it has also given provincial and local authorities a solid database in support of multi-year trend analysis and budgeting processes. Municipalities report performance data annually by 31 May. In addition to MPMP, in 2001 Ontario introduced the Ontario Municipal Benchmarking Initiative in order to support city executives as they measure progress and share data and practices with respect to: the efficiency with which resources are transformed into goods and services; their quality; their associated outcomes; and the effectiveness of services delivered. The initiative is composed of 15 member municipalities and publishes an annual report, available to the public. This report presents information in 27 service areas with an aim to help citizens be more informed about their municipality and the services it offers, and how their municipality compares to others.

Sources: Government of Ontario (2015[12])Municipal Performance Measureswww.mah.gov.on.ca/Page297.aspx (accessed on 6 February 2019); OECD (2017[13]), OECD Territorial Reviews: Morelos, Mexico, http://dx.doi.org/10.1787/9789264267817-en.

Strengthening horizontal and vertical co-ordination

Multi-level governance co-ordination is a key ingredient to implement an efficient territorial approach for sustainable development. It requires the adoption of strong co-ordination mechanisms within and between levels of government (Charbit, 2011[14]). Given the prominent role of the Finnish national government in setting regional strategies, co-ordination among regions and municipalities is a cornerstone to align local policies with the national vision and pursue their implementation at the local level.

Improving co-ordination with the regional council to achieve municipal objectives

The success of North Karelia as a region relies on a co-ordinated implementation of its development plan across the territory. Ensuring that municipal councils are in line with the overall vision for the region and the implementation of the strategies is key to achieving the desired policy outcomes for the population.

In Outokumpu, a pressing issue is its “silo approach” to regional policy. Thanks in part to its history of economic self-sufficiency based on mining activity, the municipal administration has a vision of relying on its own assets to achieve higher stages of development. For example, Outokumpu has set municipal attractiveness to bring in new residents high on its agenda. However, the strategies to attract workers or upskill the labour force seem to be disconnected from the regional plan. Most of these strategies are conducted through individual effort, with little mention of partnerships with other municipalities (Chapter 2). This is not unique to Outokumpu Municipality but a common feature across municipalities in North Karelia, which call for a greater co-ordinating role in the region. Under the depopulation context of rural Finland, it is understandable that each municipality aims to set high goals on skills attraction and retention, but this should not imply a competing policy environment among neighbouring areas. With Joensuu attracting the bulk of students and skilled workers that arrive in North Karelia, the regional council should work together with municipalities to identify opportunities to further collaborate within the Joensuu labour market.

North Karelia Council can improve the interaction among local and private stakeholders to strengthen the implementation of policies. Some policies are being conducted with a lack of co-ordination with the local actors. For example, while the University of Eastern Finland has an important role in skills upgrading and research in the region, the university’s interactions with the working group of extractive industries are rare and informal. Furthermore, local actors in municipalities (e.g. the industrial park of Outokumpu) do not have clear institutional spaces to collaborate with national government agencies (ELY Centre). Conducting a detailed mapping of relevant stakeholders to involve and open collaboration spaces to create links with national institutions at the regional level can be of benefit for attaining comprehensive policy outcomes.

Furthermore, the strategic programmes within Business Joensuu could be better co-ordinated to fulfil policy complementarities. Some sectors in Business Joensuu are fragmented into different strategic programmes (e.g. innovation, entrepreneurship). These could be better co-ordinated and also with programmes conducted by municipalities and state regional agencies in order to unleash the potential of synergies among economic sectors. Many of the programmes have points in common that should be better co-ordinated, including the focus on boosting entrepreneurship and the aim to attain greater economic results through networks and new technologies.

To ensure alignment of the regional development plan and municipal strategies, the regional council can create a platform for dialogue and meet regularly in a formalised setting (Box 3.6). This platform can help build a unified vision for the region, embrace changes in strategies when needed and define synergies among municipal plans. The platform has to be institutionalised to ensure its continuity over time and should involve different actors, local businesses and community leaders, to build an integrated action plan for development.

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Box 3.6. Platform to align views for regional development

Brainport regional development

Eindhoven is one of the few regions in the Netherlands where regional government has been successful, as a complement to national and local government. The Eindhoven Regional Co-operation organisation is an alliance of 21 local governments organised on a voluntary basis.

Part of its success stems from the fact that the 21 local governments are willing to contribute financially and co-fund projects for which only partial funding is available (as is generally the case for both Dutch and EU-level regional policy). Nevertheless, it has only been truly effective in policy areas where consensus exists.

For example, it has struggled to deal with problems of traffic congestion and an oversupply of office space, but has proven effective in facilitating high-tech industry.

By the 1990s, three factors were in place:

  1. 1. A history of proactive local government.

  2. 2. A number of leading firms with a long history in the region and/or a strong feeling of attachment to it, which were willing to assume responsibility for the region’s well-being on their own initiative or if called upon to do so.

  3. 3. An effective regional-scale co-operation organisation (SRE), backed politically and financially by local governments.

These conditions made it possible to set up a special public-private organisation that grew out of the temporary projects to fight the crisis (Stimulus and Horizon), organised by local and regional actors. This organisation, the Brainport Foundation, is a permanent public-private partnership responsible for implementing and, increasingly, for formulating, regional economic policy through its subsidiary, Brainport Development.

Five Clusters Initiative” in Västra Götaland, Sweden

The importance of co-operation and partnership among different institutional actors has also been demonstrated in the region of Västra Götaland in Sweden. A recent initiative, the “Five Clusters Initiative”, is an example of successful co-operation among businesses, research institutes and the public sector in the region. The initiative is a joint effort initiated by the West Sweden Chambers of Commerce; the main universities; the principal city, Gothenburg; and the region of Västra Götaland, which is responsible for regional development. This process began with a mutual understanding that sustainable development in all its aspects and dimensions would be the basis for discussion.

After bringing the actors together for joint discussions, five clusters were identified: i) the urban future; ii) transport solutions; iii) green chemistry and bio-based products; iv) life sciences; and v) the marine environment. For each cluster, the aim was to identify world-class resources in research, education and industry and move toward developing the regional economy from them. The initiative resulted in a clearer focus for all organisations in the areas represented in the clusters and also in day-to-day operations. The universities have even in some instances adapted their internal organisation to better focus on the chosen challenges. As a result of a more focused approach, a new large-scale collaboration in clinical research between the leading companies, the region and the academy, with strong outside back-up, was announced in the autumn of 2014. Mistra Urban Futures, a national centre with international ambitions located in Gothenburg, is now a player in rebuilding part of the city centre in Gothenburg Old Harbour, with 40 000 residents and 20 000 working places.

Source: OECD (2016[15])OECD Territorial Reviews: Bergamo, Italyhttp://dx.doi.org/10.1787/9789264251984-en.

Business Joensuu can support this platform by co-ordinating the involvement of business and entrepreneurs. The active participation of the private sector in the strategic definition of development has proven to be instrumental for regions (see example of Eindhoven in Box 3.6). Business Joensuu can also help to clarify the implementation mechanisms of EU funds and define synergies among municipality development plans. Business Joensuu should also play a more active role in connecting local companies directly with the programmes managed by Business Finland and help define a clear marketing strategy for the region.

Improving co-ordination among municipalities

Given its small size, Outokumpu requires co-ordination with other municipalities to have a bigger impact on policy decisions and provide quality public services and infrastructure. In Finland, the low density of settlements makes the cost of service delivery particularly high. These costs are for example higher than in other Nordic countries like Sweden, due to Finland’s higher dispersion (OECD, 2017[1]). Municipal fragmentation not only affects the quality of public services but also limits the benefits of economies of scale in large projects and hampers productivity (Ahrend et al., 2014[16]).

Municipalities within North Karelia have a tradition of joint ventures to overcome challenges on the provision of public services. The development of a joint data management system between municipalities has helped facilitate collaboration between service providers to better meet people’s needs. Municipalities have also formed partnerships to deliver some elderly care services and have pooled their resources to form a common ICT and telecommunications service provider (OECD, 2017[1]). Likewise, Outokumpu is a labour market hub for residents from other municipalities (Chapter 2), which highlights the economic interaction in the area.

Nevertheless, one of the big challenges for the municipal council is that people coming to work from other municipalaties can contribute to the municipal finances and vitality. One of the reasons for some people to live outside of the municipality and commute every day to work is related to the relatively high property taxes in Outokumpu. The average Outokumpu rent, in price-controlled apartments, is the second-highest in North Karelia (EUR 10.2 monthly per square metre) and not far from Joensuu’s average price (EUR 10.5). To make the most of the the labour mobility within the region, North Karelia should have a clear assessment of the type of people commuting and strengthen the discussion platforms (workforce groups) to agree on policies and unlock opportunities for both municipalities where people life and the ones where people work.

The region of North Karelia lacks formal incentives for co-ordination among municipalities. Municipal co-operation is mainly done on a voluntary basis through meetings and specific partnerships. The platform for dialogue can be complemented with formal co-ordination arrangements between local governments to implement policies without relying on the different types of relationship with the government in power. North Karelia Council can use the experience of project contracts in France or the budgetary agreement approach in Vancouver to promote municipal co-ordination through contractual arrangements (Box 3.7).

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Box 3.7. Contractual arrangements in France and Vancouver, Canada

France uses project contracts (contrat de projet) to bring together state (including European Structural Funds) and regional funding to finance projects that can help leverage other objectives (e.g. digital services, transitions to more environmentally friendly practices, etc.). Territorial contracts (contrat de pays) are also used to encourage a group of local authorities to undertake a development project, sometimes straddling or crossing administrative boundaries, adapting to the space where people live. The project is directly prepared by the relevant area (group of local authorities) and the contract provides fiscal incentives to enterprises involved.

In Vancouver, Canada, the first Vancouver Agreement was signed for a five-year period in 2000 and renewed in 2005 until 2010. The scope of the Vancouver Agreement was broad, with three main components: health and safety, economic and social development (including housing), and community capacity building. Its main objective was to promote co-operation between the three levels of government to address local issues of poverty, homelessness, substance abuse, safety and economic revitalisation, concentrating on Vancouver’s Downtown Eastside. While the Vancouver Agreement was unfunded, it made use of existing mandates, authorities and programmes to finance initiatives. There was an agreement by each party to use funding available from existing federal, provincial and municipal programmes to finance projects and programmes and to strategically focus a portion of those expenditures on agreed-upon activities.

Sources: Adapted from OECD (2006[17])Competitive Cities in the Global Economyhttp://dx.doi.org/10.1787/9789264027091-en; Vancouver Agreement (n.d.[18]), The Agreement, www.vancouveragreement.ca/the-agreement.

Better inter-regional co-ordination to support the internationalisation of SMEs and the mining network

Co-ordination of North Karelia with neighbouring regions can create a strong business environment that serves as a platform to upscale local business and integrate the local assets in the development of the mining sector.

There are various voluntary collaborations between regions in north and east Finland, including a co-operation area with seven regions involved. Furthermore, the Euregio Karelia forum for cross-border collaboration between Finland and Russia comprises three Finnish regions (Kainuu, North Karelia and Northern Ostrobothnia) and the Republic of Karelia in Russia. This forum was founded in 2000 with the aim to develop the viability of the region and the living conditions of the inhabitants via cross-border co-operation. Its board consists of leading political representatives of the member regions and meets annually to prepare and carry out co-operation projects for the development of the border regions (e.g. developing transport connections and infrastructure, promoting economic co-operation, improving social well-being and addressing environmental issues) and supervise the regions’ interests.

However, the predominance of the national government in the definition of the regional economic strategy leads regions to strengthen integration with national agencies and ministries rather than with other regions. The current forms of co-operation between the regions of north and east Finland are relatively weak and narrow (OECD, 2017[1]). Furthermore, the current infrastructure mainly promotes economic and commercial relations with Helsinki, with few connections between east and west regions. The North-South Highway (Route No. 6) has a larger traffic capacity than the East-West Highway (Route No. 9). The lower quality of east-west infrastructure hampers North Karelia’s and Outokumpu’s capacity to provide mining services solutions to the mining region in the west, where there is currently a high mineral potential.

The co-ordination with other regions can be used to improve the co-ordination of smart specialisation strategies and boost economic sectors. Currently, national programmes take the main co-ordinating lead in some sectors. For example, in the tourism sector, Visit Finland plays a co-ordinating role to ensure complementarities between different destinations and encourages regions to develop their own strengths and themes with the national government. However, direct inter-regional co-ordination could lead to developing closer links among destination management companies at a regional level and ensure their work is connected to broader opportunities (OECD, 2017[1]). Collaboration between Eastern Finland and Lapland and regions in Norway, Russia and Sweden can also spur new business opportunities.

North Karelia could also improve the synergies between Joensuu and Kuopio. Both urban and administrative regional centres have special characteristics that can be complementary to each other and, in turn, benefit the economic activity of the region. Kuopio’s expertise and educational institutions are focused on well-being and medicine, while Joensuu leans towards forestry and manufacturing.

The development of a strong mining network in Finland requires better co-ordination among regions that develop or have the potential for mining activities. The region can unlock synergies in different areas and can exploit their particular links with the mining sector. For example, the regions in the north of the country have the largest share of active mines and mining investments, and can partner with eastern regions to leverage on their industrial and manufacturing know-how. In the west of Finland, various exploration projects can benefit from the experience of mining-related companies in North Karelia. To make the most of this network, the Ministry of Economic Affairs should create mechanisms of regional co-ordination for mining activities. It can benefit from the experience of the association of regions in the Czech Republic and Germany (Box 3.8).

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Box 3.8. Mechanisms for regional co-ordination in OECD countries

The governments of the German Länder co-operate through the Council of Prime Ministers and 19 subject-specific permanent conferences of ministers. The council/standing conferences are not part of the German government and cannot pass legislation. Nevertheless, they play an important role in the federal system. Councils have two primary functions:

  • In policy fields where legislative powers reside with the Länder, they are the main forum for policy co-ordination across the Länder.

  • In policy fields where the Länder have limited powers, council/conference resolutions articulate common interests of the Länder to other actors, such as the federal government or the European Commission.

Co-operation in the council/conferences is consensus-based and most decisions are made unanimously. The Council of Prime Ministers and most other permanent conferences require the formal approval from 13 of the 16 German Länder to pass a resolution. Although resolutions are not legally binding, they have strong symbolic power and are almost always enacted by Länder governments.

Some permanent conferences also draft model laws and regulations to support state administrations and to further harmonise laws across states. The Council of Prime Ministers convenes four times a year. After the council meetings, prime ministers meet with the German Chancellor. Subject-specific permanent conferences have their own meetings scheduled and tend to meet between one and four times a year. The federal minister in charge of the respective portfolio typically attends the meeting as an observer. Several permanent conferences have established additional committees to discuss particular topics in more detail. The administrative structure of permanent conferences varies depending on their responsibilities. Some permanent conferences have their own permanent secretariats with sizable staff numbers, while others use the administration of the state that holds the rotating presidency of the permanent conference.

The Association of Regions of the Czech Republic (AK CR) was founded in 2001 to represent the collective voice of the Czech regions. It associates the Czech Republic’s 13 regions and the capital Prague. The supreme body of the AK CR is the council composed of the president of each region and the mayor of the capital, Prague. The association offers services ranging from representing regional interests in parliament, the cabinet and European institutions, to drawing up various reports, standpoints and initiatives. The council elects a chairman and three vice-chairmen, and decides on setting up commissions. Commissions serve as advisors to the council. Current commissions include the Commission for Regional Development, the Commission for Public Administration, the Commission for Regional Financing, the Commission for Education, the Commission for Health Services, the Commission for the Environment and Agriculture, and the Commission for Transportation. Commission sessions serve for monitoring and issuing position papers/recommendations on major national and European issues in their area of competency. The council meets once every six to eight weeks on a rotating basis in one of the regions. External guests, from the central government administration, members of parliament, public organisations or international companies may also be invited to the meetings. The association has a small secretariat and is financed through membership fees.

Source: OECD (2014[19])Spain: From Administrative Reform to Continuous Improvementhttp://dx.doi.org/10.1787/9789264210592-en.

References

[16] Ahrend, R. et al. (2014), “What Makes Cities More Productive? Evidence on the Role of Urban Governance from Five OECD Countries”, OECD Regional Development Working Papers, No. 2014/5, OECD Publishing, Paris, https://dx.doi.org/10.1787/5jz432cf2d8p-en.

[2] Business Joensuu (n.d.), Homepage, https://www.businessjoensuu.fi/ (accessed on 15 March 2019).

[14] Charbit, C. (2011), “Governance of Public Policies in Decentralised Contexts: The Multi-level Approach”, OECD Regional Development Working Papers, No. 2011/4, OECD Publishing, Paris, https://dx.doi.org/10.1787/5kg883pkxkhc-en.

[3] Finnish Trade Organization (2016), Finnish Mining Cluster.

[12] Government of Ontario (2015), Municipal Performance Measures, Ministry of Municipal Affairs and Housing, Government of Ontario, http://www.mah.gov.on.ca/Page297.aspx (accessed on 6 February 2019).

[5] Ministry of Economic Affairs and Employment (2019), Minerals Policy, https://tem.fi/en/minerals-policy (accessed on 22 January 2019).

[13] OECD (2017), OECD Territorial Reviews: Morelos, Mexico, OECD Territorial Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264267817-en.

[1] OECD (2017), OECD Territorial Reviews: Northern Sparsely Populated Areas, OECD Territorial Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264268234-en.

[15] OECD (2016), OECD Territorial Reviews: Bergamo, Italy, OECD Territorial Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264251984-en.

[7] OECD (2016), OECD Territorial Reviews: Córdoba, Argentina, OECD Territorial Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264262201-en.

[19] OECD (2014), Spain: From Administrative Reform to Continuous Improvement, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264210592-en.

[8] OECD (2011), Estonia: Towards a Single Government Approach, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264104860-en.

[17] OECD (2006), Competitive Cities in the Global Economy, OECD Territorial Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264027091-en.

[10] Outokumpu Municipality (2018), Corporate Strategy 2018-2021, http://www.outokummunkaupunki.fi/documents/291232/298182/Outokummun+kaupungin+konsernistrategia+Kumpukartta+2018-2021%2C+kvalt+27.11.2017%2C+voimaan+1.1.2018.pdf/5a953d57-1739-4207-dc2e-9e9e0b9601b8 (accessed on 6 February 2019).

[9] Sarapuu, K. (2010), “Comparative analysis of state administrations: The size of state as an independent variable”, Halduskultuur – Administrative Culture, Vol. 11/1, pp. 30-43.

[11] Schumann, A. (2016), “Using Outcome Indicators to Improve Policies: Methods, Design Strategies and Implementation”, OECD Regional Development Working Papers, No. 2016/2, OECD Publishing, Paris, https://dx.doi.org/10.1787/5jm5cgr8j532-en.

[6] Tiainen, H., R. Sairinen and O. Sidorengo (2015), “Governance of sustainable mining in arctic countries”, Arctic Yearbook 2015, https://www.researchgate.net/publication/283510080_Governance_of_Sustainable_Mining_in_Arctic_Countries (accessed on 4 February 2019).

[4] Tukes (2019), Mining Activity, https://tukes.fi/en/mining (accessed on 6 February 2019).

[18] Vancouver Agreement (n.d.), The Agreement, http://www.vancouveragreement.ca/the-agreement.

Note

← 1. The Talvivaara mine located in the Sotkamo area of Eastern Finland experienced the first pollutant leaks containing uranium in 2010. In 2012, two other major leaks released pollutants into the surrounding area. The first took place in November 2012 and also involved a leakage from a gypsum waste pond, discharging nickel, uranium and other toxic metals and effluents into nearby surroundings and lakes. This leakage spawned a large demonstration, with local people from Eastern Finland demanding the mine’s closure.

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Chapter 3. Governing mining regions to attain sustained and inclusive growth