The making of local development: Highlights from Integrated Territorial Projects Evaluation Open Days in Roma July 4th, 2006 Marco Magrassi Investment Evaluation Unit Department for Development Policies - Ministry of Economy of Italy

CONTENTS 1.Main features of Integrated Territorial Projects 2.Methods and issues in project identification and selection 3.Some lessons and open questions

INTEGRATED TERRITORIAL PROJECT: Formal Definition from the CSF “Composite project for the development of an area, which includes a set of different interventions that all contribute, in interaction with each other, to a common development strategy, devised by local actors in response to concrete needs and opportunities.” Defining Integrated Territorial Projects (ITPs)....

The “WHY” question: policy goals and assumptions behind ITPs... “Local knows better”: bottom-up development planning  better and strategic project choices Local level coordination of multi-sectoral interventions  synergies, stronger results Local level partnerships between municipalities, public institutions, private sector  stronger government and governance It is fair to devolve expenditure power to local level, elected bodies

Detailed operations of different nature CORE OBJECTIVE (Strategic idea: provides coherence, integration) Example: To increase cultural tourism Historic preservation Environment (restoring buildings, cleaning polluted sites) Infrastructure (Roads, telecommunications Tourist Info points) Productive sector (Support to local mfg. of typical products) Human Resources (training skills needed in the tourism sector) Unified Project Management (one municipal govt. chosen to lead project) Measurable Expected Outcomes: Increased N. of visitors, Employment, reduced out-migration The basic ITP scheme… Local ITP partnership selects single investments (10 to 50) and present them to the Region as “package” Single investments at different stages in technical design Regions evaluate/approve ITP as a whole package of projects

Integrated Territorial Projects are important in Italy… Almost € 6-billion in 7 ROPs in Southern Italy OBJ.1 (  20% CSF resources) About 160 projects, more than 6,000 investments In Obj. 2, many Regions autonomously decided to adopt ITP model.(e.g. Tuscany Region 30% of the ROP)

Municipalities covered by ITPs in Southern Italy: almost 2,000 (more than 90% of total)

Industrial Develop. Agriculture Food Urban Develop. Tourism Culture Environment Natural Parks Transport networks Generic objective Category Core Objective Number of ITP What are the goals that municipalities have selected to improve economic and social welfare? Core Objectives… Distribution of Core Objectives by Thematic Category

ITP with special features: 1. Single-municipality (urban) ITPs: 22 projects in medium/large cities (more than € 1 billion) 2. Sector-based integrated and inter-municipal projects (social services, industrial development) --sectors and target areas selected through Regional plans

MinMeanMax Number of Municipalities Population (median ) Total Funding (millions of €) (median ) Investment per capita (€) (median 330) A very diversified universe…

ITP by Region and incidence on total EU Regional Funds available (2004 figures. Currently is more)

ITP identification and selection

ITPs provide opportunity to examine the “negotiated approach”: A selection procedure that pursues quality through cooperation between Region and final beneficiaries Sometimes, it combines cooperative and competitive elements Here, we examine it for ITPs, but was applied in many priorities and measures (also sector-based) Issues in ITP identification and selection

Campania Negotiated, mixed Sicily Competitive, bottom-up Calabria Negotiated, top-down Puglia Negotiated, top-down Molise Negotiated, mixed Sardinia competitive, bottom-up Basilicata Negotiated, mixed Competitive, negotiated and mixed slection procedures in the ITP experience...

Two types of identification and selection procedures A: competitive, bottom upB: negotiated, top down Municipalities associate. Prepare and submit detailed project proposal Regions established bidding criteria for municipalities and published a call for projects Municipalities associate; prepare project following Regional geographical, financial, and sometimes sectorial decisions Regions divide all territory, group municipalities, allocate funds ex- ante Regions appraise and approve projects according to project quality and other criteria Regions appraise and approve projects once they reach a minimum quality standard

Competitive CfP (Sicily)Negotiated ex-ante (Calabria) Regional Criteria for ITP identification and selection Proposals evaluated and attributed max 100 points Planning/project quality (max 30 points) Contribution to regional priorities (20 points) Technical sustainability (8 points) Environmental sustainability (8 points) Financial sustainability (8 points) Socioeconomic and institutional sustainability (8 points) Administrative and management sustainability (18 points) Max 25 projects in all Region ITP areas cannot be in more than one Provincial territory (gminas) and should be sub- provincial in size 7 Medium and large cities would be granted specific resources Funds distributed ex-ante according to demographic criteria

Tuscany example: role of the Provinces (powiats) in ITP identification and selection… 1.Region established rules; divided funds equitably among Provinces 2.Then delegated to 10 Provinces tasks of “animating” and assisting the territory to organize and prepare project proposals (Reg provided TA funds) 3.Inter-municipal associations presented projects 4.Provinces developed a first scoring and ranking of projects 5.Regions evaluated and approved; but Provincial ranking incorporated in the scoring formula…

Advantages and risks in ‘negotiated’ procedure Advantages and risks in competitive CfP + more freedom for municipal initiative (demand-based) + better project quality + in theory, more transparent - increases conflicts/political costs - difficult to properly evaluate - can penalize poorer final beneficiaries who are more in need + more equitable in distributive terms + implement regional strategy + reduce political conflict - reproduce top-down, centralized policy process (supply-based) - less incentive for quality (but…) - less freedom for territory to self- organize

From goal setting, to programming, to implementation: General lessons from urban ITPs

Lessons from 22 Integrated Projects in medium/large cities totaling € 1 billion+ currently in implementation Ambitious goals of combining economic transformation with social development Evaluation evidence from : the South…

Sectorial distribution of 490 investments in 20 urban projects (% of total funds) Were strategic goals reached? A proxy answer from types of investments actually financed... Half of total resources in transport,roads and public space...“traditional” investments prevail.

If this was programming of 22 urban projects, how is implementation going? Apparently, it confirms mixed results... Urban infrastructure still dominates, but also well on social services Economic and innovation investment (enterprise support, economic infrastr.) very slow implementation In Central-Northern Italy, things don’t go much better (EU zoning problem)...

 Minor investment in urban competitiveness, economic infrastructure, FDI promotion, internationalization  Little financial engagement of the private sector  Very few projects involve metro-area or city-region (e.g. Catania, Cagliari)  Urban development strategies were rushed, often week  “Institutional” bottlenecks: financial administration, municipal internal organization, project management, City- Region inter-govt. relations, engineering/procurement cycles.... Evaluation evidence that fed negotiation strategy for Also...lack of strategic planning negatively affected effectiveness of urban development funding

Overall lessons

Overall lessons (1)… 1.In weaker territories, a “radical” bottom-up approach has strong limitations…Regions and other actors must assist continuously 2.In stronger territories or larger urban areas, you can decentralize more and have ambitious goals (innovation, growth). But still does note come “naturally”... 3.Partnership with civil society and private economic actors crucial, but very difficult to build... 4.Better projects where local govts. have some capacity/experience in development planning? 5.Financial streamlining, project management design/resources, crucial issues to fix in

Other questions to discuss… 1.What role for Regions in defining boundaries and selecting territories? Better piloting or comprehnsive policy ? What balance b/en top-down and bottom-up? 2.(a) Larger cities, (b) small (or rural) municipal networks, (c) sector-based local policies…should we diversify strategic and operational approaches? How? 3.The “timing” issue:local coalition & strategy-building takes time, but projects must advance and disburse…How to pursue both?