The OECD Territorial Review of Småland-Blekinge: Main Trends and Challenges William Tompson Regional Development Policy Division Directorate for Public Governance and Territorial Development OECD Ronneby, 10 November 2011

First, a word of thanks… to the members of the local team (Emil Hesse, Helena Nilsson, Maria Nilsson, Per Schöldberg, Sofia Westerberg, Carin Karlsson and Lisa Wagnborg for an outstanding background report and the organisation of a flawless mission; to the two dozen or so colleagues who helped them compile the report; to all our interlocutors in the four counties during the March and June missions; and, in particular, to Per Schöldberg, for acting as guide, chauffeur, advisor and chaperone during our missions. 10 November 2011 Ronneby Seminar2

A LOOK AT THE RECENT PAST Part 1 10 November 2011 Ronneby Seminar3

Relatively sparse settlement patterns 10 November 2011 Ronneby Seminar4 Population density Even the most densely populated municipality in Kronoberg has a lower density of population than the sparsest TL3 regions in five OECD countries.

Increasing concentration of population 10 November 2011 Ronneby Seminar5 Demographic trends in the region mirror national trends on a smaller scale

Sweden remains a high-productivity economy 10 November 2011 Ronneby Seminar6 Productivity per hour worked in Sweden and OECD countries, according to the figure 100=US productivity per hour worked

The counties are not closing the productivity gap… 10 November 2011 Ronneby Seminar7 GDP per worker in the four counties relative to the national average,

…But their performance compares well with that of OECD peers 10 November 2011 Ronneby Seminar8 Småland-Blekinge counties exceeded the average rate of productivity growth for high-productivity rural regions by almost one full percentage point (0.85 pp) over – equivalent to an 11% productivity “bonus” over the period. Only 30% of high-productivity rural regions in the OECD area recorded higher rates of productivity growth.

Growth performance has likewise been unspectacular in a Swedish context… 10 November 2011 Ronneby Seminar9

…but relatively strong compared to other OECD regions 10 November 2011 Ronneby Seminar10

The counties suffer from exceptional volatility of growth 10 November 2011 Ronneby Seminar11

Their business cycles reflect this 10 November 2011 Ronneby Seminar12

The labour-market impact of the crisis was thus particularly severe 10 November 2011 Ronneby Seminar13

Which is linked in part to their economic structure 10 November 2011 Ronneby Seminar14 Specialisation index in mining, quarrying and manufacturing,

The counties are heavily specialised in goods production 10 November 2011 Ronneby Seminar15 Structure of GDP by economic sector: the four counties and Sweden

Specialisation in low- and medium-low tech industries 10 November 2011 Ronneby Seminar16

Specialisation in high-tech and knowledge-intensive sectors 10 November 2011 Ronneby Seminar17

Net outward commuting is modest but rising 10 November 2011 Ronneby Seminar18 Outward commuting flows, 2009 Inward commuting flows, 2009

Functional labour markets are growing 10 November 2011 Ronneby Seminar19 Local labour-market areas in Småland-Blekinge

Gender differences are declining in employment… 10 November 2011 Ronneby Seminar20 Employment rates Unemployment rates

…and wages 10 November 2011 Ronneby Seminar21

Firm start-ups by managerial gender 10 November 2011 Ronneby Seminar22

THE CHALLENGE OF THE FUTURE Part 2 10 November 2011 Ronneby Seminar23

Transition ahead The recent crisis has forced the pace of structural change in OECD economies. The implications of this shift are particularly great for the counties of Småland and Blekinge. It is becoming increasingly difficult to sustain competitive medium-to-low tech manufacturing in the developed countries. 10 November 2011 Ronneby Seminar24

A set of inter-linked challenges Human capital: formation, retention and attraction Innovation: making the most of the region’s knowledge-creation potential Promoting new forms of entrepreneurship Improving connectivity within the region and beyond: can Småland-Blekinge pursue agglomeration without density? Creating forms of governance that enable to the counties to address the above in an integrated fashion 10 November 2011 Ronneby Seminar25

Educational attainments are relatively low by comparison with national averages 10 November 2011 Ronneby Seminar26

…But still rather high by OECD standards 10 November 2011 Ronneby Seminar27

Retention of educated youth is difficult 10 November 2011 Ronneby Seminar28 Percent of post-secondary graduates from a county residing in the same county, 2007

International migrants as % of population, November 2011 Ronneby Seminar29

Connecting the region 10 November 2011 Ronneby Seminar30

Road connections to external markets could be improved 10 November 2011 Ronneby Seminar31 Note: The indicator measures accessibility to potential markets in travel time by road using an inverse weighted GDP matrix to all EU regions. The weighting rule applies the inverse distance for travel time. Potential rail access thus measures all the people that can be reached from a given region to all other regions in the EU.

Rail connectivity is better but not terrific 10 November 2011 Ronneby Seminar32 Note: The indicator measures accessibility to potential markets in travel time by rail using an inverse weighted GDP matrix to all EU regions. The weighting rule applies the inverse distance for travel time. Potential rail access thus measures all the people that can be reached from a given region to all other regions in the EU.

Improved connectivity within the region could also help labour-market performance 10 November 2011 Ronneby Seminar33

Activity rates have tended to be high 10 November 2011 Ronneby Seminar34 Employment and unemployment rates for Swedish counties, 2007

Youth unemployment and population density 10 November 2011 Ronneby Seminar35

Connectivity should also favour entrepreneurship 10 November 2011 Ronneby Seminar36

Enterprise creation 10 November 2011 Ronneby Seminar37