Lisbon and the Regions Drew Scott Europa Institute University of Edinburgh

Multi-Level Governance (MLG): an idea whose time is coming? MLG Mark I – weak MLG: – Structural fund reforms 1988 (Europeanisation) – TEU, CoR, Subsidiarity (Constitutional). MLG Mark II – potentially strong MLG: – Emergence of regions as powerful loci of economic policy potential in borderless economy (Europeanisation); – Dissatisfaction with the Community method. New trans- national governance - open method, enhanced subsidiarity clauses and, inter alia, role for regions as legitimating authorities (Constitutional).

Lisbon, OMC and the Regions: Two Trends Globalisation of economic policy: – Loss of (national) macroeconomic policy flexibility – EMU, SGP; – Increased microeconomic policy activism at trans-national level (state aids, competition policy). Necessitates Local flexibility of economic policy: – Incentive to coordinate – Efficiency – Legitimacy Multi-Level Governance

Lisbon and Regions: Issues Kok Report and Spring 2005 European Council – re- launch of the Lisbon Strategy; OMC as governance – the players; Incentives to coordinate; Regions, localization of economic policy and Lisbon; Regions and policy legitimacy; Multi-Level governance and the role of regions in delivering Lisbon.

Caveats Criticisms of OMC as governance do not apply to all aspects of the Lisbon Strategy; Main focus of paper is on the competitiveness agenda of the Lisbon Strategy – i.e. the economic policy dimension. Sustainable development and social inclusion less relevant in context of paper; Conclusion is that a mixed strategy is necessary - key elements of LS require MLG, others not necessarily so. But, limited success expected outside MLG cases.

Kok Report, November 2004 – criticising the governance dimension. More political ownership [of the Lisbon targets] is the precondition for success. (p39) Up until now national parliaments and citizens have not been sufficiently associated with the process, so that the pressure on governments has been less than it should and could have been. The same applies to social partners and other stakeholders. Closer cooperation between the various stakeholders is needed, who must commit themselves to the process of encouraging and supporting each other. (p40)

Spring Council, 2005 – re-launching the Lisbon Strategy Called for a re-launch of the LS. Emphasis on growth and employment; – New cycle of governance involving greater EU- MS partnership; – National reform programmes (by 15 October) detailing 3-year strategy of policy actions/reforms based on new integrated guidelines (comprising BEPG and employment) consistent with LS. Inter alia NRPs are to be used for improving mutual learning.

Re-launched LS and Governance OMC remains though the reporting to be simplified; OMC regarded as instrumental in devising a strategic and integrated approach, and to involve and mobilise stakeholders and to promote exchange of good practice; National level governance to mobilise public authorities at national, regional and local level, according to their respective areas of competence, and to promote dialogue and partnership between all relevant bodies…

BUT: OMC – the players Focus remains on national governments; other stakeholders to be included according to national practice – aim is to give LS participative legitimacy – but who, and why? Lack of robust mechanisms for effecting policy transfer in key aspects of Lisbon agenda: absence of incentives to engage national governments in a Europeanisation- of-public-policy process.

Problems to be addressed Why has member-state level mutual learning or policy transfer failed under the OMC? We lack a theory of mutual learning, but there are theories of international policy transfer (policy coordination) – what do these tell us? Is the failure of LS really about the absence of shared beliefs? What stakeholders should be involved in the LS re- launch? At what policy level should mutual learning take place and be expected to succeed? In what Lisbon policy areas should we expect it to occur?

EU and policy national economic policy coordination (transfer) Single European Market and EMU both instances where absolute coordination has replaced relative coordination under orthodox analysis; Lisbon Agenda does not meet conditions necessary for either relative or absolute coordination – absence of a shared target variable which otherwise will propagate the shocks that arise from uncoordinated national policies across the area as a whole. Lisbon agenda fails in part under orthodox international economic policy coordination analysis. Lisbon requires alternative model of coordination.

Regional policy coordination (transfer): localisation of economic policy instruments Localisation of policy instruments: – Non-availability of national (globalised) policy instruments to tackle specific domestic economic objectives; – Asymmetric shocks occur at level of industry and region; – Enhanced flexibility in local policy response necessary; – Local knowledge is high on deployment and mix of competitiveness-enhancing policy instruments; – Incentive to coordinate locally both horizontal and vertical (efficiency arguments); – Local policy coordinaton does not involve high politics (shared vision) – no impact on national social models; – Subsidiarity enhances legitimacy of policy actions.

Stage 2 – Localisation and Vertical and Horizontal policy coordination Vertical – rendering local policies consistent with national and trans-national (EU) level policies; Horizontal – effecting policy coordination and policy transfer between regions with similar characteristics; Regional comparative advantages – many of the competitiveness-related Lisbon policies are sub-state competences.

Regions and efficiency-based policy transfer Regions more receptive to, and experienced in, trans-national policy transfer - the incentive to coordinate is high; regions have considerable experience of policy-learning; Vertical coordination requires close engagement between regions and national government in Lisbon processes – especially where competences overlap or contagion problems emerge; Horizontal coordination develops EU-wide regional (economic) networks both inside and outside the framework of EU policies.

Regions to input in key Lisbon competitiveness policies: – Innovation; – Research and development; – Education and training (universities and vocational); – Networks (physical, non-physical); – Small and medium sized enterprises; – Elements of social inclusion and environmental sustainability; – Better Regulation Strategy.

Regions and legitimacy – normative underpinning of policy transfer Input legitimacy; – Constitutional – policy transfer does lead to policy centralisation (at EU or national levels) – Efficiency in economic policy process (design, implementation); – Local priorities to reflect local circumstances; Output legitimacy – Proximity to citizen and local economic players; – Integration of elements of the Lisbon targets; – Local responsiveness to external economic shocks; – Contribution to Lisbon debate at national and EU levels.

Energizing the regional involvement with the Lisbon Agenda Involvement in National Action Programmes; Direct access to relevant Commission agencies; National-level - Lisbon-related debate and dialogue at the sub-state level including economic development administrations, governments, assemblies, parliaments, economic and social partners; EU-level - Committee of Regions and Regions with Legislative Powers.