OECD Territorial Reviews SwEDEn O 2017 E C D T e MOniTORing PROgRESS in MulTi‑lEvEl r r it o gOvERnanCE anD RuRal POliCy r ia l R e v ie w s S w E D E n 2 0 1 7 M O n iT O R in g P R O g R E S S in M u l T i‑l E v E l g O v E R n a n C E a n D R u R a l P O l iC y OECD Territorial Reviews: Sweden 2017 MONITORING PROGRESS IN MULTI LEVEL GOVERNANCE AND RURAL POLICY This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2017), OECD Territorial Reviews: Sweden 2017: Monitoring Progress in Multi-level Governance and Rural Policy, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264268883-en ISBN 978-92-64-26887-6 (print) ISBN 978-92-64-26888-3 (PDF) Series: OECD Territorial Reviews ISSN 1990-0767 (print) ISSN 1990-0759 (online) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Photo credits: Cover Illustration © Jeffrey Fisher. 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Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) at [email protected]. 3 FOREWORD – Foreword Policies for economic growth, jobs, human capital and environmental sustainability have greater impact when they recognise the different economic and social realities where people live and work. National governments are thus challenged to rethink how to harness the potential of different types of cities and regions to prepare for the future. In 2009, the OECD conducted a territorial review of Sweden at the request of the Swedish Ministry of Enterprise, Industry and Communication (known in 2016 as the Ministry of Enterprise and Innovation). This resulted in the review, OECD Territorial Reviews: Sweden 2010, published in February 2010, that focused on: 1) the trends, achievements and challenges of regional development in Sweden; 2) how to exploit cross-sector synergies through regional policy in Sweden; 3) how multi-level governance arrangements could support more effective regional development. Sweden has recently revised its National Strategy for Sustainable Regional Growth and Attractiveness 2015-2020 and is laying the foundations to develop a renewed rural policy. In addition, a committee has been appointed to examine county mergers in order to create fewer – and larger – regions. As part of these initiatives, the Swedish government is seeking to understand the progress made with respect to the OECD’s 2010 territorial recommendations, and the current challenges for regional development in Sweden within the context of its revised national strategy. To this end, the Swedish government has requested that the OECD conduct a review in order to: • assess the primary regional policy changes since 2010 and the extent to which recommendations from the 2010 OECD territorial review have been implemented • contribute to an ongoing discussion on a new rural policy in Sweden, using the OECD Framework for Rural Policy as a basis • focus on the multi-level governance challenges faced, placing special attention on regional reforms and municipal mergers • assess the strengths and challenges faced in implementing the OECD Principles on Effective Public Investment across Levels of Government. Since 2010, Sweden has continued to prioritise its dual objective of territorial growth and territorial equity. Many of the recent trends are marked by a clear evolution in multi- level governance capacity and a strengthening in the role of regions, as recommended in 2010, and supported by the National Strategy for Sustainable Regional Growth and Attractiveness 2015-2020. Two topics appear to be of increasing importance with respect to Sweden’s regional development. The first concerns rural Sweden and whether it has been “left behind”, not only in its development but also in the government’s discourse. Sweden has recently set up a committee to provide recommendations for a renewed rural policy. The second debate, and one that is drawing increasing attention, centres on OECD TERRITORIAL REVIEW: SWEDEN 2017 – MONITORING PROGRESS IN MULTI-LEVEL GOVERNANCE AND RURAL POLICY © OECD 2017 4 – FOREWORD regional and municipal governance. Rural policy and multi-level governance are thus the two special chapters of this report. The first chapter provides an overview of the degree of implementation of the recommendations made by the OECD in 2010. This review was carried out by the OECD Regional Development Policy Committee (RDPC). The RDPC provides a unique forum for international exchange and debate on regional economies, policies and governance. The RDPC has developed a number of activities, including a series of national Territorial Reviews. These studies follow a standard methodology and a common conceptual framework, allowing countries to share their experiences and disseminate information on good practices. The RDPC has also endorsed the Recommendation on Effective Public Investment across Levels of Government, as a key instrument to support multi-level governance. OECD TERRITORIAL REVIEW: SWEDEN 2017 – MONITORING PROGRESS IN MULTI-LEVEL GOVERNANCE AND RURAL POLICY © OECD 2017 5 ACKNOWLEDGEMENTS – Acknowledgements This report was produced by the Public Governance and Territorial Development Directorate of the OECD under the direction of Rolf Alter and Luiz de Mello. It was supervised by Dorothée Allain Dupré, in the Regional Development Policy Division led by Joaquim Oliveira Martins. Chapter 1 of the report was written by Dorothée Allain Dupré and Varinia Michalun. Chapter 2 on rural development was written by Chris McDonald. Chapter 3 on multi-level governance was drafted by Antti Moisio and Varinia Michalun. The report also benefited from contributions from Felix Arnold, Chiara Allegri, David Freshwater and Johannes Weber. Valuable comments and inputs on the report were received from Isabelle Chatry, Enrique Garcilazo, Luiz de Mello and Joaquim Oliveira Martins. The OECD would like to thank the Swedish authorities at the national and subnational levels for their co-operation and support during the review process. Special thanks are given to Sverker Lindblad, Senior Adviser, Ministry of Enterprise and Innovation, for initiating and supervising the project, and to all members of the local team, including Patrik Johansson, Maria Nordh, Erik Joachimsson, Anna Hedberg and Lena Lind for their work on the project. The OECD extends warm thanks all the stakeholders from central ministries, subnational governments, academia, civil society met during the mission organised in April 2016 in Sweden: more than 150 different stakeholders were met. The OECD also would like to thank the Ministry of Enterprise and Innovation for the organisation of the seminar to discuss the various issues addressed in this report and some preliminary recommendations. Special thanks are given to Jean-Christophe Baudouin, Directeur, Direction des stratégies Territoriales, Commissariat Général à l’Egalité des Territoires, Mr Titus Livius, Director Governance and Finance at the Dutch Ministry of Interior and Kingdom Relations and Mr Peter Wostner, Secretary, Government Office for Development and European Cohesion Policy, Head of Smart Specialisation Unit and Chair of the OECD Working Party for Rural Policy, who participated in the mission as peer reviewers for France, the Netherlands, and Slovenia respectively. The report relies on a broad variety of sources, including interviews during the mission, answers to a questionnaire completed by Sweden and OECD Reviews recently conducted on Sweden in different policy areas. Joanne Dundon, Jennifer Gardner, Kate Lancaster and Pilar Philip provided guidance to prepare the publication. Ms. Julie Harris edited the final manuscript and prepared it for publication. OECD TERRITORIAL REVIEW: SWEDEN 2017 – MONITORING PROGRESS IN MULTI-LEVEL GOVERNANCE AND RURAL POLICY © OECD 2017 7 TABLE OF CONTENTS – Table of contents Executive summary ........................................................................................................................ 13 Background on the Territorial Review ......................................................................................... 17 Assessment and recommendations ................................................................................................ 19 Chapter 1. Progress in implementing the recommendations of the 2010 OECD Territorial Review of Sweden ......................................................................................................... 37 Introduction ................................................................................................................................. 38 A low level of territorial disparities in Sweden compared to OECD countries ........................... 39 Implementing the regional growth policy: Progress since 2010 .................................................. 47 A changing multi-level governance system ................................................................................. 60 Conclusion ................................................................................................................................... 68 Annex 1.A1. Status of the implementation of the OECD’s 2010 recommendations .................. 69 Annex 1.A2. Trends in OECD regional well-being indicators .................................................... 72 Notes ............................................................................................................................................ 74 References ................................................................................................................................... 75 Chapter 2. Improving rural policy development in Sweden ........................................................ 79 Introduction ................................................................................................................................. 82 Defining rural areas ..................................................................................................................... 83 How are rural areas doing? ........................................................................................................ 100 Developing a national rural policy for Sweden: State of play and current reform initiatives ... 108 Improving the co-ordination of rural, regional and sectoral policies ........................................ 117 Developing a national rural policy for Sweden: Future directions ............................................ 131 Notes .......................................................................................................................................... 144 References ................................................................................................................................. 144 Chapter 3. Reforming the Swedish hourglass: More than just boundaries ............................. 147 Introduction ............................................................................................................................... 150 The Swedish multi-level governance framework ...................................................................... 152 Using public investment to support regional development goals .............................................. 175 Regional reform for effective territorial development and investment: More than just boundaries ......................................................................................................... 191 Annex 3.A1. Compulsory service allocation and expenditure among Sweden’s counties and municipalities ...................................................................................................................... 202 Annex 3.A2. Subnational investment in Sweden by sector and by government level ............. 204 Annex 3.A3. Recent regional reform activities in OECD countries .......................................... 207 Annex 3.A4. Relative size of Sweden’s municipalities ............................................................. 209 OECD TERRITORIAL REVIEW: SWEDEN 2017 – MONITORING PROGRESS IN MULTI-LEVEL GOVERNANCE AND RURAL POLICY © OECD 2017 8 – TABLE OF CONTENTS Notes .......................................................................................................................................... 211 References ................................................................................................................................. 213 Tables 0.1. OECD Recommendation on Effective Public Investment across Levels of Government: Summary assessment of Sweden ...................................................................................................... 29 1.1. Key components of Swedish regional policy over time ............................................................ 48 1.A1.1. Summary of Implementation Status of Recommendations from the OECD Territorial Reviews: Sweden 2010 ...................................................................................................................... 70 1.A1.2. Summary of Implementation Status of Recommendations from the OECD Territorial Reviews: Sweden 2010 ...................................................................................................................... 71 1.A2.1. Changes in trends of regional well-being: Sweden 2000-13 ............................................... 72 2.1. Challenges and opportunities faced by type of rural region ...................................................... 88 2.2. Swedish counties classified by the OECD regional typology ................................................... 90 2.3. Swedish counties classified by OECD extended typology ........................................................ 93 2.4. Population and classification of functional urban areas ............................................................ 96 2.5. Swedish Agency for Growth Policy Analysis’s urban/rural typology ....................................... 98 2.6. Summary of main rural definitions for Sweden ......................................................................... 99 2.7. Specialisation index for northern and southern rural regions in Sweden ................................ 106 2.8. Productivity growth for Sweden’s rural regions (pre- and post-crisis) .................................... 107 2.9. Indicative public support for the Rural Development Programme in Sweden for the 2014-20 period .................................................................................................................... 109 2.10. Areas of challenges and opportunities identified in Sweden’s National Strategy for Sustainable Regional Growth and Attractiveness ..................................................................... 112 2.11. Policy complementarities for rural regions close to cities ..................................................... 121 2.12. Policy complementarities for remote rural regions ................................................................ 122 2.13. Factors impacting the cost of rural services ........................................................................... 123 2.14. Public service delivery in Sweden: Structural costs that are taken into account in the cost equalisation system for subnational governments .......................................................................... 124 2.15. Estimations of costs due to unfavourable settlement structure in Sweden, 2011 .................. 124 2.16. Sweden’s northern counties: Local labour markets and municipalities ................................. 130 2.17. Rural Policy 3.0 ..................................................................................................................... 133 2.18. Benefits and risks of implementing this new approach to rural policy for Sweden .............. 142 3.1. Breakdown of Swedish municipal and county revenue, 2014 ................................................. 162 3.2. Fiscal equalisation in comparison ............................................................................................ 168 3.3. Investment levels by subnational government bodies in Sweden ............................................ 179 3.4. County-level actors with responsibility for regional development, 2016 ................................ 195 3.A3.1. Intermediary and regional governments in the OECD area ............................................... 207 Figures 1.1. Recent trends in GDP growth and migration in Sweden ........................................................... 40 1.2. Coefficient of variation of regional disposable income, 1995 and 2014 ................................... 41 1.3. Regional variation in the unemployment rate (TL2), 2014 ....................................................... 42 1.4. Change in the regional (TL3) unemployment rate (2005-14) in percentage points ................... 43 1.5. Relative performance of Swedish regions by well-being dimensions ....................................... 44 1.6. Estimated regional variation in life satisfaction ........................................................................ 44 1.7. Percentage contribution to national GDP growth in Sweden, 2000-13 ..................................... 45 1.8. Productivity and catching-up trends in Swedish regions ........................................................... 46 OECD TERRITORIAL REVIEW: SWEDEN 2017 – MONITORING PROGRESS IN MULTI-LEVEL GOVERNANCE AND RURAL POLICY © OECD 2017