OECD report

«
OECD Territorial Reviews
Öresund, Denmark/Sweden
The Öresund is a cross border region. It comprises, on the one hand, the island of Zealand
in Denmark including Copenhagen, the capital city, and on the other hand, the Skåne region
with the city of Malmö, Sweden’s second biggest city. Since 2000, the two cities have been
linked by a rail and road bridge. This new transport infrastructure has given birth to one
single functional region lying in two different countries.
OECD
Territorial Reviews
The Öresund project highlights the potential economic growth resulting from the integration
of one of the most highly populated and productive regions on the Baltic Sea. The project is
a major endeavour for the Danish and Swedish governments and the EU Commission
considers Öresund a flagship project within the framework of its INTERREG initiative. While
progress has been achieved to better link the two regional economies, much remains to be
done to remove barriers to integration and to define the strategic positioning of the area.
Öresund, Denmark/Sweden
Four key policy challenges need to be addressed:
a) accessibility, in particular the pricing policy for crossing the fixed link;
b) labour mobility, for removing bureaucratic and legislation obstacles and defining a new
package of active labour market policies;
c) competitiveness, networking and co-operation between firms and educational institutions;
d) asymmetries of the two fiscal systems.
The Territorial Review of Öresund is integrated into a wider programme of national and
thematic regional reviews undertaken by the OECD Territorial Development Policy
Committee. The overall aim of the thematic regional review series is to provide practical
policy advice to governments focusing on three themes: multi-level governance, sustainable
development at local and regional levels and regional networks for competitiveness.
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Öresund, Denmark/Sweden
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OECD Territorial Reviews
Most important is the governance framework of the region. The report suggests a “light
institutionalisation” of cross-border relations, rather than building a heavily bureaucratic
governing body. It also underlines the potential for public/private partnerships.
FOREWORD
The globalisation of trade and economic activity is increasingly testing the ability of regional
economies to adapt and exploit or maintain their competitive edge. There is a tendency for
performance gaps to widen between regions, and the cost of maintaining cohesion is increasing. On
the other hand rapid technological change, extended markets and greater use of knowledge are offering
new opportunities for local and regional development but demand further investment from enterprises,
reorganisation of labour and production, skills upgrading and improvements in the local environment.
All these trends are leading public authorities to rethink their strategies. The role of policies
aimed at improving the competitiveness of regions by promoting the valorisation and use of
endogenous resources and at capturing trade and additional economic activities has been strengthened.
At the same time central governments are no longer the sole provider of development policies. The
vertical distribution of power between the different tiers of government needs to be reassessed as well
as the decentralisation of fiscal resources in order to better respond to the expectations of the public
and improve policy efficiency.
The Territorial Development Policy Committee (TDPC) was created at the beginning of
1999 to assist governments with a forum for discussing the above issues. Within this framework, the
TDPC has adopted a programme of work that puts its main focus on reviewing member countries’
territorial policies and on evaluating their impact at regional level. The objectives of territorial reviews
are: a) identify the nature and scale of territorial challenges using a common analytical framework; b)
assist governments in the assessment and improvement of their territorial policy, using comparative
policy analysis; c) assess the distribution of competencies and resources among the different levels of
governments; and d) identify and disseminate information on best practices regarding territorial policy
and governance.
The Committee produces two types of reviews:
Territorial reviews at the national level. Requested by national authorities, they analyse
trends in regional performances and institutional settings, focus on policies to reduce territorial
disparities and to assist regions in developing competitive advantages. They also concentrate on the
governance framework, on the impact of national non-territorial policies on subnational entities and on
specific aspects of fiscal federalism. The final report proposes territorial policy recommendations.
Thematic territorial reviews at regional level. Requested by subnational authorities (local or
regional) with the agreement of national ones, they aim to support cross-country analyses on the
following themes: multi-level governance, sustainable development at local and regional levels and
regional networks for competitiveness.
1
ACKNOWLEDGEMENTS
This project was realised in co-operation with and sponsored by the Danish and Swedish
governments, the cities of Copenhagen and Malmö, Greater Copenhagen Authority, Region Skåne,
Öresund University and the Öresund Committee. The project was co-funded by the EU-programme
Interreg IIIA Öresund. The Öresund Committee has co-ordinated the Danish-Swedish co-operation
with OECD, including the direction of activities in the region and the providing of statistics and other
background information for the analysis. Responsible for this work was Deputy Director
Torben Aaberg assisted by Morten Krebs Gjesing, Josefine Majewski and Karsten P. Jakobsen.
Further policy analysis was provided by C. Benner, Department of Geography, The
Pennsylvania State University (United States), Prof. L. Davezies, University of Paris 12 (France),
Dr. O. Ribe, Deputy Director General, Department of Labour, Ministry of Labour and Government
Administration (Norway), and Prof. L. Senn, L. Bocconi University, Milan (Italy). Analysis on
benchmarking regions was provided by G. M. Apuzzo, J. Maritain Institute, Trieste (Italy), W. Kaegi,
B.S.S. Economic Consultants, Basel (Switzerland), and J. Roy, Centre on Governance, The University
of Ottawa (Canada).
This Review was co-ordinated and drafted by Mr. Patrick Dubarle, Principal Administrator,
with the contribution of Mr. Hansjörg Blöchliger, Mr. Nicola Crosta, Mrs. Lamia Kamal-Chaoui,
Administrators, and Mrs. Laura Watts, Consultant. Inputs were also provided by
Mr. Alejandro Aurrecoechea and Ms. Soo-Jin Kim, Consultants. The Review was directed by
Mr. Mario Pezzini, Head of the Territorial Reviews and Governance Division of the OECD.
2
TABLE OF CONTENTS
FOREWORD ................................................................................................................................ 1
ACKNOWLEDGEMENTS .......................................................................................................... 2
ASSESSMENT AND RECOMMENDATIONS .......................................................................... 7
CHAPTER I TRENDS AND CHALLENGES .......................................................................... 18
1.1. Introduction ...................................................................................................................... 18
Cross-border trends and challenges ..................................................................................... 18
The geopolitical context....................................................................................................... 20
1.2. The infrastructural framework .......................................................................................... 22
Airports and ports................................................................................................................. 22
Traffic across the Öresund strait .......................................................................................... 24
1.3. Labour market................................................................................................................... 26
Recent trends in employment and unemployment ............................................................... 27
Age demography .................................................................................................................. 29
Increased mobility................................................................................................................ 30
1.4. A competitive environment .............................................................................................. 34
Increased competitiveness in a merged region?................................................................... 35
1.5. Economic performances in the Öresund........................................................................... 46
Distribution of wealth .......................................................................................................... 47
Concentration of foreign direct investment.......................................................................... 50
CHAPTER II STRATEGIES AND POLICIES ......................................................................... 52
2.1. Strategies .......................................................................................................................... 52
Introduction.......................................................................................................................... 52
The Öresund Region: an old idea made new ....................................................................... 52
A sustainable region............................................................................................................. 55
Öresund and national regional policies ................................................................................ 56
EU cross-border policy initiatives for the Öresund Region ................................................. 60
Conclusions.......................................................................................................................... 64
2.2. Physical capital: infrastructure and the fixed link ............................................................ 64
The consequences of the bridge’s opening .......................................................................... 65
Conclusions.......................................................................................................................... 70
2.3. Shaping a common labour market .................................................................................... 71
Future prospects for labour mobility.................................................................................... 72
Differences of national labour market regulatory system .................................................... 74
Main obstacles to labour mobility........................................................................................ 78
Current policies to advance the integration of the labour markets....................................... 82
Conclusions.......................................................................................................................... 84
2.4. Competitiveness enhancing policies: networking and knowledge development.............. 85
3
Building capabilities that enhance innovation ..................................................................... 85
The Öresund structure .......................................................................................................... 87
Actors and networking strategies ......................................................................................... 90
Existing challenges for networking and knowledge development....................................... 95
Conclusions........................................................................................................................ 100
CHAPTER III GOVERNANCE WITHOUT GOVERNMENT.............................................. 102
3.1. Emergence of cross-border governance.......................................................................... 102
Some theoretical considerations......................................................................................... 102
Cross-border governance in Europe................................................................................... 103
EU cross-border initiatives and the INTERREG programme ............................................ 105
3.2. Governing Öresund......................................................................................................... 106
Cross-border governance in the Nordic framework........................................................... 106
Governance framework in the Öresund Region................................................................. 109
3.3. Co-ordination between two governments on Öresund: the example of taxation ............ 111
3.4. Governance reforms in the Öresund – some discussion points ...................................... 114
Institutionalisation.............................................................................................................. 115
Taxation across the border ................................................................................................. 116
Metropolitan governance ................................................................................................... 116
Inclusion of the private sector ............................................................................................ 118
Integration of INTERREG ................................................................................................. 119
Democratic accountability and legitimacy......................................................................... 120
3.5. Conclusions .................................................................................................................... 120
ANNEX: BENCHMARKING CROSS-BORDER REGIONS................................................. 122
Introduction ........................................................................................................................... 122
Learning from North America: promoting functional co-operation based on economic
interdependencies .................................................................................................................. 122
Economic integration and local partnership initiatives: the example of Detroit-Windsor
(United States-Canada) ...................................................................................................... 122
Regional NGOs: the example of the Cascadia region (United States-Canada) ................. 127
Learning from Europe: supporting cross-border co-operation within an institutionalised framework
............................................................................................................................................... 127
Co-ordinated strategic planning: the example of Trieste-Koper (Italy-Slovenia).............. 127
Building an integrated labour market: the example of RegioTriRhena (Germany-SwitzerlandFrance) ............................................................................................................................... 129
Conclusion and recommendations ......................................................................................... 137
Bibliography.............................................................................................................................. 138
Tables
Table 1.1.
Table 1.2.
Table 1.3.
Table 1.4.
Table 1.5.
Table 1.6.
Table 1.7.
Table 1.8.
Population by territory in the Öresund Region.................................................... 20
Cargo compared to other harbours ...................................................................... 23
Cargo turnover in the Copenhagen-Malmö Port, 2000 ....................................... 23
Examples of larger transport investments in the Öresund Region ...................... 24
The traffic across the Öresund strait, 1999-2001 ................................................ 24
The charge for crossing the Öresund Bridge....................................................... 26
Regional GDP and employment, 1995-1999....................................................... 28
Key figures for the labour market in Öresund, 1999-2008.................................. 33
4
Table 1.9.
Table 1.10.
Table 1.11.
Table 1.12.
Table 1.13.
Table 1.14.
Table 1.15.
Table 1.16.
Table 1.17.
Table 2.1.1.
Table 2.2.1.
Table 2.2.2.
Table 2.2.3.
Table 2.3.1.
Table 3.2.1.
Table 3.3.1.
Table A1.
Table A2.
Table A3.
Economically active day-time population by industry ........................................ 38
Resource area by number of employees in the Öresund Region, 1998-1999...... 38
Value added in the Öresund Region, 1998-1999................................................. 40
Comparison of selected prices............................................................................. 43
Educational levels in the Öresund Region, 1998................................................. 44
Universities and colleges in the Öresund Region, 1998...................................... 44
Scientific output, 1994-1996 ............................................................................... 46
Development in GDP per capita.......................................................................... 48
Regional disparities of GDP per capita ............................................................... 48
Population and surface: Öresund, Denmark, Sweden at the end of the 1990s 54
Direct and total wage costs for adult industrial workers, 2002 ....................... 73
The numbers of cross-border commuters according to educational level, 200074
Differences in housing prices .......................................................................... 80
Number of employees in the Öresund Region by industrial/trade sector, 199889
Responsibilities of local governments in Denmark and Sweden .................. 109
After-tax income in Denmark and Sweden, 2000 ......................................... 113
Population, surface and density in Detroit and Windsor ................................... 124
Education attainment in Detroit and Windsor ................................................... 124
Merchandise trade between Canada and the United States, 1997-2001............ 125
Figures
Figure 1.1. The Öresund Region.............................................................................................. 19
Figure 1.2. Major sub-regions and cities in the Öresund Region ............................................ 21
Figure 1.3. Population and labour force in the Öresund Region, 2000.................................. 27
Figure 1.4. Trend in unemployment rates in the Öresund Region, 1994-2001...................... 28
Figure 1.5. The age structure in the Öresund Region, 2000 .................................................. 29
Figure 1.6. The composition of different age groups in the Danish part and the Swedish part, 2001
30
Figure 1.7. Development in number of foreign emigrants in Öresund .................................. 31
Figure 1.8. Moving patterns in the Öresund Region.............................................................. 32
Figure 1.9. Production structure in the Öresund Region by sector, 1998 .............................. 37
Figure 1.10. Change in employees by sector, 1995-1999.................................................... 39
Figure 1.11. Growth in value added, 1995-1998 ................................................................. 40
Figure 1.12. Development in the yearly number of new enterprises in Öresund ................ 42
Figure 1.13. OECD regionalised GDP, 1999....................................................................... 47
Figure 1.14. Inward and outward FDI in Denmark ............................................................. 50
Figure 1.15. Inward and outward FDI in Sweden................................................................ 51
Figure 2.1.1. Integration index for Öresund, 2001-2002 ...................................................... 63
Figure 2.2.1. The strictness of employment legislation in OECD countries ........................ 77
Figure 2.2.2. Property prices index, 2001............................................................................. 81
Figure 3.2.1. Decentralisation ratios in OECD countries, 1999 ......................................... 106
Figure 3.2.2. Expenditure structure of Danish and Swedish local authorities .................... 108
Figure 3.3.1. Tax revenue structure of Denmark and Sweden, 1999.................................. 112
Figure A1. Map of the Detroit-Windsor region................................................................... 123
Figure A2. Map of the Trieste-Koper region....................................................................... 128
Figure A3. Map of RegioTriRhena...................................................................................... 130
Figure A4. GNP by economic sectors, 1996 ....................................................................... 131
Figure A5. Unemployment rates in RegioTriRhena, 1999.................................................. 132
5
Figure A6. Cross-border migration and its motivation........................................................ 133
Boxes
Box 1.1.1. Territorial composition of the Öresund Region ..................................................... 19
Box 1.2.1. Private car traffic on the Öresund Bridge .............................................................. 25
Box 2.1.1. Agenda 21, the Environmental Programme and STRING ..................................... 56
Box 2.1.2. Institutional background......................................................................................... 59
Box 2.1.3. INTERREG............................................................................................................ 60
Box 2.2.1. The Öresund Bridge ............................................................................................... 65
Box 2.3.1. The Öresund Labour Market Council .................................................................... 83
Box 2.4.1. Business associations in Öresund........................................................................... 93
Box 2.4.2. Science parks in the Öresund Region..................................................................... 96
Box 2.4.3. Wal-Mart................................................................................................................ 99
Box 3.1.1. North America cross-border governance ............................................................. 104
Box 3.2.1. Decentralisation and cross-border integration in Denmark and Sweden ............. 107
Box 3.2.2. Inter-governmental relations ................................................................................ 110
Box 3.3.1. Fiscal barriers to integration................................................................................. 112
Box 3.3.2. The OECD Tax Convention on Income and on Capital....................................... 114
Box 3.4.1. OECD principles of metropolitan governance ..................................................... 117
Box 3.4.2. The Regio Insubrica and its cross-border body.................................................... 119
Box A1: The impact of NAFTA on the Detroit-Windsor cross-border trade........................ 125
Box A2: Work permits in RegioTriRhena............................................................................. 133
Box A3: Cross-border taxation agreements in RegioTriRhena ............................................. 134
Box A4: Cross-border information policies in RegioTriRhena............................................. 137
6
ASSESSMENT AND RECOMMENDATIONS
The Öresund cross-
The opening in July 2000 of a bridge between Copenhagen (Denmark) and
border project is
the neighbouring Malmö (Sweden) has not only contributed to increasing
giving rise to a world
trade and exchange between the two significant regions of Zealand and
class hub and gateway
Skåne, which represent respectively 48% and 11.6% of their national GDP.
to the Baltic Region.
The overall goal of the Öresund cross-border project is also to create and
consolidate a functional area of 3.5 million inhabitants, considerably bigger
than Stockholm, Oslo or Helsinki. Integrating Copenhagen and Malmö
should further enhance high productivity and prosperity and tackle
comparative advantages that the two parts of the strait could better exploit if
they join forces. In the region, there is a concentration of firms in adjacent
sectors, research laboratories and universities. Zealand and Skåne are
well-endowed with a wide spectrum of knowledge-based industries: the
former is strong in a number of pharmaceuticals, food processing, software,
design and environment technologies and the latter shows increasingly good
performances in IT, telecommunications, biotechnology and research. At
the same time, the Öresund Region nurtures a specialised labour force by
hosting 20 universities and 130 000 students. Promoting business networks
and co-operation between firms and universities may further enhance
capacity to innovate and specialisation. Moreover, supporting partnerships
between a broader set of civil organisations and public authorities could
improve local services. In parallel, the bridge and a number of other public
infrastructure investments, totalling about EUR 8.5 billion, have facilitated
accessibility within and to the region designating it as a Scandinavian hub
and gateway to the Baltic with a potential market of around
100 million people.
Investors and the EU
The project is attracting the interest of international investors. Although not
are already betting on
benefiting from the Euro zone currency effect, foreign direct investors are
this area, which serves
already betting on Öresund, contributing to the regional concentration of
7
as a test bench for
economic activity and holding an increasing share of the regional R&D
cross-border regions.
spending. From 1998–2000, a major share of direct investments in Denmark
and Sweden has been directed to Öresund. The European Union is another
key player in the Öresund. European regional policies are being gradually
overhauled to valorise each region’s potential and to focus less on the
immediate, systematic reduction of income and unemployment disparities
among regions. In parallel, various community programmes in rural, urban
and territorial development are gaining strength. Notably, the INTERREG
programme, which has an overall budget double with regard to the previous
period, will contribute EUR 30 million to the Öresund Region for 2000–
2006. Given its focus on market integration, its innovative governance
system and numerous cross-border institutions, the Öresund project is a
particularly interesting test bench for the processes of regional integration
within the European Union.
The Danish and
The national governments recognise that the project is significant and
Swedish governments
consistent with their different regional policies. In Denmark, the degree of
consider the project
territorial disparity is among the lowest in Europe, even though politicians
consistent with their
in rural areas remain sensitive to territorial cohesion issues. From 1991,
regional policies.
most regional policies were discontinued, except for limited ad hoc
interventions aimed at attracting foreign capital or creating enterprise zones.
The bulk of territorial policies are now related to European Structural
Funds. Funds to Öresund’s less developed areas (Objective 2), notably the
counties of Storstrøm and the island of Bornholm, help to rebalance the
development within the entire region. Given that the remaining part of the
Structural Funds goes to regions in Jutland and Funen, the government
maintains an equilibrated redistribution of funds. In Sweden, the Öresund
project is coherent with the overall policy objective of linking the country
stronger to the heart of Europe. Swedish policy evolved from focusing
exclusively on the north to a more balanced approach toward socioeconomic and environmental issues throughout the country. However,
transfers to southern Sweden remain modest and poised to cover part of the
local authorities’ operating costs. Within the framework of the Regional
Growth Agreement introduced in 1998, increased co-ordinating
responsibilities are being passed to County Administrative Boards, although
8
they are not coupled with additional financial means. Experimental
decentralisation is being pursued and new regional self-governing bodies
have been established, notably in Skåne (a pilot region). This region
building process and the greater autonomy presently granted to Skåne are a
leap forward for Öresund.
The new region has
In the last decade, the two governments have developed a common vision
great potential but
for the region but, so far, they have neither formally evaluated the degree of
increased physical
integration, nor drawn a roadmap orienting a strategy for the future of the
accessibility per se is
region. These steps are now necessary. In fact, despite several remarkable
not sufficient to reap
results, borders remain an obstacle. Building infrastructure and improving
the benefits of cross-
accessibility appear increasingly as the initial steps of a longer process to
border integration.
create a functionally integrated cross-border region. Trade between
transborder centres amounts to less than 25% of the potential of centres
located in the same country. In Öresund, although commuters rose
from 1 950 in 1994 to 3 200 in 2001, labour mobility between the two sides
of the strait could be higher (there are 70 000 daily commuters between
Malmö and its suburbs and the 225 000 commuters within
Greater Copenhagen). On the whole, the Öresund share of the
two countries’ GDP has remained fairly stable and GDP per capita in
Zealand continues to be significantly more important than in Skåne, where
despite greater job creation, unemployment remains high. Moreover, parts
of regulation and fiscal differences generate contingent rents rather than a
better allocation of resources. Effective governance and enhanced
networking among firms require additional action. In short, further
integration in Öresund remains a major challenge together with the
development of a widely shared coherent strategy for the future of the
region. Four key policy areas should be targeted for action and included in
the strategic planning for the region: 1) infrastructure and spatial planning;
2) labour market; 3) networking and knowledge diffusion; and 4) taxation.
Despite positive results Assessing the long-term consequences of the bridge and toll policy is a
from the bridge’s
prerequisite for the transborder strategy. It underlines numerous positive
opening…
results but also calls for a reconsideration of the tolls. Increased
accessibility has raised the profiles of smaller cities, especially in Sweden.
Malmö’s autonomy has increased with regard to the rest of Sweden as well
9
as Skåne in general, while Copenhagen has enlarged its catchment area by
roughly 50%. Urban development has been impressive on the Danish side,
notably with the planning process put in place by the Ørestad Development
Corporation in the southern districts of Copenhagen. Opportunities provided
by the fixed link have also led to ambitious restructuring of Malmö’s old
city centre, harbour and industrial areas. However, many of the expected
impacts of the fixed link have neither materialised nor been forecasted.
Even though railway traffic has been far above ex ante forecasts, the bridge
is far from congested, and passenger and freight traffic have been on the
whole below expectations.
…the first challenge is
Although the below expected use of the bridge is sometimes ascribed to
to reconsider
changes in business cycles and increases in fuel price, the high toll of the
performances of
crossing appears to be the main discouraging element. While an animated
existing infrastructure
debate has being going on regarding the possibility of lowering the toll,
and to revise pricing
both countries agreed to avoid market distortions and to protect other means
policies.
of transport. Lowering the tolls could considerably stretch the repayment
period for the bridge, making it difficult for the bridge to be self-financed
and thus, necessitating financial support from public funds. Considering
these factors, the long-term toll elasticity should be appraised to eventually
revise the pricing policy. In particular, tax deductions for the bridge
crossing should be further explored. A related course of action could be
reducing subsidies currently oriented towards the train system by the
Danish government. Rather than invest in new infrastructure, increased
accessibility will also require further inter-modal integration, prioritising
improvement in transport services, notably in hinterland areas, and better
train service. For ongoing infrastructure plans, careful monitoring of
movements across the strait and co-ordinated spatial planning should tackle
congestion problems in the two cities and achieve environmental
sustainability. Creating a cross-border planning committee would serve to
overcome the limits of informal bilateral discussions and to insure a
framework for constant dialogue on strategic issues of integrated spatial
planning.
10
A second policy
Market forces are likely to further integrate the two labour markets. For
challenge is to further
example, higher unemployment in Skåne can increase pressure to commute
facilitate labour
within the Öresund Region and labour shortage in the high-skill market
mobility…
segments can facilitate mobility. However, the two different regulatory
frameworks (e.g. on collective bargaining, labour legislation, social security
and pension rights) could influence labour mobility and firm location
decisions; even if their differences remain limited, compared with other
OECD countries. These differences are less apparent in wages, which are in
general higher in Denmark but compensated for by the higher indirect costs
in Sweden, than in the degree of labour market flexibility. Denmark has less
public intervention, less restrictive employment protection, and higher job
mobility when compared to Sweden. Most of all, Denmark largely shifted to
enterprise collective bargaining, with wages more reflective of productivity
levels.
…. by removing
A harmonised labour market is difficult to achieve in the near future. More
bureaucratic and
immediate action should address administrative practices that hinder the
legislation obstacles
changing of jobs from one side to the other of the sound, commuting and
and developing more
working part-time on both sides. Institutions could better disseminate
active labour market
information regarding working conditions and legal dispositions on
policies..
commuting and clarify responsibility for welfare benefits that remain
unclear despite the agreements signed among Nordic countries on taxes and
social contributions. A similar action could be undertaken regarding mutual
skill recognition, which remains ambiguous because of the different
evaluation systems, despite the EU’s established common standards.
Promoting cross-border hiring in the public sector as well as reinforcing
co-operation in the development of active labour market policies on the
two sides of the straits is also advisable. Students and researchers exchanges
could also be further developed.
A third challenge is to
Integrating the labour market is necessary but not sufficient for realising the
promote trans-border
full collaborative potential within Öresund. Establishing and strengthening
co-operation between
networks that stimulate innovation and the better use of skills and
firms and institutions.
knowledge are crucial steps in increasing competitiveness and prosperity
within the region. Strengthened relationships among firms, institutions and
government agencies can improve division of labour and extend further
11
economies of scale as well as help increase the range of products produced
locally. Although facilitated by new information technologies, inter-firm
relationships are often space-based, helping to explain the development of
clusters in many regions over the last decades. In this respect, a more
integrated Öresund could expand inter-firm co-operation and exploit
untapped development opportunities, given the existing concentration of
independent firms within the same or adjacent industrial sectors. Despite
improved accessibility, the Danish and Swedish parts of the
Öresund Region are relatively insulated from each other and face similar
difficulties as before the construction of the bridge. It will take a long time
before the full potential of cross-border synergy materialises spontaneously.
Many people, businesses and organisations may remain locked in their
national and linguistic context, resulting from closer spatial proximity.
Without active channels for transaction and communication, even a critical
mass of close firms may under-exploit the large potential. Consequently,
action is required to accelerate the promotion of cross-border networking
and ensure that the time required to learn and innovate in Öresund eclipses
the lower value added strategy of copying products and processes from
other regions.
On-going initiatives
Encouragingly, there are promising initiatives and new cross-border
appear promising…
institutions that are rapidly developing. They include extensive co-operation
in the research and education field as well as the development of
networking associations in key, driving industry clusters in the region. One
of the central goals of networking is less about promoting new research in
critical areas of technological development, than it is about ensuring that
research products and by-products are translated into new business
opportunities. In this perspective, several actors and particularly, local
universities have created networking forums in the major high-tech clusters
(medical/pharmaceuticals, information technology, food production and
environment) as well as an umbrella organisation to build links across the
clusters. This approach appears promising. Rather than trying to dictate
technology developments, local leaders are building “communities of
practice” over time, i.e. the organisational infrastructure to promote
information sharing and knowledge development within clusters. While
12
there is no guarantee of success – many network initiatives in the world
have not been successful – the approach can be quite effective when it
focuses specific business needs and opens up new markets rather than frame
development goals around abstract discussions of regional integration.
…but their efficacy
In many cases, connecting firms (particularly small firms) to research is not
could be increased by
at easy reach. Among other reasons, small firms do not often express a
further action towards
solvable demand for services because they lack knowledge. At the same
small firms and a
time, the total amount of SMEs on one side of the strait alone is too small to
wider range of sectors.
justify the cost of starting up a new service. In this context, instead of
spreading financial subsidies or reducing the costs of interest for loans,
effort should be made to organise stakeholder groups to develop joint
research strategies as well as to foster the supply of services in the region.
The supply of services and the development of innovation strategies should
not concern only the high-tech sector but should also cover the variety of
other economic activities that make up the Öresund economy. There are
significant initiatives in many sectors (transportation, tourism, traditional
manufacturing, and retail/wholesale distribution) to foster the quality of
businesses, but they lack a constant attention to networking across the strait,
information sharing and institution building. Again, the key role for the
public action is not to pick “winning” industries or firms but to facilitate
relations between actors, within a sector and between related sectors and to
supply information and services. Particularly promising are ties between
cultural industries and some of the new media and information technology
sectors in the region. The establishment of an innovation centre that
provides specialised services and promotes training to small businesses
should be considered. Its mandate should cover the whole Öresund Region.
A part from services to existing enterprises, efforts should be made also to
promote venture capital firms that specialise in providing capital and
expertise to start-ups, allowing inventors to focus on the technological
development, and making the business creation process as seamless as
possible.
A fourth challenge
Although power and spending capacities are more significant for Danish
concerns the need for
local and regional authorities, both countries are largely decentralised and
a new tax agreement
endowed with similar local resources. Frictions between institutions are
13
to tackle asymmetries
limited and a quasi community level playing field seems to characterise
of the two fiscal
Öresund. More serious problems arise in the field of cross-border taxation.
systems.
The fiscal systems in both countries exhibit some differences that can
distort location decisions and the free movement of labour and capital
across the border. Two aspects are of particular importance. First, there are
incentives to work in Denmark and to live in Sweden . Differences in the
fiscal architecture therefore exacerbate a spatial trend that is already visible
within the Öresund metropolitan area and that is influenced more generally
by higher Danish salaries and by lower housing and living expenses in
Sweden. Second, the administrative complexities and opacity of the whole
system create numerous disincentives to set up businesses and subsidiaries
or to share working time between both countries. Both tax asymmetries and
tax administration work against harmonious integration. In the short term,
regional and national authorities should reduce the administrative burden
vested in the fiscal system. In the long run, factors in the fiscal system that
distort locational decisions of people and businesses should be harmonised.
The current agreement on the distribution of cross-border tax revenue,
based on the OECD Tax Convention signed in 1997, establishes the
principle of workplace-based taxation. It replaces the previous system that
was strongly in favour of residence-based taxation. Since there are
significantly more people commuting from Sweden to Denmark than the
reverse, there is a considerable amount of resources remaining in Denmark.
In other terms, the current fiscal arrangements involve a net decrease of
resources for the Swedish municipalities. At the same time, these
commuters continue to use local facilities and benefit from public services
where they live, i.e. mainly in Sweden. Although the Swedish government
compensates for most of the fiscal imbalance, actors at both the regional
and national levels have insisted on a re-negotiation of the tax agreement.
Since both governments have not yet come to an agreement to solve this
problem, they could look for pragmatic tax sharing agreements found in
other cross-border regions with similar imbalances. Sweden and Denmark
could either follow the approach adopted between Germany, Belgium and
the Netherlands – that apply the Tax Convention but send a part of the tax
revenue to the country of residence – or the German-Swiss model – where
14
the workplace country taxes wages at a reduced rate, and the country of
residence deducts those taxes from the tax bill. These models could serve as
a pragmatic compromise for the interests of Swedish and Danish national
and regional governments.
The Öresund
The success of the integration process depends not only on progress made
governance structure
on a number of fronts such as accessibility, labour market and taxation, but
needs to give voice to
is also a matter of governance. In the Öresund Region, no single common
all relevant actors…
body has the explicit legal or administrative authority to co-ordinate and
implement joint development strategies in the region. The strategic question
is whether or not the current governance structure is adequate to tackle the
problems of the new functional area and whether an umbrella body should
take a strong lead in the definition and implementation of cross-border
projects. In particular, the current cross-border co-operation structure
should be re-evaluated to address areas of weakness. For instance, the
Öresund Committee should include actors from the private sector (despite
their representation in the Management Committee of the INTERREG
Öresund). These actors could instil more proactive views and help to
overcome defensive and partisan attitudes that can lock in discussions
within the Committee. Whether there is a need to offer a number of seats to
non-public members is therefore a strategic issue. If the private sector is
included, potential problems may arise with respect to possible distortions
in the public decision-making process. In that case, it will be appropriate to
clearly separate consultation and decision making. Decision making would
be left to a public administration based Committee structure and thus,
would require several modifications to the structure.
… while ensuring
The increasing number of cross-border activities also raises the question of
managerial efficacy
democratic accountability and legitimacy of public action. Bodies that have
and accountability.
been created through horizontal agreements across the border, not by the
respective local or national governments, are making more of the decisions.
While this may enhance the speed and efficiency of public integration, it
may create some problems with respect to the democratic control of such
bodies. With time, a non-transparent entanglement of special bodies with
different legal backgrounds and territorial coverage may leave citizens with
little influence on local and regional public services and local development
15
programmes. Therefore, the governments must seek a cross-border
governance framework that improves the managerial efficiency of crossborder activities while complying with the principles of democratic
accountability and transparency. Moreover, in order to increase
participation among citizens, and to work on the development of an
“Öresund identity” and an “Öresund brand”, the present communication
strategy should be further emphasised and strengthened. In particular, the
Öresund Committee’s activities could be better understood through the
medium of an appointed spokesperson.
Light
As a whole, the present governance framework can be described as
institutionalisation of
“governance without government”. This generic approach works well in the
cross-border
Öresund Region. A new transborder political unit that can make
co-operation seems
autonomous political decisions seems neither feasible nor desirable in the
advisable.
long run. The institutional similarities of both countries result in low
transaction costs and render collaboration relatively easy. Nevertheless,
Öresund is facing the risk of fragmentation and lack of consistency among
cross-border activities. In particular, the custom of informal bilateral
consultations on specific issues might hinder the design and implementation
of a coherent strategy for the region. In order to avoid these risks, among
the wide array of solutions possible, ranging from the present status quo to
the creation of a cross-border regional authority, forms of “light
institutionalisation” of cross-border relations should be considered. In
particular, a system of incentives and contracts could help to re-frame crossborder co-operation while avoiding the creation of new institutions.
Summing up
The Öresund project is a major endeavour for the Danish and Swedish
governments, given the role played by the Zealand and Skåne economies in
their respective countries and the potential economic growth from the
integration of one of the most highly populated and productive regions on
the Baltic Sea. The significance of the project is reflected not only in the
regional policy focus given to Öresund in both countries but also in the
EU’s support, notably through INTERREG, which considers Öresund a
flagship programme. While progress has been achieved to better link the
two regional economies, much remains to be done to remove barriers to
integration and to define the strategic positioning of the area for the future.
16
Four key policy challenges need to be addressed. First, regarding physical
accessibility, the pricing policy for the crossing can be made more efficient
and secondary infrastructure optimised to fully exploit the opportunities
brought about by the fixed link. A cross-border committee could be created
to allow integrated spatial planning. Secondly, labour mobility should be
increased by removing bureaucratic and legislation obstacles and through a
new package of active labour market policies. Thirdly, networking and
co-operation between firms and education institutions should be enhanced.
Fourthly, asymmetries of the two fiscal systems will need to be tackled by a
new tax agreement. Also at stake is the governance framework of the
region. While there are numerous common Danish/Swedish regional
institutions and rightfully, the creation of a heavily bureaucratic governing
body has been avoided, the potential for public/private partnerships is far
from tapped. Furthermore, the system in place does not provide an
appropriate framework for the private sector to fully involve all relevant
actors. These conditions will need to be filled and forms of “light
institutionalisation” of cross-border relations developed in order to trigger a
new dynamism in the integration process and to create the conditions for the
development and implementation of a widely shared strategy for the future
of the region.
17
CHAPTER I
TRENDS AND CHALLENGES
1.1. Introduction
Cross-border trends and challenges
During the last decade, cross-border initiatives have proliferated in OECD member
countries. This trend has come as no surprise. With the parallel increase in globalisation of products
and services and decrease of market protection and barriers to trade, competition between regions and
cities have become more intense. Within this framework, border regions are confronted with specific
handicaps. Due to their peripheral situation, they have often suffered from isolation. When they did
not lag behind in terms of output and job creation, their economic achievements remained significantly
below their potential. The establishment of cross-border links is a sound policy response to these
concerns. It opens new opportunities for growth, allows border regions to expand their industrial and
service base as well as improves their exposure to international trade.
Cross-border relationships can take many forms, from loose co-operation to integration. If
there are more risks and difficulties in the case of integration, i.e. the creation of a new functional
region with a single internal market, there are also more rewards. As economic theory shows, the
establishment of a new cross-border region results in a larger labour market and more diversified
supply of skills, thus providing superior comparative advantage to the new territory that often attracts
more FDI per capita than previously. Beyond this market scale (or Smithian) effect, it is also possible
to take advantage of additional synergies. The intensity of such synergies will depend on the capacities
of the different constituencies to co-operate and valorise their socio-economic complementarities.
Cross-border regions that can unleash this innovation potential will trigger off a very robust
entrepreneurial (or Schumpeterian) growth.
As an approximately even combination of Danish and Swedish territories (Box 1.1.1), the
Öresund Region is particularly well placed to achieve this type of development trajectory. Both the
Swedish and Danish areas have advanced economies with an abundant supply of skills and a long
tradition in business development and innovation. The cultural differences between the two sides of
the strait are narrow, and the income and wealth gap is limited. Denmark and Sweden are also
decentralised countries with a significant devolution of power to the local levels. Thus, Zealand and
Skåne subnational governments are in an advantageous position in terms of internalising the crossborder initiative. Moreover the Nordic framework facilitates the establishment of collaboration and
could help to forge an Öresund identity. The two countries are members of the EU and as such, are
involved in the EU’s cross-border policies.
On both sides of Öresund, there exists great expectations and challenges in terms of the
economic effects of an integrated region as well as the impact of public initiatives to encourage crossborder development. The Danish and Swedish policies for Öresund have a certain precedence.
Numerous cross-border institutions have been established in recent years and bilateral co-operation in
Öresund was set up long before the bridge’s opening. The first INTERREG programme was also
anterior to the completion of the fixed link. Whereas, on the one hand, the Öresund project was and
18
still is ahead of most cross-border initiatives in Europe (e.g. the creation of a steering Committee, the
signature of fiscal agreements, the co-operation of higher education institutions); on the other hand, it
still has to face significant challenges before being considered a cohesive and fully integrated region.
Further integration could be achieved by addressing five areas in which unused potentials are
particularly significant and need special attention: 1) trade and notably, the traffic on the bridge; 2) the
labour market, which continues to face numerous obstacles to integration; 3) SMEs, clusters and small
business/higher education whose cross-border interactions are underdeveloped; 4) the reduction of
taxation gaps; and 5) the development of cross-border social capital and the cross-border
public/private partnerships. If public initiatives are to be fully effective and the integration objective is
to be achieved in a foreseeable future, a comprehensive strategy is required. This strategy should
tackle the five issues emphasised above and thus, will be addressed in this report.
Box 1.1.1. Territorial composition of the Öresund Region
Geographically, the Öresund Region has a surface area of 20 859 km² and is now physically linked by the newly
built Öresund Bridge. The region encompasses Skåne on the Swedish side and the islands, Zealand, Lolland,
Falster and Bornholm on the Danish side. It can be roughly divided into three areas, the metropolitan area of
Copenhagen, the Danish periphery and Skåne (Figure 1.1). Malmö and its surroundings account for a dominant
part of “Swedish” Öresund.
Figure 1.1. The Öresund Region
Source: NordRegio.
19
Skåne consists of one county divided into 33 municipalities. The Danish area is made of eight political units: the
City of Copenhagen and the City of Frederiksberg, which are not included in Denmark’s county structure, and
six counties, Copenhagen, Frederiksborg, Roskilde, West Zealand, Storstrøm and Bornholm. These six counties
are further divided into 99 municipalities. Before 1999, the Danish rural counties of Storstrøm, Vestsjælland and
Bornholm County were not part of the Öresund Region.
Table 1.1. Population by territory in the Öresund Region
Administrative unit
Population
Area in km2
Copenhagen
500 531
88.25
Frederiksberg
91 322
8.77
Copenhagen County
617 336
525.95
Frederiksborg County
370 555
1 347.42
Roskilde County
234 820
891.44
Vestsjællands County
298 731
2 983.77
Storstrøms County
260 498
3 398.02
Bornholms County
44 197
588.53
Skåne County
1 136 571
11 027.07
The Öresund Region
3 554 561
20 859.22
Source: Denmark Statistics (2002) and Statistics Sweden (2001).
Population density
5 671.74
10 413.00
1 173.75
275.01
263.42
100.12
76.66
75.10
103.07
170.41
Approximately 3.5 million inhabitants live in the region, one-third on the Swedish side and two-thirds on the
Danish. The region’s population constitutes approximately half of the Danish population and one-tenth of the
Swedish (Table 1.1). The region covers both rural areas and a large metropolitan area, consisting of the Danish
Greater Copenhagen Area (with approximately 1.8 million inhabitants), and the city of Malmö (with
265 000 inhabitants) in Sweden. The central Copenhagen-Malmö axis forms the biggest and most densely
populated big city area in Scandinavia with approximately 2 million inhabitants. The region attracts many people
because of its high quality of life. The Eurobarometer Survey in autumn 2001 showed that 96% of both Danes
and Swedes are most likely to be satisfied with the life they lead.1
The geopolitical context
The Öresund Region is subject to a number of geopolitical features. First, the region is part
of the Nordic countries, a distinct group of countries – considered to be efficient, competitive and
highly transparent from an international perspective. This positive image is often reflected in
international analyses, which emphasise the unique Nordic combination of the welfare state and a
market-driven efficient economy. Both countries were challenged by the forces of technological and
economic change in the last decade and had to undergo significant structural adjustment. Regional
polarisation resulted in increased migration from the peripheries towards a few selected urban centres
(Hanell, Aalbu, Neubeuer, 2002). The leading cities in this process are attempting to stay ahead and
exploit agglomeration and concentration of labour and capital. In this context, the merger of the
Öresund Region would give the Copenhagen-Malmö axis a better starting point in the increasingly
globalised competition taking place between large cities. The region has a central geographical
1.
Other countries where at least 9 in 10 people are satisfied are the Netherlands (94%),
Luxembourg (93%) and Ireland (90%), with the United Kingdom, Finland (89% each) and
Austria (87%) not far behind. In Belgium (84%), Spain (83%), Germany (82%) and Italy (81%),
satisfaction levels are close to the EU average (83%).
20
location and current dominating geopolitical trends could further improve the significance of the area
(Figure 1.2).
Figure 1.2. Major sub-regions and cities in the Öresund Region
Source: Nordregio.
Second, two trends may very likely influence the economic environment in Europe in the
coming years. On one hand, the dynamic nature of European growth is shifting east, from the
traditional Paris-London axis towards regions like the metropolitan area of Berlin and the Baltic Sea
region. On the other hand, the trend towards internationalisation and globalisation that strongly
characterised the 1990s has increased the importance of cross-border regions’ economies at the
expense of nation-states. With the emergence of greater integration, economic development is no
longer confined within the limits of national boundaries. Both trends in the development of the
economic environment in Europe are consolidating the Öresund Region’s position as a strategic centre
for economic growth and in particular as a gateway to the Baltic Sea. Given the numerous maritime
and air transport links and historical commonalties, a business location in the Öresund Region helps
considerably in terms of gaining access to the Baltic region, which has a market potential of
approximately 103 million people.2
2.
i.e., the population of the regions benefiting from INTERREG III B Baltic Sea.
21
Third, EU enlargement is likely to improve the region’s strategic external relations because
the significance of the Baltic Sea region in the north-eastern part of Europe increases with
enlargement. For the Öresund Region, it is clearly an advantage that both countries are members of the
EU because the cross-border region share a common economic and political platform. Furthermore,
the efforts to make the Öresund Region a functional region contribute to the general development of
European integration.
The first chapter of this report introduces the Öresund Region and its dynamics by providing
the base and general framework to which the policy areas addressed in the second chapter should be
applied. The region’s potential to develop into an international hub also demands well-functioning
logistics and infrastructure and easy accessibility externally and internally. This will require reviewing
the present infrastructure policy and notably the pricing policy on the bridge. A third aspect concerns
the persistence of two labour markets with different regulations, procedures and tax systems, i.e. the
need to remove barriers to easy commuting and optimal allocation of resources. Also crucial is the
necessity to better tap the potential for co-operation and joint business opportunities on the two sides
of the strait based on complementarity of skills and ability to innovate. As a consequence the
fourth section will focus on the main factors of competitiveness, i.e. the industrial dynamics, the
formation of new firms and the human capital. The last section will draw attention to the differences
and inequality in the region and to the role played by territorial factors. Following the second chapter
that analyses the articulation of a strategy, the third chapter is devoted to the governance question.
1.2. The infrastructural framework
The Öresund Region’s strategic importance is crucially linked to its accessibility. More than
half of the exports from Sweden (USD 95 billion) are exported to the rest of the EU and almost
two-thirds of Sweden’s importation (USD 80 billion) originate from within the EU. Germany is
Sweden’s single largest trade partner and Swedish trade with Denmark is equivalent to
approximately 7% of both export and import. Thus, a strong infrastructural framework is key in
establishing Öresund as a strategic hub and gateway to the Baltic.
Airports and ports
The Copenhagen airport is a significant feature of the region’s accessibility. It is the most
important airport in the region and ranks sixth in Europe in terms of number of passengers. Handling
approximately 380 000 tons of cargo and more than 18 million passengers annually, the Copenhagen
Airport is the North European hub and one of the major transfer airports in Europe. It has 96 daily,
non-stop departures to destinations in Europe, including Sweden and Norway, and 17 non-stop,
inter-continental departures to Tokyo, Peking, Bangkok, Hong Kong, Singapore, Pakistan,
South Africa, New York, Chicago and Seattle, among others. A major part of the passenger traffic in
the airport comprises transfer and transit passengers. With the fixed link, large parts of Sweden now
have direct access to an international airport, which is larger than Arlanda around Stockholm. Flights
to Copenhagen primarily prompted by Kastrups position as an international hub can also be used for
national transport in Sweden. This improved access to an international hub makes Skåne a more
attractive location for businesses.
Öresund is also characterised by significant traffic through its ports. The CopenhagenMalmö Port, the Port of Trelleborg and the Port of Helsingborg are the three main ports in the region.
The Port of Trelleborg, located directly on the Baltic Sea, has a higher share of goods by rail in
comparison to other ports due to the fact that a major part of the goods by rail to and from Skåne are
22
shipped by rail ferries to Germany (Tables 1.2 and 1.3). The Ports of Helsingborg and Copenhagen are
specialised in container traffic while the Port of Malmö mainly handles trailer traffic. The Port of
Copenhagen is also a popular cruise destination with 215 ships and 185 000 passengers visited it
in 2001 (data from Wonderful Copenhagen). Recently, the Ports of Copenhagen and Malmö entered
into a strategic co-operation agreement, resulting in the Copenhagen-Malmö Port (CMP). In
January 2001, the management of the two ports was formally handed over to a single organisation.
The following tables show the relative size of the merged port and the composition of the cargo
turnover.
Table 1.2. Cargo compared to other harbours
1 000 tonnes
Harbour
1998
1999
Hamburg
76 503
Gothenburg
30 360
Bremen
19 972
Copenhagen + Malmö
18 561
16 141
Berlin
7 840
Stockholm
5 706
Source: Denmark Statistics, Statistics Sweden, Copenhagen Harbour.
Table 1.3.
2000
2001
14 672
13 259
Cargo turnover in the Copenhagen-Malmö Port, 2000-2001
2000
2001
Containers, TEUs
130 000
126 000
Trucks and trailers, units
200 000
New cars, units
40 000
26 000
Oil products, million tonnes
5
5.5
Bulk, million tonnes
4
Passengers, millions
5.7
3.3
Source: Background report (2002), Part C, p. 20, and Copenhagen Malmö Port Annual Report (2001).
Considering Germany’s status as Sweden’s single largest trade partner, a proposed bridge
across the Femern Belt (situated south of Öresund and linking Denmark with Eastern Germany)
represents a relevant unused potential that could further develop Öresund’s link with Europe. This
bridge would link Lolland-Falster with the northern part of Germany. Currently, the Danish and
German governments are charting the financial requirements for constructing this fixed link.
Beyond building gateways to the outside, a major challenge in Öresund is also to connect the
Danish and Swedish areas internally. To operate as one region, the infrastructure across the border has
to function as smoothly as any other transportation structure in a national context. Accordingly, the
Danish and Swedish governments have made huge investments in infrastructure of more than
EUR 8.5 billion in recent years in an effort to physically integrate the two parts of the region. These
investments comprise first and foremost the fixed link across the Strait (including both rail and
motorway connections), rolling stocks for rail services, the Copenhagen Metro and the city tunnel in
Malmö. Investments are made in road, rail and air infrastructure. They have led to significant
improvements in public transport infrastructure (Table 1.4).
23
Table 1.4. Examples of larger transport investments in the Öresund Region
Project
EUR millions
City tunnel in Malmö (5.5 km) – still being planned
800
Roads in Malmö (14.5 km)
220
The Öresund fixed link (coast-to-coast 16.2 km) – finished
2 320
Land work on the Danish side
840
Land work on the Swedish side
220
Rolling stock
1 350
Expansion of Copenhagen Airport
940
Metro in Copenhagen (21 km)
1 250
Expansion of the Central Station in Copenhagen
400
The Ørestad (main roads)
180
Total
8 520
1. Some of the projects ended on a higher price than the figures estimated. For example, the total construction
investments for the Öresund Bridge and the land works amounted to DKK 30.1 billion (2000 prices) instead of
DKK 21.9 billion (1990 prices) (Öresundsbro Konsortiet, A/S Öresundsforbindelsen, Svensk-Danska
Broförbindelse SVEDAB AB).
Source: Copenhagen Statistic Office and Statistics Sweden (1999).
Traffic across the Öresund strait
In 1999, the year before opening of the bridge, there were three ferry lines for cars on
Öresund. Besides Scandlines and HH-Ferries between Helsingør and Helsingborg, there was a ferry
line between Dragor and Limhamn. The Elsinor-Helsingborg lines had the major part of the traffic and
their market shares were respectively 90%, 95% and 80% of the market for private cars, lorries and
busses. As a consequence of the bridge’s opening and the coming low season during the
winter 1999-2000, the ferry line between Dragor and Limhamn was withdrawn in October 1999.
Table 1.5. The traffic across the Öresund strait, 1999-2001
1999
2000
2001
Trains
4 951 500
Private cars
2 666 472
3 811 606
4 612 363
Lorries
468 353
523 813
542 577
Buses
60 148
70 476
72 574
Total vehicles
3 194 973
4 405 895
5 227 514
Passages
19 400 000
23 800 000
25 800 000
1. The Öresund traffic is defined as traffic between Zealand and Skåne.
Growth 1999-2001
(%)
73
16
21
64
33
Source: Background report (2002), Öresund Committee.
After the opening of the bridge, the share of car traffic crossing the sound between the bridge
and the Helsingør-Helsingborg ferry line, was 60% and 40%. The change in the market share is a
consequence of the traffic leap (Table 1.5), and the traffic growth across Öresund has been taking
place between Copenhagen and Malmö (Box 1.2.1). Furthermore, there has been traffic movement of
about 20-25% from the HH-traffic to the bridge. For the lorry traffic, the opening of the Öresund
24
bridge has caused modest traffic growth as a consequence of the growth in the distribution traffic
between Copenhagen and Malmö plus a weak transfer of traffic from the Kattegat lines (JutlandSweden) and from the lines between Sweden and Germany. In the first calendar year after the
opening (2001), 28% of the Öresund traffic took place on the bridge, while the remaining traffic took
place between Helsingør and Helsingborg. Since autumn 2001, the Öresund Bridge has strengthened
its market position and the traffic share on the bridge has increased to 32%. Finally, regarding the bus
market the Öresund Bridge route has become in 2001 the market leader with a total of 52% of the
Öresund traffic. This share has been increasing throughout 2001 and the first part of 2002, when the
figures are seasonally adjusted.
Box 1.2.1. Private car traffic on the Öresund Bridge
Car traffic intensity on the Öresund Bridge has been in general below expectations. The Öresundsbro Konsortiets
forecasts for the traffic have neither in 2000 nor in 2001 come up to the actual traffic level. In 2002, however, a
change seems to take place and expectations seem to be correlated to actual traffic.
Two factors in the traffic forecasts have been miscalculated in previous simulations:
1. The “curiosity” traffic, which developed during the summer, disappeared after September 2000, and the
holiday and leisure traffic in 2001 was not as extensive as expected.
2. Integration progress has been slower than planned before the opening of the bridge. This has resulted in
lower growth percentages.
The traffic in 2001 also suffered from the economic slowdown in Sweden. The Swedish currency experienced a
decline (compared with the Danish Kroner) of 10% and a total decline of 15% from May 2000 to
September 2001 thus triggering off a decrease in Swedish shopping and leisure traffic across the bridge. The
impact of the weakening of the Danish economy was not so important since Danes exhibit different travelling
patterns across the sound.
As a consequence of the fluctuations in the Swedish economy and the low traffic during holidays, the summer
traffic in 2001 was correspondingly low. At the same time, the Helsingør-Helsingborg line during the summer
months increased its market share due to effective promotion and adjusted products for especially the leisure and
holiday segment.
During autumn 2001, integration traffic began, and the traffic on the Öresund Bridge increased by 20%
compared with autumn 2000. In December 2001, the leisure traffic also exhibited an increase, which continued
in 2002. In total, the traffic across the Öresund Bridge increased by 15% during the first seven months of 2002.
The toll has been central in the public debate since the bridge’s opening (see Section 2.2).
Many people argue that the toll is too high and slows down the integration process. However, there are
several toll systems in use that provide frequent users with reductions. For example with the
Öresundbonus (Table 1.6), the first two single journeys are charged at the standard rate. Thereafter, the
fee per trip is 50% of the standard price. The discounted fee applies to all subsequent trips during the
six months of the contract period. Another option available for daily commuters is the
ÖresundPendlare (ÖresundCommuter), which costs DKK 2 400 per month. When using the
ÖresundPendlere, i.e. 50 trips per month, commuters will pay an average of DKK 48 per trip. For
regular travellers, who are not daily commuters, there is the Öresund MiniPendlare at DKK 1 800 per
25
month. This means that 24 trips per month will cost DKK 75 per trip. There are also a few bonus
systems for companies.
Table 1.6.
The charge for crossing the Öresund Bridge
In DKK
CAR
Price
Basic price
Four-trip card
Ten-trip card
Bonus customers
MiniPendlare (24 trips per month)
Pendlare (50 trips per month)
TRAIN
Single
Return
Öresund card, standard
Öresund card, business
5 x return card, standard
5 x return card, business
Source: www.oeresundsbron.com (2002).
640
1 250
1 800
2 400
The shortest trip
65
130
1 200
1 900
585
945
Price per single trip
220
160
125
220/110
75
48
The longest trip
152
304
2 270
2 970
805
1 165
1.3. Labour market
Infrastructure investments provide a means to allow for greater trade and internal exchanges
within the Öresund Region, but they are not a source of growth per se, just a vehicle for increased
output and prosperity. The vision of a merger between the Copenhagen area and the Malmö Lund area
rests essentially upon the materialisation of wealth opportunities and the productivity gains generated
by the creation of a larger functional labour market. The theoretical, central argument behind this
assumption is that of labour pooling of the Marshallian externalities associated with concentrating
specialised labour and employers in the same location.3 In the different segments of the labour market,
demand and supply are more easily matched, ensuing in further development. In the case of Zealand
and Skåne, the agglomeration effect is further reinforced by the demographic urban expansion in the
region. Moreover, differences and inequalities in the labour market on the Danish and Swedish sides
can facilitate the integration process. A higher unemployment rate in Skåne combined with higher
salaries in Zealand can raise the number of Swedes looking for jobs in Denmark. The higher rate of
job opportunities in the metropolitan area also supports this trend. However, cross-border gains will
only fully materialise if obstacles to the integration of the two labour markets are lessened if not
removed. As prognoses indicate a tightening of the labour market in the coming years, following the
ageing of the workforce, the need for a well co-ordinated labour market policy will become even more
pressing.
3.
For economists of the new economic geography and notably P. Krugman, the concentration of skilled
manpower is considered as the most concrete advantage of urban agglomeration and clustering.
Advantages in terms of technological spillover are seen as having weaker empirical support.
26
Recent trends in employment and unemployment
The
labour
market
is
tightening
on
both
sides
of
the
sound.
Three and a half million inhabitants live in the Öresund Region and around half are of working age.
However, until recently, Zealand and Skåne have largely functioned as two distinct labour markets in
terms of labour force, unemployment, economic growth and employment structure. The share of
labour force in the total population is relatively equivalent in Zealand and Skåne. Forty-seven per cent
of the population are part of the labour market on the Swedish side while the share is 53% on the
Danish side (Figure 1.3).
Figure 1.3. Population and labour force in the Öresund Region, 2000
Labour force
The rest of the population
4 000
3 500
In thousands
3 000
1 702
2 500
2 000
1 121
1 500
1 000
500
581
1 263
1 802
539
0
Zealand
Skåne
The Öresund Region
Source: Background report (2002).
Nevertheless, the evolutions of employment and economic growth show strong disparities
between Zealand and Skåne. Economic growth has contributed to employment growth in both areas
but is higher in Zealand since economic recovery started later in Skåne. Growth in the Öresund Region
has been to a large extent linked to the evolution of national economic development. The figures for
Zealand stand naturally quite close to those of Denmark because Zealand constitutes a large part of
Denmark (Table 1.7).
27
Table 1.7. Regional GDP and employment, 1995-1999
Index 1995 = 100
Employment1
2000
113.2
103.1
105.9
104.4
108.9
GDP
1998
1999
Skåne
113.6
121.0
Zealand
114.9
122.0
ÖRESUND
114.6
121.7
Denmark
116.6
124.1
Sweden
114.0
119.4
1. Quarterly data (Q4) except for 2002 (Q3).
1998
107.9
103.0
104.4
102.0
102.7
1999
109.0
105.9
106.8
102.0
105.0
2001
115.3
108.5
110.4
108.0
109.5
2002
119.3
106.4
110.0
106.6
112.6
Source: Öresund Statistics.
In Skåne, the economic recession that hit the country in the beginning of the 1990s resulted
in a steep rise in registered unemployment; however, unemployment was higher than in Sweden as a
whole, peaking at above 12% in the beginning of 1997 compared with 9.9% at the national level.
During the late 1990s, economic recovery was strong on both sides of the strait and positive
employment growth has resulted in declining unemployment in the entire region during these years.
Disparities in employment growth between Skåne and Zealand are mirrored both in the level of
employment and unemployment rates. In Zealand, the total employment rate is high (75.7%) and the
unemployment is low (3.8% in 2000), whereas in Skåne, the employment rate is lower (66.5%) and
the unemployment is higher (6.5%). Although quite large during the 1990s and still visible in 2000,
disparities in unemployment rates continued to decrease in 2001. Generally, growth has been greater
than forecasted for the whole region and especially for Skåne. Recruitment problems are also more
widespread than expected in Skåne, and therefore, the area cannot necessarily be expected to relieve
the pressure on the Zealand side (Figure 1.4).
Figure 1.4. Trend in unemployment rates in the Öresund Region, 1994-2001
Öresund Region DK
Öresund Region SE
14
12
10
8
6
4
2
Source: Öresund Statistics.
28
2001Q4
2001Q2
2000Q4
2000Q2
1999Q4
1999Q2
1998Q4
1998Q2
1997Q4
1997Q2
1996Q4
1996Q2
1995Q4
1995Q2
1994Q4
1994Q2
0
Age demography
In the region, tensions are expected to increase in both Danish and Swedish labour markets.
The age demography trends in the Öresund Region show that the share of the population of
non-working age is growing. The group of people between the ages of 50-59 is the second largest
(representing 13% of the total), the first largest group being 30-39 years old. In the coming years, the
50-59 years old group will slowly leave the workforce and the group entering the workforce will be
the 10-19 years old group, which is the smallest generation of many years (Figure 1.5).
Figure 1.5. The age structure in the Öresund Region, 2000
In %
DK
SE
90- years
80-89 years
70-79 years
60-69 years
50-59 years
40-49 years
30-39 years
20-29 years
10-19 years
0-9 years
0
5
10
15
20
Source: Öresund Statistics, Denmark Statistics.
The age structure in Skåne differs most significantly from the Danish part. The number of
people of working age is smaller in Skåne but the working population is also younger. The group of
people between 10-19 years old is relatively higher than in the Danish part of the Öresund Region
which means that Skåne will not experience a shortage of young people on the labour market to the
same extent as will Denmark (Figure 1.6). The change in the age structure of the Öresund Region’s
population is therefore modified significantly when adding the two parts together.
29
Figure 1.6. The composition of different age groups in the Danish part and the
Swedish part, 2001
The relative difference in age structure in Skåne compared to the Danish part of the region
90- years
80-89 years
70-79 years
60-69 years
50-59 years
40-49 years
30-39 years
20-29 years
10-19 years
0-9 years
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Source: Öresund Statistics, OECD Territorial Database.
Another significant difference between Skåne and Zealand is the relationship between active
population (labour force) and non-active population (children, pensioners, students, disabled, etc.).
This ratio for the Öresund Region is 0.94 in the beginning of the period and expected to increase
to 0.96 in the end of the 1999-2008 period. This means that for every 100 people in the labour force,
96 people – not contributing to economic production – have to be supported. According to prognoses
(Arbejdsformidlingen I Öresundsregionen, 2001), the difference in dependency ratios between Skåne
and Zealand is quite significant: in Skåne, it starts at 1.20 although supposed to decline to 1.14
in 2008, whereas in Zealand it starts at 0.84 but is expected to grow to 0.89. The difference in the
proportion of young people between Skåne and Zealand largely explains this disparity. Differences in
national educational systems may also contribute to this gap although to a relatively minor extent. For
example, in Denmark, apprenticeship (apprentices are considered as part of labour force) is
widespread in upper secondary education, while Sweden uses training in school as its main model.
Increased mobility
Improving geographical mobility in the Öresund Region is crucial for integrating the
two parts of the strait because it will facilitate networking and exchange of experience between
Zealand and Skåne firms as well as productivity enhancement and technology transfer. Geographical
mobility can be measured and assessed by considering migration flows and commuting patterns. The
change in the population structure the last 10 years has been characterised by an increase in the
number of foreign citizens living in the region. While this could help to alleviate tensions on the
labour market, it also requires policies to facilitate the inclusion of foreign workers. The average
number of foreign citizens in the region amounts to approximately 7% of the population. It is
considerably higher in relative terms in Copenhagen than in Skåne. It has nevertheless grown rapidly
in Malmö in the last 5-10 year period. The growth of immigrants has been slightly negative in all of
30
Skåne, while the share in the Danish periphery has doubled from 2% to 4% of total population in the
period from 1990 to 2000. In the metropolitan area, the share of foreign citizens is approximately 9%,
peaking in Copenhagen at 13% (Figure 1.7). The majority of foreigners are immigrants from countries
outside the EU and OECD and are mainly from the former Yugoslavia, Iran, Iraq and Pakistan.
Approximately 6% of the Danish population and 11% of the Swedish population are born outside
Denmark and Sweden.
Figure 1.7. Development in number of foreign emigrants in Öresund
Percentage of population in 1990
Percentage of population in 2002
14
12
10
8
6
4
2
1.
Skåne
Bornholms
County
Storstrøms
County
Vestsjællands
County
Roskilde
County
Frederiksborg
County
Copenhagen
County
Frederiksberg
Copenhagen
0
The data from Denmark Statistics concern foreigners, while the data from Statistics Sweden concern citizens
in Sweden with a non-Swedish citizenship. Statistics Sweden does not have the figures corresponding to
those of Denmark Statistics. For comparison, in Copenhagen Community 1 January 2001; people with a
non-Danish citizenship accounted for 11.5% but foreigners accounted for 13.2%.
Source: Denmark Statistics, Statistics Sweden, OECD Territorial Database.
People also migrate internally. Of special interest is the cross-border migration after the
bridge’s opening. An increase in the moving patterns across the sound shows that the bridge has a
direct effect on the moving patterns in the region. The latest figures show that the number of Danes
moving to Skåne has more than doubled after the opening of the bridge. The Danes are primarily
moving to Malmö, Lund, Helsingborg and Landskrona. In 2001, 1 800 people moved from Denmark
to Skåne, whereas around 800 Swedes moved to Denmark (Figure 1.8). In the first nine months
of 2002, there were 1 900 people moving from Denmark to Sweden, a 40% increase compared to the
same period last year (www.nfo.nu, 2002). It is likely that many of them will become work
commuters, commuting from Skåne to Denmark.
31
Figure 1.8. Moving patterns in the Öresund Region
From Denmark to Skåne
From Skåne to Denmark
2 000
1 800
Number of migrants
1 600
1 400
1 200
1 000
800
600
400
200
1998
1999
2000
2001
Source: Region Skåne “Befolkningsutvecklingen i Skåne under år 2001” (2001).
Commuting in the region is common, but this is not the case for cross-border commuting.
Approximately 3 800-3 900 people cross the border to work or go to school.4 In comparison, almost
150 000 people commute from suburban to central Copenhagen and 50 000 commute to Malmö from
other parts of Sweden. Estimations (AF-regionerne, 1997) show net commuting in Skåne and Zealand.
Net commuting is negative in Skåne. Only 5 500 people live in Skåne but work in another region. In
the Danish part of the Öresund Region, net commuting is positive. Two thousand five hundred people
commute to the region every day. A closer look at the separate areas in the Öresund Region reveals a
clear pattern. Copenhagen is the centre, to which people from the suburb commute. Twenty to
twenty-five per cent of the workforce in Roskilde and Frederiksborg Counties commute to
Copenhagen and approximately 10% of the workforce in Storstrøm and Vestsjaelland County
commute to the capital. In Skåne, work centres are Malmö, Lund and Helsingborg, where a daily
number of respectively 45 000, 20 000 and 13 000 commute to the cities. Cross-border commuting
only accounts for 3 200 people living in Skåne and working in Denmark. Approximately 200 commute
from Denmark to Sweden.
The potential for cross-border commuting and a more integrated labour market seems to be
high but according to surveys only specific segments of the population are subject to cross-border
commuting. The Öresund’s Labour Market Council ÖAR has defined certain groups (totalling
approximately 70 000 people)5 that are more willing to apply for a job on the other side of Öresund.
These groups are characterised by their substantial knowledge of the working conditions and
4.
This includes 400-500 students and around 300 persons missed out of the statistics as a consequence
of the counting according to the Ørestad database.
5.
The report is based on a survey involving 1 000 Swedes and 1 000 Danes in telephone interviews. The
groups defined by this survey are persons who: live in Sweden or alone, are in the 20-29 year old age
group, are without children, are temporarily employed or unemployed, are men or are students (ÖAR,
Köbenhavns Kommune, Region Skåne, Malmö kommun, EURES Crossborder, 2002).
32
educational institutions on the other side. The key to activating this commuting potential seems to lie
in transportation time and costs and an appropriate set of rules and regulations.
Prognoses
According to projections (Arbejdsformidlingen I Öresundsregionen, 2001) for the
period 1999-2008 produced by the Public Employment Service,6 the labour force is supposed to grow
by 34 600 people or 0.7% per year in Skåne and by 20 776 people or 0.2% per year in Zealand. This
implies small changes in the relative employment strength between the two main parts of the region in
the coming years. Current projections for employment growth in the region are positive, predicting
unemployment reductions in both Skåne and Zealand. The decline in unemployment in Zealand,
adding up to half of employment growth, indicates that the pressure for immigration to Zealand should
be modest. Ageing of the workforce influences the participation rate negatively, and the employment
growth in Zealand is significantly reduced from the favourable period at the end of the 1990s. The
employment growth rate in Skåne is stronger than the growth rate for the working age population.
Given the increase in the employment participation rate and reduced unemployment and mirroring
modest variation in the population’s demographic structure, no dramatic change is expected.
Employment is expected to grow at a stronger pace in the Swedish part of the Öresund
Region. In Skåne, 39 000 more people will be employed in 2008 equivalent to a total growth rate
of 8.3% for the period as a whole. In Zealand, a total growth of 3.5% for the same period will result in
the employment of 43 000 more people. Compared to the 1993-2000 labour force growth in Zealand,
the prognoses for 1999-2008 forecast a decline. The unemployment rate is expected to decrease during
this period, most notably in Zealand from 4.7% to 2.9%. In relation to the high inflow of newcomers,
smaller changes are forecasted in Skåne from 6.7% to 5.4% (Table 1.8). The unemployment rate in the
Danish Capital Region will correspond to full employment levels. However, during the same period,
the unemployment rates for low educated groups will double while supply and demand for academic
educated personnel are expected to balance.
Table 1.8. Key figures for the labour market in Öresund, 1999-2008
Population 1999
Total
16-64/66
years
2.3 million
1.6 million
0.7 million
Employment
Work
force
Unemployed
1999
1999
1999
The Öresund Region
3.4 million
1.7 million 1.7 million
93 000
Zealand
2.3 million
1.2 million 1.2 million
59 000
Skåne
1.1 million
0.5 million 0.5 million
34 000
Change 1999-2008
The Öresund Region
150 000
106 000
82 000
51 000
-27 000
Zealand
107 000
64 000
39 000
19 000
-22 000
Skåne
43 000
42 000
43 000
32 000
-5 000
Source: Arbetsförmedlingen i Öresundsregionen: “Utvecklingen på arbetsmarknaden
Prognos 1999-2008” (2001).
6.
Unemployment
1999
2008
5.2%
4.7%
6.7%
3.6%
2.9%
5.4%
i Öresundsregionen.
The Public Employment Service in the Öresund Region regularly produces labour market projections
for the whole region. The projections are based on a separate modelling of the changes in the labour
market in Skåne and Zealand, then put together to provide projections for the whole region. These
projections are particularly interesting because they cover the first ten years after the bridge was
opened. The projections do not explicitly state the influence of the bridge; however, the number of
commuters is supposed to be constant. The projections are established on a long-term basis and do not
take into consideration short-term business cycle movements.
33
The labour forecasts indicate a general reduction in the need for unqualified labour and a
smaller but significant growth in candidates with long university education.7 The result of these
analyses should nevertheless be interpreted with care, not taking into account any substitution between
educational groups. The expected increase in the need for labour with higher competence levels and a
reduction in demand for non-qualified labour (in Zealand) are general trends that may be expected to
occur in Skåne as well. Potential employees, educated in the Öresund Region’s well-developed
educational institutions, should be available to work in other parts of Denmark and Sweden.
Therefore, a surplus of candidates may be expected in many trades, giving firms greater choice.
The actual situation is characterised by a fairly tight labour market with the recent
appearance of bottlenecks. Thus, the forecasted 2.9% unemployment in Zealand for 2008 seems quite
optimistic and could be counteracted by market forces such as a stronger than expected wage drift,
from which Skåne could benefit. Skåne would then experience stronger employment growth and lower
unemployment than expected. Higher rates of unemployment in Skåne than in Zealand could trigger
more commuting across the Sound. In such a case, the differences in the tightness of the two labour
markets could be reduced more than estimated.
1.4. A competitive environment
With an important geopolitical position, up-to-date infrastructure and a healthy investment
climate, the Öresund Region features a unique economic and geographical situation in
Northern Europe and the Baltics. The Öresund Region has the potential to build new business and
market structures and create an even stronger economic growth centre in Scandinavia. To compete
with non-cross-border regions, the significance of the national border running through the Öresund
Region has to be diminished. The region is not yet a functional region without barriers, but the new
bridge connecting Denmark and Skåne in Sweden is both a concrete and a symbolic proof of the
efforts to break down administrative and regulatory barriers in the region. The rationale for integrating
the area further is basically parallel to the argument for integration in the European Union. Both
theoretical and empirical indicators give reason to believe that the urban areas of Copenhagen and
Malmö together can create new development opportunities and tap complementary comparative
advantages. A number of factors influence the extent to which these opportunities will be seized and
expanded. Three such factors are crucial and thus, require specific attention from policy makers: 1) the
region’s industrial dynamics and its orientation towards efficient specialisation; 2) the ability to create
new enterprises and to renew the local fabric; and 3) the availability of skilled human resources and
the capacity to use this potential for innovative products and productivity enhancement.
7.
Projections allocate the employment growth to different industries. In the Danish area, growth is
supposed to be especially strong in the hotel and restaurant sector, chemical industry and business
services. These areas are expected to have a growth of more than four times the average growth
in 2000-2008. In Skåne, growth is supposed to especially strong in building and construction, trade
and business services. Employment in the transport industry is also supposed to be quite strong. In the
present situation, there is a lack of educated people in the construction, hotel and restaurant and health
care sectors in Zealand. Sluggish growth in the building industries in Zealand may reduce the
bottleneck problems in the coming years. Bottlenecks problems (in Zealand) may be more severe in
the future in hotel and restaurant and healthcare sectors.
34
Increased competitiveness in a merged region?
A theoretical potential
Merging two separate regions can increase competitiveness. This assertion has been at least
indirectly the subject of many academic analyses aiming at measuring the advantages of the
integration and consolidation of markets within urban or regional spaces. Economists have for long
associated the advantages of economic effectiveness with territorial location. Marshall (1890) notes
that increasing outputs are not necessarily accompanied by an increase in the size of output units and
apart from internal economies of scale, there are external economies of scale due to the economic
environment of firms. The agglomeration of companies and their proximity can produce an advantage
common to all companies in a certain area. Isard (1956) distinguishes two economic externalities:
1) those that come from the proximity of activities in the same branch or in the same industry, which is
called localisation economics; and 2) those that come from the proximity of many activities, which is
called urbanisation economics, especially relevant in Öresund. Urbanisation economics arise from the
agglomeration of different activities, the sum of private and public investments, the availability of a
mobile and qualified workforce, and the presence of financial and legal services. While relatively
neglected during the 1970s and 1980s, the analysis of spatial clustering has been much developed in
the last decade, focussing on cost reduction and increasingly on knowledge spill-overs (see for
example Sabel, 1989; Storper, 1993; Amin and Thrift, 1994; Porter, 1998; Scott, 1998).
Economists have also tried to assess the economic impact of borders using gravitation
models. This concept, based on an analogy with Newton’s universal gravitation law, has been
elaborated upon to explain attractions and interrelations between territories and especially adjacent
territories. Gravitation intensity is a function of the income in the two regions concerned and of the
distance between them. Several studies on European cases show that exchanges between two crossborder urban zones represent less than 25% of what they would be if the two urban zones were
situated in the same country.8 These limitations result from the presence of a number of barriers to
trade.
Empirical indicators
While the competitiveness of the Öresund Region is increasing, it is difficult to isolate the
synergy effects of integration from general development. The economic backbone of the Öresund
Region is the Greater Copenhagen Area and the positive development in the region is therefore
especially related to the general development in Denmark. In general, Denmark is moving up on the
international list as one of the most competitive countries in the world.9 This trend is significantly
nurtured by foreign investments moving to the area. The international investment agency for Greater
8.
See work by McCallum (1995) for the US/Canadian case or by Tinbergen (1975). A recent analysis
by Madsen and Podenphant (1996) estimated that trade between Zealand and Skåne was only 7% of
the volume expected when no barrier existed.
9.
According to the Institute for Management Development (IMD)’s yearly World Competitiveness
Yearbook, Denmark has moved from No. 15 in 2001 to No. 6 in 2002. The progress is first and
foremost due to the fact that Denmark has tackled economic recession better than most other
countries. Denmark’s relative strengths are especially within areas such as service exports, foreign
investments, pc-spread, educational resources and research. The United States is ranked No. 1 and
Finland is second. The information is taken from www.copcap.dk, 2 May 2002.
35
Copenhagen “Copenhagen Capacity” lists the following reasons for region’s ability to attract
companies:10
−
Copenhagen’s GDP per capita (PPP) for 2000 was USD 28 300.
−
The region is the eighth richest region in Europe in terms of “gross city product”.
−
The employers’ social security contribution is 1% of the employee’s salary.
−
Copenhagen’s international airport is the sixth largest in Europe.
−
The region’s business telephony has the lowest charge in Europe.
−
The region has the highest IT spending per capita in Europe.
−
The region is ranks first in the world in terms of life quality.
−
The region’s Medicon Valley is the third largest biomedical R&D centre in Europe.
a) Industrial dynamics
The production structure in the Öresund Region is diversified and reflective of the respective
countries. In Zealand, the output structure does not differ significantly from the structure in the rest of
Denmark. Both are dominated by business in trade, hotel and restaurants. In the Öresund Region, there
is a relative higher share of firms in business services (30%), compared to the 20% in the rest of
Denmark. Region Skåne is also quite similar to the rest of the country with trade, hotel and restaurant,
and business services enterprises dominating. Generally, Industrial output in Sweden is dominated by
large enterprises (Volvo, SKF, Ericsson) while Danish firms are more moderate in size. This is not,
however, the case for the Öresund Region. Ninety per cent of all firms on both sides had less than
20 employees in 1995 (Maskell and Törnqvist, 1999, p. 61). Across the two sides of the strait, the
structure of the corporate fabric is nevertheless slightly different. While Zealand and Skåne have a
comparable share of large firms, where firms of 20 employees or more account for 12-15% of the
labour market, Skåne has a higher proportion of very small firms and is stronger in the
5-100 employees range.
In 1998, the Öresund generated a value added of almost DKK 400 billion, with enterprises
on the Swedish side accounting for approximately one-fifth of the total. Both parts of the region are
dependent on the value added from wholesale and commissioned trade and construction. A relatively
higher share of the value added on the Swedish part is attributable to the manufacturing of basic
metals, construction, and food, beverages and tobacco. On the Danish side, the value added is
relatively more dependent on retail trade and repair work, and wholesale and commissioned trade
(Figure 1.9). Employment in Zealand is more specialised in trade and transport, hotel and service,
financial service and public administration, whereas Skåne is more biased towards manufacturing, the
public sector, education and healthcare (Table 1.9).
10.
www.copcap.dk, “Location Copenhagen”, 2001, executive summary.
36
Figure 1.9. Production structure in the Öresund Region by sector, 1998
Share of value added in %
Denmark
0
5
Sweden
10
15
20
25
Wholesale and commissioned trade,
excluding motor vehicles
Other business activities
Construction
Retail trade and repair work excluding motor vehicles
Manufacture not elsewhere classified
Transport
Manufacture of food, beverages and tobacco
Computer and related activities
Manufacture of basic metals and
fabricated metal products
Manufacture of wood products, printing and publishing
Sale and repair of motor vehicles, etc.
Manufacture of electrical and optical equipment
Hotels and restaurants
Other service activities
Manufacture of other non-metallic mineral products
Real estate activities
Manufacture of textiles, wearing apparel, leather
1.
The total value added in the Danish part of Öresund was DKK 312 billion in 1998 and in the Swedish part it
was DKK 77 billion in 1998.
Source: Öresund Statistics.
37
Table 1.9. Economically active day-time population by industry
In %
Öresund
Öresund
The
Region, Region,
Capital
1.1.2000
Swedis
Region
Danish
Region
h part
part
Agriculture
3.8
2.0
2.0
2.6
1.8
0.8
Energy
17.0
19.2
14.0
19.2
12.0
10.9
Public sector
0.6
0.9
0.7
0.9
0.6
0.5
Construction
6.1
5.5
5.9
5.9
5.9
5.7
Trade and transport
21.8
18.6
22.3
19.9
23.1
24.1
Hotel and service industry
7.9
6.6
8.0
5.9
8.8
9.0
Financial service
12.5
12.9
14.7
11.0
16.0
18.1
Public administration
5.8
5.4
6.5
4.8
7.1
7.2
Education
7.3
8.3
7.8
8.9
7.3
7.1
Healthcare
16.8
18.4
17.4
18.7
16.9
16.2
Not given
0.4
2.3
0.9
2.3
0.4
0.4
Total
100.0
100.0
100.0
100.0
100.0
100.0
Source: Quoted from ”København Statistiske Årbog 2001”, Part C, Table 3.2, p. 15.
Denmark
Swede
n
Öresund
Copenhagen
0.1
7.1
0.6
2.8
21.1
13.4
22.6
10.7
6.9
14.4
0.4
100.0
Malmö
0.3
14.0
1.0
6.0
23.6
7.4
17.4
5.0
6.8
16.3
2.2
100.0
The heterogeneous business structure in the Öresund Region is reflected in its fragmented
territorial nature. There are differences in the manufacturing structure both between the Zealand side
and the Skåne side of Öresund and between the centre of the region and the periphery. There are also
differences in the technology intensity of industries between these sub-regions. In Skåne, the high-tech
industry only employs 4% of the industrial workforce. In some peripheral municipalities, high-tech
industries do not exist at all. In Malmö, this industry only accounts for 7.8% of the industrial
workforce. The highest rate is 19.7% in Greater Copenhagen. The only counterpart to Copenhagen on
the Swedish side is Lund. In Malmö, the industrial sector is smaller and more traditional but contains
some IT enterprises. In Öresund, the number of employees in the IT sector is approximately
90 000 people, i.e. 5.5% of the workforce. The centre of the IT sector is located in Copenhagen
County where the sector employs 12% of the workforce. If both high- and medium-tech industrial
sectors and the IT sector are totalled, the area covers approximately 10% of the workforce in the
Öresund Region. The majority of the workforce is in fact employed in low-tech sectors, and the
majority of the value added is also created in these industries (Hansen and Serin, 2001) (Table 1.10
and Figure 1.10).
Table 1.10. Resource area by number of employees in the Öresund Region, 1998-1999
Resource area
Medico/health
Building and dwelling
ICT and contents
Transport
Food products
Environmental/energy
Tourism
Furniture and textile
Other industries (residual)
Source: Öresund Statistics.
1998
220 395
214 057
147 157
135 532
128 081
35 468
34 905
31 373
610 269
38
1999
218 941
213 308
151 963
137 122
126 639
35 421
36 372
31 664
615 816
Figure 1.10.
Change in employees by sector, 1995-1999
% change
Other industries
(residual)
Tourism
ICT and contents
Building and dwelling
Furniture and textile
Transport
Medico/health
Food products
Environmental/
energy
-5
0
5
10
15
20
Source: Öresund Statistics.
According to the Öresund University, the critical driving growth clusters in the region are to
be found within the resource areas of medicine/health, IT, food products and environmental/energy.
The four areas are promoted under the concept “Öresund Science Region” and are therefore of special
interest to the description of the industrial structures. In the period 1995-1998, growth in these
resource areas developed quite differently. Growth in employees was more than 10% in tourism, IT
and the building sector, rendering them the most quickly developing areas in the Öresund Region
while food production and environmental industries experienced negative employment growth rates.
The most quickly expanding sectors were medicine and IT. The environmental products sector
experienced a significant drop in value added in 1995-1998 (Table 1.11 and Figure 1.11).
39
Table 1.11. Value added in the Öresund Region, 1998-1999
Million DKK
Resource areas
Building and dwelling
ICT and contents
Food products
Transport
Medico/health
Furniture and textile
Tourism
Environmental/energy
Other industries (residual)
Source: Öresund Statistics.
1998
89 132
70 151
58 246
46 307
31 029
13 134
8 854
6 035
66 772
Figure 1.11.
1999
103 605
71 434
57 438
48 970
31 491
12 715
10 583
8 231
70 740
Growth in value added, 1995-1998
% change in value added
Medico/health
Furniture and textile
ICT and contents
Building and dwelling
Transport
Tourism
Food products
Other industries (residual)
Environmental/ energy
-80
-60
-40
-20
0
20
40
Source: Öresund Statistics.
In the future, the business structure in the Öresund could become more inter-related.
Co-operation between firms across the sound has increased since the bridge’s opening. The Öresund
Chamber of Industry and Commerce carried out a study among Danish and Swedish members in the
Öresund Region to evaluate each enterprise’s development since the bridge’s opening in July 2000.
The study shows that in general, enterprises increased their inter-regional activities. Development has
been most significant in co-operation between enterprises across the sound. Thirty-five per cent of
Swedish and 16% of Danish enterprises reported an increase in their inter-regional co-operation
(Danish Ministry of Trade and Industry and the Greater Copenhagen Authority, 2001). The study also
reveals that enterprises had very positive expectations of how they would make use of an integrated
region in the future. Fifty-three per cent of Danish and 65% of Swedish enterprises expect to increase
their inter-regional activities in the next 3-5 years. Significant action seems to support these words.
Forty-five per cent of the Swedish and 36% of the Danish enterprises have already actively looked into
40
the possibilities of increasing their inter-regional activities (Danish Ministry of Trade and Industry and
the Greater Copenhagen Authority, 2001).
To sum up, the region has a diversified industrial structure: the Swedish area has a higher
share of industrial and rural production than Zealand. On both sides, low- and medium-tech industries
dominate the production structure but there are major inter-regional differences. The high-tech
industry is centralised in the metropolitan area near Copenhagen and Lund while Malmö has a more
moderate representation of high-tech firms. Based on the assumption that growth is dependent on local
economic factors, it cannot be assumed that the successful development of the high-tech industry in
the metropolitan areas will spread and benefit other parts of the region. A balanced growth strategy,
involving all municipalities in the Öresund integration process, has to take into account the differences
within the region and facilitate cross-border co-operation within high-tech as well as low- and
medium-tech productions.
b) Increased entrepreneurship and inter-firm co-operation
Reflecting its dynamic business climate, the region exhibits higher growth in the number of
enterprise creation compared to the rest of Denmark and Sweden, which is particularly evident when
analysing the period from 1995-1998 (Figure 1.12). During this period, Sweden experienced small
negative growth in the yearly number of new enterprises, but in Skåne this trend was less marked,
which could be attributed to the attractiveness of the Öresund Region. In Denmark, the period
from 1995-1999 was a period of general growth in the emergence of new enterprises; however, the
development in the Danish part of the Öresund Region was especially marked. In several sectors, the
Danish part of Öresund experienced higher growth than the rest of Denmark. The construction and
hotels/restaurants sectors have witnessed the most important growth in the Öresund Region. The steep
increase in the hotel and restaurant sector in Skåne compared to the rest of Sweden and even to the
Danish part of Öresund reveals the growing significance and potential of this sector, which is partially
due to the higher proximity to a major metropolitan area. The number of accumulated overnight stays
in hotels in Malmö increased by 4% in 2001 against 1.2% in the Copenhagen region.11
11.
See www.woco.dk/composite(590).htm.
41
Figure 1.12.
Development in the yearly number of new enterprises in Öresund
Change in %
Ö resund R egion D K +S E
O utside Ö resund R egion, in D K
O utside Ö resund R egion, in SE
Ö resund R egion SE
Ö resund R egion D K
100
80
60
40
20
0
1.
Source: Öresund Statistics.
42
Total
services
Public and personal
business activity
Financial intermediation,
and communication
Transport, storage
of which hotels
Figures are for 1995-1999.
and restaurants
motor vehicles
of which retail trade
and repair work excluding
hotels, restaurants
Construction
Manufacturing
-40
Wholesale and retail trade,
-20
Increased co-operation between firms in the region indicates a positive effect of the merger
on the business climate. According to the Chamber of Commerce, the number of companies
co-operating with Skåne has grown from 33% in March 2001 to 43% in April 2002. Corresponding
figures for companies in Skåne co-operating with Zealand was 47% and 54%. The exchange of goods
across the sound has also increased during this period (Table 1.12). Skåne’s share of total
purchase/sale in Zealand has increased from approximately 1.7% to 2.5%. Zealand’s share of total
purchase in Skåne increased from 2.3% to 3% but the share of total sale decreased from 3.4% to 2.7%
(Öresund Industri og Handelskammer, 2002). The reason for this decrease is most likely to be traced
to the fluctuation of the currencies. The exchange of goods is also affected by the differences in prices
because of the different VAT in the two countries. The following table shows a price comparison of
selected goods.
Table 1.12. Comparison of selected prices
In DKK
Denmark
Sweden
Difference (%)
CONSUMER GOODS
Adjustable spanner
160.00
137.60
-14.0
Pair of jeans
669.00
604.80
-9.6
B&O television
10 495.00
10 295.90
-2.0
Music CD
119.95
137.60
+14.7
FOOD
Steak (200 g)
36.00
22.30
-37.9
One kg pork chops
59.90
38.90
-35.0
One kg potatoes
6.50
4.20
-34.8
1.5-litre Coca-Cola
15.50
12.00
-22.4
One Big Mac
25.75
20.80
-19.4
Chivas Regal
279.95
284.70
+1.7
One litre low-fat milk
5.30
5.50
+3.5
Carlsberg Black Guld
7.35
9.70
+31.8
SERVICES
One hour’s garage service
642.50
389.30
-39.4
One hour’s cleaning1
160.00
240.00
+50.0
1. Cleaning is subsidised in Denmark.
2. Prices collected by the Institute of Future Studies between 17-21 September 2001. Exchange rates at
21 December 2001 (1.156 DKK/SEK).
Source: Danske Bank, Economics Department: “The Öresund Region” (2002), p. 5.
Öresund is already highly competitive but positive trends in entrepreneurship indicate the
increased economic strength of an integrated region. The efforts of combining the forces in Öresund
are still new, rendering it difficult to ascertain its effect on business life. The exchange of goods across
the sound reveals greater commercial interdependence in the region. The integration of CopenhagenMalmö-Lund into one agglomeration could lead to new business opportunities. However, the task of
creating a single urban region composed of cities with individual economic spaces in two different
countries with distinctive cultures, institutions and laws is a very complex process. A closer analysis
of the differences and inequalities in the region is thus pertinent (see Section 1.5).
43
c) Human resources
The Öresund Region has a relatively high level of education (Table 1.13),12 and the ensuing
merger of the region will combine some of the biggest universities in Scandinavia. This merger will
result in one of the largest educational centres in Europe with 20 different universities and other higher
education institutions and a total number of 130 000 enrolled students (Table 1.14). Co-operation in
the educational domain makes it possible for the various faculties to specialise more and develop
special competencies.
Table 1.13. Educational levels in the Öresund Region, 1998
% of the 15-74 year olds
Skåne
Primary school
High school education
Short and medium length further education courses
Long further education courses
Not given
Source: Öresund Statistics.
35.1
45.1
6.4
11.3
2.2
The
metropolitan
area
29.8
40.4
13.8
8.5
7.5
The
Danish
peripher
y
43.2
39.4
11.1
2.4
3.9
Sweden
Denmark
34.5
46.3
6.5
11.0
1.8
36.9
39.8
12.7
5.3
5.3
Table 1.14. Universities and colleges in the Öresund Region, 1998
Name of the university/college
Number of students
GREATER COPENHAGEN
63 504
Copenhagen Business School
13 500
Roskilde University Centre
6 300
The Royal Danish Academy of Fine Art
School of Architecture
1 000
School of Conservation
90
School of Fine Arts
210
The Royal Danish School of Pharmacy
1 100
Royal School of Library and Information Science
618
The Royal Veterinary and Agricultural University
3 000
Technical University of Denmark
5 686
University of Copenhagen
32 000
SKÅNE
60 974
Swedish University of Agricultural Sciences Alnarp
3 830
Malmö University College
8 000
Lund Institute of Technology
5 000
Lund University
35 301
Kristianstad University
5 500
College for Health Sciences in Lund/Helsingborg
1 683
College for Health Sciences in Malmö
981
College for Health Sciences in Kristianstad
679
TOTAL
124 478
Source: Homepages of the universities (www.uni.oresund.org), November-December (1998).
12.
The big cities generally have better-educated populations than do rural districts. The difference in the
rural areas between short- and medium-term educational courses and long-term education courses is
rather the result of a difference in definition than an actual difference in the level of education.
44
Twelve higher education institutions in the region participate in the Öresund University,13
which is a voluntary co-operation between universities on both sides of the Öresund. The goal is to
create a strong information centre, composed of the region’s universities, in order to increase the
effectiveness and quality of education, research and other activities at the university. This
collaboration is expected to affect all aspects of the university. New possibilities are created for
specialisation through the synergy effect and use of the universities’ resources. Moreover, expertise
and equipment are increased, and access to offered courses, libraries, laboratories and other facilities
will be improved for both students and researchers in the region.
The Öresund University is based on the idea of utilising network technologies to create
research and learning centres across geographical, institutional and time barriers. IT communication
creates a bridge across the Sound and improves interactions between researchers, allows for distance
learning – including supplementary education – and disseminates information from the universities to
the trade and industry. The structure is based on collaboration between faculties and student mobility,
including joint staff and graduate studies. Collaboration should also promote several general and
specific technical projects, undertaken by project groups at the participating universities.
Presently, the number of Swedes studying in Denmark is higher than that of Danes studying
in Sweden. In 2000, 357 Swedes enrolled in an educational institution in Zealand. This is an increase
of 53% (since 1998) even though the number still represents less than 0.5% of the 65 100 Danish
students studying in their home country. In 2000, 105 Danish students were enrolled at Lund’s
University, the University of Agriculture of Sweden, the Malmö and Kristianstad Universities.14
The potential for co-operation between researchers, notably university researchers, is
enormous. Denmark and Sweden are among the most productive societies according to scientific
research output per capita. From a regional perspective, the highest concentration of scientific output
in the Nordic countries is found in the Öresund Region. According to figures from the 1990s, the
Öresund Region is ranked in fifth after London, Paris, Moscow and the Randstadt, as the most
productive region in Europe in scientific research, measured by the number of published publications
(Table 1.15).
13.
www.uni.oresund.org. The Öresund University brings together twelve major universities in the region:
Lund University, University of Copenhagen, Copenhagen Business School, Roskilde University,
Malmö University, Kristianstad University, Royal School of Library and Information Science
Denmark, the Royal Danish School of Pharmacy, the Danish University of Education, Technical
University of Denmark, the Royal Veterinary and Agricultural University Denmark, Swedish
University of Agricultural Sciences.
14.
The figures on education are from Öresunds Handelskammer (2001). They underestimate the number
of students from one country who study in the other. In fact, students that have taken e.g., a
Bachelor’s Degree in a Swedish university and that want to change and graduate in a Danish
university, are transferred on merits only. They are not therefore registered in the above statistics.
45
Table 1.15. Scientific output, 1994-1996
Region
London
Paris
Moscow
Amsterdam – Hague-Rotterdam – Utrecht
ÖRESUND REGION
Stockholm – Uppsala
Berlin
Oxford – Reading
Edinburgh – Glasgow
Manchester – Liverpool
Source: C. Wichmann Matthiessen (2000).
Published scientific research publications
64 742
45 752
39 903
36 158
21 631
20 195
19 872
18 876
18 668
18 653
A challenge lies in creating complementarity between the different educational systems. It
calls for a standardisation or smooth transfer mechanisms of educational merits between the
two countries. The Danish education system distinguishes between “proceeding/long” and “mediumlong” education. For example, the training of teachers or nurses is a medium-long education while the
education for becoming a doctor or lawyer is a proceeding/long education.15 The actual period of study
is often longer than the norm. The first three years are called basic education and typically follows a
specific programme. The superimposed courses offer the students some kind of specialisation.
However, in Sweden, the structure is different. All education before the Ph.D. is called basic
education. It is organised in programmes and single courses. Each programme is specialised and leads
to a specific occupation. The single courses are shorter periods of education, ranging from five weeks
to one year. These can be combined as building blocks to obtain a general academic exam.16
1.5. Economic performances in the Öresund
Given the openness of the Danish and Swedish economies, the benefits of globalisation have
been largely diffused throughout their territories. Due to sound macro-economic policies combined
with active Scandinavian-type social redistribution, disparities between counties’ GDP per capita have
been maintained at a low level with regard to other EU countries (see Section 2.1).17 However,
mirroring persisting trends in a majority of OECD countries, differences and inequalities at
sub-regional or sub-county levels have not been reduced. Most recent trends in population seem to
favour the close periphery of the two main cities at the expense of the rural areas. In the case of
foreign owned companies, the statistics available only confirm a relative deconcentration detrimental
to metropolitan centres, although the trend is relatively slow (for example for Skåne, see
Sveriges AMB, 2001). Öresund remains a heterogeneous region and while the gap between the Danish
and the Swedish parts seems to be declining, disparities within Zealand and within Skåne are still a
challenge for central and regional policy makers.
15.
Denmark has a so-called 3-5-8 structure: students obtain a Bachelor’s Degree after three years of
studying, a Master’s Degree called “Kandidat” after five years and a Ph.D. after eight years.
16.
In Sweden, the length of the education is defined in points. One point corresponds to a week of fulltime study; thus, one year is 40 points. A “Kandidat” degree requires 120 points, and to obtain a
“Magister” degree, a student needs 160 points. Three years makes a “Kandidat”, four years make a
“Magister”, two years postgraduate studies, 5-7 years in total yields a licentiate degree and an
additional two years, i.e. 7-9 years in total gives a doctorate.
17.
From 1989 to 1999, standard deviation of GDP per capita has increased in Sweden (as a percentage of
EU-15 average from 10.9 to 16.4, but this is still quite below most EU countries level. See EU 2002
Cohesion report.
46
Distribution of wealth
GDP levels vary within the region. In 1999, the total GDP of the Öresund Region was
USD 130 billion, which equals one-half of the Swedish and two-thirds of the Danish economy. During
this year, the Danish part of Öresund provided half of total GDP in Denmark while the Swedish part of
the region provided around 11% of total GDP in Sweden, revealing the difference of the region’s
significance in the two national economies. The metropolitan area accounts for a dominant share of the
regional GDP, i.e. a little less than two-thirds of GDP. The Danish periphery produces
approximately 15% of the region’s GDP, and the Swedish part provides one-fourth of the total GDP in
the region (Figure 1.13).
Figure 1.13.
OECD regionalised GDP, 1999
Millions of USD at 1995 prices and exchange rates
The Öresund Region
Outside the Öresund Region
The Danish periphery
The Sw edish part (Skåne)
The metropolitan area
300 000
250 000
200 000
150 000
100 000
50 000
0
Sw eden total
Denmark total
Öresund total
Source: OECD Territorial Database.
In 1999, per capita GDP for the resident population of the Öresund Region was almost
USD 35 000. This was below the average in Denmark but has to be seen in light of the different levels
of GDP per capita in the Danish and Swedish areas. Value added growth in the region has also been
quite high due to the high productivity and concentration of skills in the region. It is below the Danish
average, but again this has to do with the different general conditions during the 1990s in Sweden and
Denmark. The index below shows that growth has been stable in Denmark but quite uneven in
Sweden. In the early 1990s, the growth in GDP per capita was negative in Sweden but in the period
from 1995-1999, it was remarkably buoyant (Table 1.16).
47
Table 1.16. Development in GDP per capita
OECD regionalised GDP per capita1
GRP² per capita 1990
GRP² per capita 1995
Average
USD
Index
USD
Index
Denmark
31 822
100
34 508
108.4
Sweden
27 244
100
27 212
99.9
Öresund
30 014
100
32 130
107.1
1. USD at 1995 price level and exchange rate and index 1990.
2. GRP = gross regionalised product.
GRP² per capita 1999
USD
Index
37 531
117.9
30 289
111.2
34 884
116.2
Source: OECD Territorial Database.
Differences and inequalities in the Öresund Region can also be registered between
sub-regions. During the 1990s, the growth in GDP per capita in the Öresund Region was just below
the average in Denmark but higher than the average in Sweden. The region includes both some of the
most advanced and lagging areas in Denmark and Sweden. In 1990, the wealthiest sub-regions were
Copenhagen and Frederiksberg Kommune and they are still first in the league (in 1999).18
Storstrøm County is the worst performing (in 1999) and the gap from the two aforementioned
municipalities has in fact increased from 1.87 to 2.36 over the last decade (Table 1.17).
Table 1.17. Regional disparities of GDP per capita
1990
DENMARK
106.0
SWEDEN
90.8
ÖRESUND
100.0
THE METROPOLITAN AREA
123.2
Copenhagen and Frederiksberg municipalities
152.3
Copenhagen County
134.1
Frederiksborg County
84.0
Roskilde County
80.9
THE DANISH PERIPHERY
86.6
Vestsjællands County
90.8
Storstrøms County
81.3
Bornholms County
90.7
THE SWEDISH PART (Skåne län)
85.8
1. Primary statistics extracted from Eurostat database.
1995
107.4
84.7
100.0
131.9
182.0
133.8
84.4
76.1
84.6
91.9
77.1
81.0
73.7
1999
107.6
86.8
100.0
132.5
178.4
138.5
84.9
75.6
83.2
90.7
75.4
79.1
77.4
Source: OECD Territorial Database.
Core and peripherial issues
18.
It is important to note that the GDP measures value added in the regions. There might be some gaps
between these calculations and income measurements. In a county such as Roskilde, many people
work in Copenhagen and their value added is registered in the capital city. In addition it is the county
where the population has increased the most in the last 20 years. This could explain its relatively weak
performance in terms of GDP/capita. This parameter is being used here because it remains the basis
for Structural Funds policies and EU regional debates. Data on income are not available at
sub-regional or county level.
48
These disparities reflect varying performances between the urban core and its immediate
hinterland and the more distanced rural area on both sides of the strait. The rural areas in the east and
south parts of Skåne and the south and west parts of Zealand and Lolland-Falster have many
similarities. These areas do not have great population density but do benefit from wide expanses of
nature. The central challenge is to facilitate a balanced and sustainable development within this ruralurban dimension. As neighbours to large urban areas, the rural districts are exposed to development
tendencies of the large city centres, which may affect their present situation as well as define their
developmental potential. Negative aspects may result in the creation of vacuum situations, draining the
peripheral areas in terms of population, industry and services, whereas positive aspects may be the
“rings in the water” effect leading to the establishment of businesses, public services and new
settlements in the peripheral region. Thus far, the balance has not been sufficiently in favour of the
latter.
Weak endogenous development in Öresund rural areas
While the whole region has the notable ability to attract people and population growth has
increased almost every year in the last 20 years, this growth has been uneven. Economic development
has clearly favoured the urban areas around the central Copenhagen-Malmö axis. The suburbs of
Copenhagen have attracted people to the certain detriment of the Danish periphery. The Swedish part
seems, on the other hand, to receive continued inflows of people, and the population of Skåne County
is growing quickly. Today, Skåne appears to be increasingly chosen as the place of residence due to its
proximity to Copenhagen. Region Skåne is nevertheless characterised by considerable differences
within the area. The big cities, population growth and economic development are concentrated in the
western part of Skåne. Towns and villages situated at some distance from the large urban areas suffer
from decreasing population and a lack of economic growth. Storstrøm County in Zealand and LollandFalster are a kind of bed district for Copenhagen and about 14 000 persons daily commute to the
Copenhagen area to work, equal to 11% of the workforce. West Zealand County already have many
functional inter-connections and a division of labour with Greater Copenhagen in areas such as labour,
raw materials, transport, knowledge, education and culture. Bornholm is an island and a more closed
economy.
These rural districts are also confronted by a number of specific issues:
1. Eastern Skåne is focussed on the primary sector and dominated by Stockholm. The area
is lagging behind especially in terms of knowledge activities and R&D spending (with an
R&D index of 80 compared to the EU average of 100 and 418 for Stockholm).19
2. The level of unemployment in Storstrøm was still 6.3% in early 2002, compared to the
5.1% average in Denmark. The county has much expectation in the possible construction
of a fixed link across the Femern Belt between the Öresund Region and the north
German metropolitan centres to revitalise its economy and enhance its attractiveness.
3. For Western Zealand, the challenge is to benefit more from its central location between
the Öresund Region and the rest of Denmark and to not become a transit region.
4. Fast, direct rail and ferry links have been set up between Copenhagen and Bornholm – an
opportunity to obtain transport equality with the rest of the country. Since 1980,
Bornholm has co-operated closely with Southeast Skåne. The so-called SÖSK-Bornholm
19.
www.Skåne.org.
49
partnership has its own political organisation and focuses on issues such as a fixed ferry
link, tourism and business development.
Concentration of foreign direct investment
The development of total inflow of foreign direct investment in Sweden and Denmark gives
a picture of the general trend in FDI. Following the positive development during the 1990s, FDI
inflows to Denmark peaked at almost USD 14.5 billion in 2000. The heavy growth originated partly
from several very large transactions in 2000, for example when Nordic Baltic Holding AB (Sweden)
acquired Unidanmark A/S or the acquisitions of Sonofon Holding A/S by Telenor AS (Norway). Like
Denmark, Sweden experienced an upward trend in FDI in the 1990s (Figures 1.14. and 1.15.). In 1999,
the merger of Swede’s Astra and Britain’s Zeneca resulted in a sharp climb in the inward investment
flows. Large businesses like Daimler/Chrysler, Unilever, Orange, Novo Nordisk, Royal Scandinavia
and Flextronics have chosen to establish themselves in Sweden in recent years.
Figure 1.14.
Inward and outward FDI in Denmark
Million USD
Inflow
Outflow
16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
1990
1991
1992
1993
1994
1995
Source: OECD Territorial Database.
50
1996
1997
1998
1999 2000 p 2001e
Figure 1.15.
Inward and outward FDI in Sweden
Million USD
Inflow
Outflow
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999 2000 p 2001e
Source: OECD Territorial Database.
Many of these operations have taken place in Öresund. While 3 000 foreign owned
enterprises (FOEs) work in Denmark, more than 70% are located in the Greater Copenhagen Area. In
Skåne, the number of people employed by FOEs is about 12%, i.e. similar to the weight of the region
in Sweden as a whole (Sveriges AMB, 2001). In both countries foreign implantations seem to
concentrate in the immediate periphery of the metropolitan area, but more detailed statistics are needed
to confirm the trend.
To sum up, differences and inequalities do exist in the Öresund Region. Economic
development is somehow fragmented, and the different development in the Danish and Swedish
economies pulled the two parts of the Öresund Region in different directions during the first half of
the 1990s. However, in the recent years, Sweden has been catching up to Denmark and exhibiting a
faster pace in Skåne than in other parts of Sweden. The labour market in the Öresund Region has key
complementarities, which could trigger increased commuting to create a common functional labour
market. Furthermore, interregional differences exist in the industrial structure where the knowledgebased services (KIBS) are close tied to the metropolitan area. Territorial inequalities in the region call
for a diversified growth strategy. However, it is important to stress that not all differences impede
integration but can also provide good reasons for co-operation. Substantial convergence in the region
within certain areas already exists and these factors of cohesion can be further liberated and harnessed.
51
CHAPTER II
STRATEGIES AND POLICIES
2.1. Strategies
Introduction
The Öresund project aims at improving the region’s conditions in order to maximise the benefits
brought about from the recent changes in size, accessibility and the integration of the Danish and Swedish
sides, which has been facilitated by the opening of the Bridge. The overall political vision, underlying the
regionalisation process, is to achieve economies of scale and economies of scope through the means of a
larger territory and a common governance system. With its strong economic base and its growing
importance as a hub, Öresund is well-positioned to reach this objective. The development of an
“Öresund Region” is also a project at the regional level, consistent with both national regional policies.
Öresund has now grown to be perceived at the European Union level as a privileged testing ground in the
process to achieve a “Europe of the regions”. Denmark and Sweden have actively supported the
implementation of the INTERREG programme. This programme has to a certain extent opened for mental
integration, while the bridge was obviously designed for physical integration. It is probably too early to
assess to what extent the integration strategies have been successful. The Öresund Chamber of Commerce
has nevertheless worked out an index that reveals the integration progress is half completed, thus calling
for consolidation policies and multi-level public initiatives.
The Öresund Region: an old idea made new
It can be argued that the Öresund region has both a long and short story. On the one hand, there is
a several-centuries-old history of Swedish and Danish interaction in this area, which has not always
anticipated its future evolution as a true trans-border region. On the other hand, the Öresund Region has a
much shorter history as a concrete political project, starting with the decision of the construction of the
fixed link in 1991.
For several hundred years, the Öresund was a passage between the Baltic Sea and the North Sea,
but this was to change in the mid-1600s, when it became a border between Sweden and Denmark. During
the Viking Age and in the earlier Middle Ages, at the time when Denmark was expanding its borders, the
Öresund was at the core of the nation. However, when the Swedes conquered Skåne in 1658, the region
lost the central position it had enjoyed under Danish rule and became instead an area on the Swedish
periphery. Then, by the end of the 1660s, Swedish law had been introduced in Skåne and the Öresund
became the geographical border between Sweden and Denmark. This border was relatively stable from
the 18th century until the middle of the 19th century. During this period, Skånian customs were influenced
by Swedish culture and society, while Denmark was oriented towards Germany in the south. Until well
into the 20th century, the Öresund strait constituted a mental barrier between the two countries.
52
The most significant aspect of Öresund’s recent history started in the 1960s with the incipient
awareness of the potential benefits arising out of increased Swedish-Danish co-operation in the Öresund,
and the awareness that this co-operation would be greatly facilitated if there were some kind of physical
link between the two borders. Nonetheless, the process was not to be a straight-forward one.
The proximity between the Swedish and the Danish coasts in the Öresund area had encouraged
the completion of plans to build a link between the countries since 1872. Such a link would be the shortest
in existence between Scandinavia and the continent. After World War II the interest in a fixed link was
particularly intense as the traffic across the Öresund had increased notably and the political situation in
Germany had enforced alternative communications between Sweden and the continent. With the plan to
build the Great Belt Link connecting East and West Denmark, it was becoming possible to envisage
continuous railway and road links to the rest of the EU.
In the 1960s, political obstacles stood in the way of support for an Öresund Region. During this
decade, internationalisation was on the increase and from a Scandinavian perspective the emerging
Öresund Region could constitute a powerful weapon in preventing the concentration of economic power in
central Europe. In 1964, the Öresund Council was founded to support co-operation between local
politicians on both sides of the Sound. Nonetheless, the national actors’ interest in extended co-operation in
the Öresund Region was, at best, half-hearted. Sweden had a strong tradition of centralisation that did not
encourage the delegation of national decision-making power. On its side, Denmark was going through a
decentralisation process, and the project was sometimes perceived as favouring the capital area. Finally,
in 1973, the Swedish and Danish governments signed an agreement on the construction of a permanent link
across the Öresund.
However, over the next 15 years the process was put to a halt. During the 1970s the Danish
government granted the internal links (e.g. the Great Belt), a higher priority over external links (e.g. with
Sweden). In the following years, industrial expansion was interrupted and the economic growth rate
declined due to the oil crises, which put heavy constraints on the Swedish and Danish economies. Various
groups protested against the link invoking the environmental threats and the financing issue. In the 1980s,
the idea of a fixed traffic link grew stronger again under the joint influence of the European Round Table
of Industrialists, the European Commission and the Scandinavian Link consortium.
In the years between 1986-1992, the idea of the Öresund Region as a competitive metropolis was
refuelled. In 1991, the Swedish and Danish governments finally approved and signed an agreement to build
a combined railway and motorway bridge. In June 1999, just a year before the bridge was finished, the two
national governments expressed for the first time their common vision, objectives and priorities for the
development of the Öresund Region in the joint document Öresund – the birth of a region..
The vision of an integrated region
One important goal of the Öresund’s Regionalisation process is to achieve economies of scale
and economies of scope through regional integration. Concerning economies of scale, the integration of the
goods and labour markets, as well as public services (for example, the marketing of the region in order to
attract investments) should lead to increased efficiency and a more diversified and robust economy.
Furthermore, integration should spur competition amongst Swedish and Danish firms, thereby increasing
entrepreneurial activities and the potential for innovation. As regards the economies of scope, a larger
market for firms, universities and other organisations would allow them to specialise, and in doing so
achieve a division of labour, instead of duplicating services, education and research. This specialisation
would increase complementarity between firms and organisations and would ultimately reinforce
interactions and learning processes.
53
Öresund’s demographic and economic characteristics show potential for these scope and scale
economies. From a demographic point of view, it is important to note that significant shares of the
populations of the two countries live in the Öresund Region: the 3.5 million inhabitants of Öresund indeed
represent 25% of the sum of the populations of Denmark and Sweden, while covering just 5% of their
surfaces (Table 2.1.1). As emphasised above this concentration of people and skills gives to the new region
capabilities to face the global city competition in Europe and elsewhere. Accordingly, the economic weight
of the zone parallels its demographic weight: Öresund is right now the most productive (in GDP per capita
or by employment) urban pole of the Baltic zone.
Table 2.1.1.
Population and surface: Öresund, Denmark, Sweden at the end of the 1990s
Öresund Region
Denmark
Sweden
Denmark + Sweden
Öresund in % of Denmark + Sweden
Population
(end of the 1990s)
3 503 679
5 284 000
8 863 000
14 147 000
25%
Surface area
(in km²)
20 866
43 100
410 324
453 424
5%
Density
(number of people/km²)
168
123
22
31
Öresund’s Danish part
% of Denmark
2 383 253
45%
9 839
23%
242
Öresund’s Swedish part
% of Sweden
1 120 426
13%
11 027
3%
102
Source: Öresund Statistics.
The integration process is hoped to strengthen the whole economy in the two sub-regions.
However, special attention should be paid to growth sectors, which are already strong on both sides of the
Sound. Sectors such pharmaceuticals, medical and bio-technology industries, information technologies,
environmental technologies and food processing industries are strategic, and although co-operation is still
limited between the two sides, it presents significant potential for further integration. High tech is however
not the only route for growth (Maskell and Törnqvist, 1999). Öresund has also core competencies in less
high tech industries, which all together accounts for a major share of regional employment. Facilitating
development opportunities in these industries should also be a policy goal (On these points, see the detailed
analysis below in Section 2.3).
The overall vision for the second phase of the project in Öresund is that the area develops into
one of the most integrated and functional border regions in Europe. In this respect, the main areas of
interest are the following: 1) to lower the perception of the border as an impeding factor for interaction in
the region, and further exploit possibilities to carry through integrated transnational solutions; 2) to
promote the Öresund as a common region for inhabitants, firms and educational and research institutions;
and 3) to foster a common solidarity and identity among the region’s population. This identity should also
be acknowledged outside the region and continue to create a force of attraction.
Öresund as an urban region
It cannot be denied that the vision for Öresund has a strong urban emphasis. The Öresund
arguably constitutes an area with a significantly metropolitan character, though the region also comprises
numerous rural municipalities. Both the important demographic size and the high settlement density of the
54
area (the Danish side of Sound shows twice the national density, and the Swedish side five times the
Swedish average density) imply that transborder integration will entail the consolidation of a great
metropolitan area. The main towns in Öresund are Copenhagen, the capital and largest Danish city, and
Malmö, the third largest Swedish city after Stockholm and Gothenburg. With the creation of the Öresund,
the region is able to climb the European urban ladder. While Copenhagen is the 19th largest European city
in terms of urban product development, Öresund holds the 11th place.
The consolidation of the transborder area would enable Öresund to be among the main great
European urban areas in scientific research (while Copenhagen ranks 21st, Öresund would be 5th), and
airport traffic. All this would qualify the area as a sort of “hub”, in a broad sense; not just limited to air
transport but also as a knowledge pole. This means that whereas today large international firms open a
branch in Copenhagen for the Danish market and another in Stockholm for Sweden, in the future, Öresund
could become the single base serving the whole of the Scandinavia, in the same way that the Madrid “hub”
tends today to become the platform of the firms established in the Iberian peninsula (Spain and Portugal).
This tendency would be reinforced if the Femern Belt Bridge project, connecting Oslo to Hamburg via
Öresund, were carried out.
A sustainable region
The declared objective of pursuing sustainable development is one of the distinctive trademarks
of the Öresund Region. One of the main goals for the Öresund Region, stated by the Swedish and Danish
prime ministers, is environmental. Öresund should be one of the cleanest metropolitan regions in Europe.
This thinking derives from the national sensitivity in both countries towards environmental and welfare
aspects, but also reflects a strong local concern, as evidenced by the number of environmentally oriented
organisations and institutions that carry out environmental research and initiatives. This was highlighted in
an image benchmarking analysis, which identified the Öresund Region as an environmental knowledge
centre, compared to other selected European metropoles. The location in Öresund of the European
Environment Agency and the International Institute for Industrial Environmental Economics at the
University of Lund, among other institutions, confirm this point.
Environmental management is also a priority for the two actors responsible for infrastructure and
public transport in the Öresund Region, i.e. the Greater Copenhagen Authority (Hovedstadens
Udviklingsråd, HUR) and the Regional Council of Skåne (Region Skåne). They work together on issues of
“hard” infrastructure and mobility management. Furthermore, there are many environmentally oriented
initiatives taken within the region by officials at various public administrative levels, by key actors in the
private sector, by academics in research institutions and by NGOs, concerned with finding ways of
increasing industrial development and growth while preserving cultural landscapes and developing green
infrastructures (Box 2.1.1).
It is interesting to note that the institutional framework for regional planning is not the same in
the two countries. While in both countries the regional level plays an important part, national actors and the
counties have a much clearer and stronger status in Denmark. The Swedish counties have, to some extent,
the same function as those in Denmark but their competence is not as clear as that of the Danish counties.
That Sweden lacks autonomous regional organisations for spatial and environmental planning also means
that the Swedish municipalities have much greater responsibility that the Danish municipalities, which
share this competence with the councils.
55
Box 2.1.1. Agenda 21, the Environmental Programme and STRING
Agenda 21
Agenda 21, the UN-endorsed global strategy to promote sustainable development, has a special relevance in the
Baltic countries. The 11 countries in the Baltic Sea region and the EU commission have developed a special
Agenda 21 called Baltic 21. The Baltic Sea region is the first region in the world to adopt common goals for
sustainable development. The implementation of the Action Programme is in progress within the sectors of
agriculture, energy, fisheries, forests, industry, tourism, transport and spatial planning, and education since
spring 2000.
As to the local application of Agenda 21, in Sweden more than half of the municipalities in the country have adopted
Agenda 21 and the work is focused on environment, health, democracy and international co-operation. On the Danish
side, all Denmark’s counties and 70% of the municipalities are working on various projects under the auspices of
local Agenda 21 (i.e. sustainable development). There have been discussions between the authorities on both sides of
Öresund, Region Skåne and HUR, about an Agenda 21 specific for the region and these discussions have been taken
up again after the Johannesburg summit.
The Environmental Programme
In 1994, the Danish and Swedish governments agreed to work out a common Environmental Programme for the
Öresund Region with the long-term aim of developing the region into one of the cleanest city-regions of Europe. The
programme, developed between 1996 and 2000, formulates regional environmental quality goals, and aims for
strengthened co-ordination between Denmark and Sweden in environmental matters. The programme is now the
common point of departure for continued co-operation between local and regional authorities in the field of
environment and comprehensive planning.
STRING
The Öresund Region is also involved in a project for sustainable development together with Schleswig-Holstein and
Hamburg. The so-called STRING I (financed by INTERREG II C and STRING II (financed by INTERREG III B)
co-operation (south-western Baltic Sea Trans-Regional Area – Inventing/Implementing New Geography) aims for
strategic co-operation with a long-term perspective towards an integrated region. The project is partly financed by
The Baltic Sea region (BSR) INTERREG III B programme. The aim is to help the STRING area, its business and
public sectors, so that they are better equipped to cope with the future changes in society on a regional, European and
global level. The STRING partners co-operate in business development, learning society, exchange of knowledge,
mobility of people, infrastructure and transport, environment and culture.
Öresund and national regional policies
Danish regional policy
In Denmark, the degree of territorial disparities is among the lowest in Europe and regional
policy is in many aspects different from regional policies conducted in other European countries.
Nonetheless, the situation has not always been like this. Between 1950-1970, regional disparities were
significant, and mainly of an urban-rural nature. The first Regional Policy Act was approved by Parliament
in 1958. But since the 1970s, this picture has changed considerably, as inequality between the regions has
been significantly reduced. Two main events led to this reduction in disparities: 1) the marked decline of
many traditional industries in the richest Copenhagen area and the concurrent growth of manufacturing in
some rural and previously disadvantaged areas; and 2) the equalising effect of the growth in public
56
services, responding to a “Nordic welfare model”. As a result, the core of the pre-existing regional policy
instruments was dismantled in 1991, as the government turned its attention to what it considered to be the
prominent territorial issue affecting the entire country: unemployment. The classification of regions
needing support was maintained, but the automatic regional mechanisms of aid were removed. Instead, a
system of ad hoc interventions was put in place, encouraging foreign investment and new enterprise
creation.
The Danish regional policy continued along these new lines, by linking economic development to
local assets rather than increasing transfers from the central government. In 1995, the Danish Ministry of
Trade and Industry set the primary objective of regional policy to improve the framework conditions of
regions so that enterprises could develop (rather than trying to make all regions “equal”). The specific
strengths of each region needed thus to be identified. This task was initially done for the
Greater Copenhagen Area, part of the Öresund Region. Other reviews have been achieved recently (In this
context, areas experiencing large industrial closures have benefited, since 1996, from funding for new local
initiatives and technical services for economic development).
In September 2001, the “Regional Industrial Development Policy” White Paper, which assessed
the regional development and growth distribution in Denmark, introduced another explicit goal in the
strategy: regional balance. The report singles out Bornholm and Lolland among the special action areas,
but does not touch on the issue of how growth-promoting initiatives can or should be balanced within the
Öresund Region.
In fact, essential parts of Danish regional policy are determined by the European Union and the
various structural funds. The Danish (more rural) areas of Storstrøm and Bornholm within the Öresund
Region are classified as Objective 2, and the many cross-border initiatives across Öresund have been and
are supported by the INTERREG programme.
Swedish regional policy
Swedish regional policy has traditionally enjoyed a much more prominent role. This is due to the
bigger dimension of regional disparities experienced in Sweden. The roots of regional disparities cannot be
attributed only to the general economic situation, but also to the handicaps of the Swedish peripheral
regions, the crisis of industrial reconversion in some areas and the relative decline (in term of GDP per
capita) of the Stockholm region, the richest region in the country.
Regional policy in Sweden, in place since the 1960s, has traditionally placed its greatest
emphasis on the northern counties, where the main regional challenges result from a combination of
peripherality, population decline and unemployment. Further south, regional challenges have been more
localised and connected with structural change in the manufacturing industry. During the late 1970s
and 1980s, industrial restructuring brought high levels of unemployment to many parts of southern Sweden
for the first time. Accordingly, the policy emphasis shifted towards larger areas of the country. Therefore,
the objective was not simply “making converge” the Northern regions but also more generally ensuring
regional equality in the whole of the country. The idea was that everybody should have access to
employment opportunities, community services and a healthy environment no matter where they lived. The
expansion of the public sector was instrumental to this notion of regional balance when this sector was
growing, although it was ultimately to become part of the problem when the public sector began to
diminish in size.
In line with the new approach, in 1998, the Swedish Government introduced a new regional
industrial policy. At the same time, Regional Growth Agreements (RGAs) were introduced to facilitate the
57
implementation of the new policy. Through the RGAs the government intends both to achieve greater
integration between policy areas and to adopt a regional outlook on the use of the sector-specific public
support that regions already receive. In addition, the Government encourages integration between RGAs
and future EU Structural Fund Programmes in order to achieve better leverage on financial resources and
co-ordination between policies. The first generation of the countywide growth agreements displayed a
focus on economic growth in the private sector including support for both current and embryonic clusters.
The aim of the new policy is to stimulate sustainable economic development by encouraging enterprise
creation and business development. The county administrative boards and regional councils are responsible
for pursuing and co-ordinating the agreements. No additional financial resources have been provided for
the purpose, as the intention was rather to better co-ordinate the use of the already existing resources
within industrial, regional and labour market policy. RGA are currently being replaced by RGP: Regional
growth programmes, so as to make the policy more proactive and to increase the focus on achievements.
The RGP will enter into force on 1 January 2004. In December 2001, the name of the policy area was
changed: regional policy was replaced by regional development policy, as a symbol of the shift from a
regional cohesion focus to an economic growth focus
In this sense, Öresund is a valuable example of the new trend in regional polices towards placebased approaches and in particular towards investment in development projects by local actors. The
Öresund project is compatible with the general regional policy framework in the two countries and notably
with the Danish strategy of creating a competitive urban pole in northern Europe, and with the Swedish
strategy of promoting a southern gateway to continental Europe.
Öresund in both regional policies
The Öresund project does not in fact occupy an especially prominent position in Swedish and
Danish regional policy. Rather, the development of the Öresund Region is a regional project, indirectly
supported by the national regional policy. This is in line with the general trend followed by the majority of
industrialised countries, which are limiting their direct involvement in regional development, and are
focusing instead on indirect strategic actions such as aiming to improve regional framework conditions
(transport infrastructures, education infrastructures, etc.). Indeed, government agencies in charge of
regional policy today are putting forth fewer budgetary means but are able to exercise more influence over
other government agencies, in particular those in charge of infrastructure investments. Another important
means of regional intervention lies in tax equalisation between local governments. This instrument is not
usually classified in the category of regional policy tool and is not implemented by the national agencies in
charge of regional policies. Nonetheless, tax equalisation often constitutes the first direct instrument of
interregional re-balancing put in place by national governments.
This evolution is apparent in Swedish and Danish regional policies applied to the Öresund
project; Öresund is not formally registered in a traditional scheme of regional policy (Box 2.1.2). It is a
focus of the regional strategies of the two countries and is the object of support through external and
specialised programmes such as INTERREG.20 The decisions made in reference to Öresund do not answer
to a formal plan conceived and put in place by ad hoc public agencies, but are rather the result of
sometimes informal co-ordination, between ministries involved in the Öresund strategy. This support was
acknowledged in strategic documents such as the aforementioned “Öresund: a region is born” (1999), a
report co-written by the Danish and Swedish governments.
20.
The Nordic Council supports cross-border development although in a very modest way.
58
Box 2.1.2. Institutional background
Denmark and Sweden are considered Unitary states with the central, regional (county) and the local as the three levels
of government, but unlike many other Unitarian countries, where all power stems from the central government, power
and reputation of the local level are strongly rooted in Nordic societies. In Denmark and Sweden, the local
governments provide a wide range of public services to the citizenry. To fund these services, a number of local taxes
are raised at the local level, making both countries among the most decentralised of OECD members. However, the
sheer difference in geographical size (Swedish municipalities being much larger than the Danish counterparts) entails
distinctly different institutional architectures. Whereas constitutionally Denmark is a Unitarian state, Swedish
municipalities have constitutionally protected rights and prerogatives. Sweden has also placed legal constraints on the
right to set tax rates, unlike Denmark. Furthermore, although in Denmark the different levels of government have
remained unchanged in the last decades, the regionalisation movement has started to change the institutional balance
in Sweden.
At a subnational level, both countries have a similar, devolved structure of governance. In Denmark, the municipal
authorities, other than the metropolitan areas of Copenhagen and Frederiksberg, consist of 14 county councils and
275 city or district councils. In Sweden, there are two types of local government bodies in Sweden, with the
municipality, kommun, as the local unit and the county council, landsting, (in some cases called a “region”) as the
regional unit. The number of municipalities (which cover the entire territory of Sweden) is 289. There are 18 county
councils, four (experimental) regions and the municipality of Gotland.
The two recently founded bodies Greater Copenhagen Authority (HUR) and Region Skåne,21 whose purpose is to
structure the governance of the metropolitan areas of Copenhagen and Skåne, are the main regional players in the
regionalisation process of Öresund. On the one hand, the HUR council consists of 11 regional politicians who are
nominated by the Copenhagen, Frederiksborg, and Roskilde counties, as well as by the Copenhagen and
Frederiksberg city councils. These five units provide capital for the HUR council’s activities, and these five county
mayors are ex-officio members. The Greater Copenhagen Authority co-ordinates public transport, regional plans,
Öresund collaboration, industrial policy and plans for tourism and cultural life. On the other hand, 149 members in
the regional council govern Region Skåne. Region Skåne’s role in regional development is to initiate and support
projects as well as to act as a co-ordinating and driving force for the organisations, companies, local and state
authorities and individuals who work with regional development issues.
The Öresund Committee (established 1992) is a political cross-border cooperation of local and regional authorities on
both sides of Öresund. The two governments have an observatory role. The Committee consists of 32 political
representatives. The goal is to enhance the integrated development of the region and the cross-border cooperation on
all levels. The Öresund Committee functions as a political platform, a meeting place, catalyst and network builder.
The Committee is financed by the members and also hosts the secretariat for the EU Interreg IIIA programme
Denmark
The Öresund project is coherent with the Danish regional policies that affect both the capital
region and the rest of the Danish part of Öresund. In effect, given that Greater Copenhagen is the
administrative centre of Denmark, the Öresund Regional strategy is thus partly agreed upon by the Danish
government, following a growth pole logic: revitalising the national capital will improve Denmark’s
overall competitiveness. In the Danish political debate, scale economics have been the central aspect. On
the other hand, as to the more peripheral parts of Öresund, the Öresund project does not contradict the
policies dictated by the European Union. The two Öresund counties of Sorstrom and Bornholm, as
21.
The HUR was founded by an Act of Parliament in the autumn of 1999 and launched its activities on
1 July 2000, and Region Skåne became the new regional organisation responsible for issues concerning the
future of Skåne as of 1 January 1999.
59
Objective 2 areas, do receive structural funds. At the same time, one of the Öresund objectives for the
Danish government lies in supporting a re-balancing of the development in the counties of the periphery of
Copenhagen. Notably, the residential function of the peripheral cantons of Öresund constitutes a
development factor.
Sweden
In the case of Sweden, the declared objectives of its regional policy do not appear to depart from
those of the Öresund regionalisation process. Skåne, a rural and agricultural region also suffering from a
strong industrial reconversion crisis, is not targeted by the Swedish regional policy. At the same time,
development objectives pursued by the Öresund project will definitely encourage growth in Skåne.
Additionally the decision to create the Skåne Region has benefited the Öresund project in
different ways. The creation of the new Skåne Region defined by the 1999 merger of two counties (Malmö
and Kristianstad) resulted in a single interlocutor on the Swedish side in the Öresund project. Thus
consolidating the role of the Swedish part in Öresund matters. Skåne today has the responsibilities of
Swedish counties, which are weaker than the Danish counties. But it also holds special competencies,
reserved exceptionally for Skåne and three other counties, in the fields of industry, culture, road and
railway infrastructure, that grants greater autonomy to the policies followed by the area. Furthermore, the
creation of the Skåne Län reinforce its connections with its geographical neighbours. This coincides with
the interest of the Swedish government in supporting Öresund in order to foster Swedish firms links with
EU markets and businesses.
EU cross-border policy initiatives for the Öresund Region
Cross-border integration initiatives are increasingly being pursued all across Europe. The reason
for this interest can be found in the need to respond to the challenges posed by growing regional
interdependence. It is frequently argued that increasing levels of interdependence generate added
“demand” for international co-operation mechanisms (Hurrell, 1995). There are international policy
externalities that require collective management as well as increasing incentives to reduce transaction
costs, facilitate intra-regional linkages and enhance territorial cohesion. As a consequence, the EU has
gradually increased its support to cross-border mechanisms of co-operation in areas contiguous to its
internal and external borders, the main instrument being the INTERREG initiative (Box 2.1.3). Indeed,
there are now hardly any border areas inside the EU in which public authorities are not involved in some
kind of co-operative initiative with their counterparts.
Box 2.1.3. INTERREG
INTERREG (International Regions) is one of the four EU initiatives in force under the Structural Funds intended to
promote social and economic cohesion. All EU Community initiatives address social and economic issues of general
interest for all EU members, while complementing other development measures promoted by the Structural Funds.
One important aim of the INTERREG initiative is to improve the co-ordination at national, regional and local levels
to achieve sustainable and balanced development within cross-border regions (CBR) or transnational entities. The
strong interest and support given by the EU to INTERREG is clearly evidenced by the fact that it has the largest
budget among the four community initiatives and the largest increase in budget in recent years, even though it still
represents a small share of structural funds as a whole.
60
Box 2.1.3. INTERREG (cont.)
INTERREG III builds on the experience of the two previous INTERREG. The guiding principles behind this
third initiative is that national borders should not represent a barrier to the harmonious development of Europe. To
this end, three different types of co-operation are supported: cross-border co-operation, that is co-operation between
region that have a common border, directly neighbouring on each other (through INTERREG III A); transnational
co-operation, contributing to an integrated and harmonious territory across the European Union (through
INTEREG III B; and interregional co-operation, which by the same token aims to improve the policies and
techniques of interregional economic development (through INTERREG III C).
The Öresund Region has its own INTERREG III A programme. Furthermore parts of the region have possibilities of
joining INTERREG III B and INTERREG III C in concrete projects.
One of the cross border regions (CBR) that received a lot of attention from the European Union is
precisely the Öresund Region. The EU Territorial Employment Pact for Öresund, a collaborative initiative
between Denmark and Sweden was used by the Commission as a “model” for integration in 1997. The
region could play this role not only because of its demographic, economic and political weight within
Europe, but overall because of its capacity to serve as an authentic laboratory and accelerator of European
integration.
INTERREG has thus mobilised funding and energy in the Öresund area. Both countries have
actively supported its implementation since 1996, when INTERREG funding was first attributed to the
region. The first INTERREG phase (INTERREG II A) lasted from 1996 to 2001, amounting to
EUR 29 million (with EUR 13.5 million provided by the Commission, EUR 13.5 million from public funds
from the region itself and EUR 2 million from private sources), in the geographical area comprising the
Greater Copenhagen area and Skåne.22 Within this framework, initiatives related to business and trade as
well as tourism have received the greatest amount of financial resources to date.
A number of comments can be made on this programme. First the total INTERREG II A
investment was low and significantly below similar INTERREG investments realised in other cross-border
urban regions in Europe during the same period, e.g. in Euroregion Rhin-Meuse (Netherlands/ Belgium/
Germany),
Nord/Pas de Calais/Kent
(France/UK),
Trirhena
(France/Germany/Switzerland),
Germany/Austria or Europole (Belgium/France/Luxembourg). Second the INTERREG II A supported
programmes in the Öresund pursued a vast number of objectives including regional competencies, business
development and tourism, research and education, infrastructure and planning, culture and media, SME
support. While all these goals are consistent with the INTERREG policy, the focus was clearer in many
other European initiatives. For example, branding the region and promoting tourism captured nearly half of
the funds for Pas de Calais/Kent. Urban governance was dominant for the Europole (36% of the funds),
while Euroregion Rhin/Meuse spent nearly 30% of its INTERREG II allocation to technology development
22.
In this respect, it should be mentioned however that other European initiatives have also benefited the
Öresund Region. For example, Objective 5(b) – Development and Structural Change in Rural Areas – and
Objective 2 – Regeneration of Regions Affected or Threatened by Industrial Decline – Structural Funds
dealt with Bornholm and Storstrøm. The Bornholm-Skåne area and the Storstrøm-Northern Germany area
were covered by INTERREG II A as part of the Öresund programme. The Urban programme has focused
on some parts of the city of Malmö; SME/SMV (Bornholm County and parts of Strorstrom County);
LEADER II (Bornholm County), and INTERREG II C – Baltic Sea (all the Öresund Region). In addition at
the time the INTERREG II A was running, Bornholm which was not part of the Öresund Region was
benefiting from a specific INTERREG II A (1996-2001).
61
and innovation. Third, projects did not attract much business sector money. The private sector pecuniary
participation was marginal in INTERREG II and even disappeared for INTERREG III.
This is not to say that INTERREG II A did not have positive results. In fact in a number of areas,
the programme was successful, particularly in fostering the growth of common educational, scientific and
entrepreneurial projects, and overall in strengthening the area’s identity as a common region. An example
of particular importance is the “Medicon Valley” project that incorporates three INTERREG-supported
projects focused on improving medical and pharmaceutical technologies (see also Section 2.3 on
competitiveness enhancing policies). INTERREG has also been highly instrumental in creating
institutional added-value (co-operation among territorial authorities and bodies and social partners), as well
as socio-cultural added value (exchanges of information and know-how in regions). An important
consideration is that the EU involvement in the Öresund Region has served as a catalyst to promote new
private and public initiatives. In addition to providing access to additional financial resources, enjoying
INTERREG status has had a symbolic effect, i.e. giving a high visibility to the Öresund Region as a “a
region in the making”. INTERREG II was also of great help for establishing the IT infrastructure necessary
for business co-operation and more generally for accelerating the advent of the “information society”, a
decisive vehicle for enhancing bi-national collaboration and integration in the region.
With the start of INTERREG III A Öresund (2000-2006), the programme’s focus has changed to
a certain extent. Presently, it is endowed with a budget of EUR 61.8 million, which is equally co-financed
by the EU Commission and by the Danish and Swedish governments. Apart from doubling the budget, the
geographical area of the operation has expanded to include the entire Öresund Region. Funded projects are
larger in size, more cross-sectoral and achieve greater involvement on the part of local, volunteer and
private organisations. Project definition also places increased importance on environmental considerations.
Due to harmonisation procedures on the two sides of the strait, the launch of a first round of assisted
projects was slow to materialise. Presently, 25 of them are ongoing. They were selected according to their
functional, institutional and identity making capabilities. Flagship projects target industrial platforms,
tourism and media.
Assessing the degree of integration
Another way to assess the INTERREG programme and in fact the whole cross-border strategy
implemented is to measure the degree of integration achieved so far between the Danish and the Swedish
part of Öresund. Providing an objective and neutral evaluation of what has been arrived at is not however
an easy task. The many assessments and statements produced by a diversity of actors and institutions on
the advancement of the integration process are to a great extent political, both in their origin and goals.
Furthermore despite an intended joint analytical approach to the barrier problems, opinions often vary in
Denmark and Sweden as to the origin and nature of the problems and their solutions. This is underscored,
at times, by pointed exchanges between the two governments. Correspondingly, diverging opinions and
priorities in Denmark and Sweden emerge on the local and regional levels. This not only reflects
differences in political culture, but also in ambition levels and perspectives.
Among the various indexes and ratings which try to determine the degree of integration in
Öresund, the measurement elaborated by the Öresund Chamber of Commerce is probably one of the most
reliable and complete. Four variables are used to define the index: labour market, traffic, business costs and
trade and co-operation. The methodological approach has been to compare observed data within Öresund
with a theoretical benchmark for a fully integrated area in a national context without cross-border barriers.
A score of 100 would correspond to a situation where both Skåne and Zealand have equally high
integration with each other as they have with Stockholm and Funen/Jutland respectively.
62
Figure 2.1.1. Integration index for Öresund, 2001-2002
2001
2002
90
80
70
60
50
40
30
20
10
0
Öresund
index total
Labour
market
Traffic
Trade and cooperation
Business
costs
Source: Öresund Industri og Handelskammer: “Erhvervslivets Öresundsindeks” (May 2002).
According to this index, the degree of integration in Öresund was 57 on a scale from 0 to 100
in 2002. The improvement from the 2001 integration index score (which was just 53), and that of 2002, is
due to the increased efforts in improving traffic patterns, trade and co-operation. Despite this improvement,
labour market integration remains the biggest challenge, being estimated at about one-third of its full
potential (see Figure 2.1.1). Explanations advance that this may be due to the relatively low number of
workers living on the other side of the sound in 2000 compared to the assessed benchmark for a fully
integrated region. The business costs index, which expresses to what extent they are converging on both
sides of the Sound, has the highest score (83), meaning that the cost differences are relatively low. The
Öresund Chamber of Commerce has also calculated integrated indexes for the two sub-regions. Its
comparison shows that the Swedish part (58 in 2002) is moving closer to a full integration than is the
Danish part (55). This is due mainly to the fact that there is a relatively higher share of Swedes working on
the Danish side than the other way around.
Another interesting index is the Öresund Barometer (Öresundsbarometern), which analyses the
economic outlook for Skåne and the Greater Copenhagen area. Since 1998, 500 companies on each side of
the sound are asked about their views on the economic outlook for the region and on certain specific
sectors. The Barometer is published by one of the larger banks in Sweden, the Svenska Enskilda
Bank (SEB) in co-operation with a Danish financial magazine and Region Skåne. Although the economic
prospects are similar for both sides of the sound, the barometer points to the slow integration process.
63
Conclusions
Öresund is one of the most advanced cross-border regions in Europe but more progress remains
to be achieved to further the integration process. Öresund faces the challenge of balancing a metropolitan
focus and sustainable development. Although it has obtained political and financial support through
Danish, Swedish and European regional policies, the overall strategy for Öresund could be improved
through the further co-ordination of these policies in order to exploit existing territorial capital. To this
purpose, the following three areas will be critical.
1. Infrastructure. The most significant investment is undoubtedly the building of the
Öresund Bridge. However, the construction of the fixed link between Copenhagen and
Malmö does not imply the end to infrastructure planning for a deeper integration.
2. Labour market. Until recently, the Danish and Swedish areas of the Öresund Region have
largely functioned as two distinct labour markets. The main challenge in this area appears to
be the lack of transparency, especially concerning taxes and social contributions and benefits,
which seems to negatively influence the movement of labour across the border.
3. Networking and knowledge diffusion. Knowledge-intensive activities, including the medical
and pharmaceutical industries and certain segments of information and communications
technology industries, appear as a promising factor for greater integration, although some
important gaps remain evident.
The analysis of these specific sectors will help identify the areas in need of additional targeted
policies to eliminate or reduce a number of barriers.
2.2. Physical capital: infrastructure and the fixed link
Infrastructure is one of the core elements in the successful integration of the Öresund Region.
Since the agreement between Denmark and Sweden regarding the cross-border region entered into effect
in 1991, more than EUR 8 500 million have been invested in improving the transport infrastructure, with
the overall emphasis on public transport (see above Table 1.5). Thus, several major investments to create a
cohesive transport network in the region have been undertaken (i.e. the Copenhagen Metro, the
City Tunnel in Malmö, and the expansion of the central train station and airport in the Danish capital, as
well as the Ørestad Development Plan. Most importantly, the Öresund Bridge should increase mobility, by
removing the physical barriers with respect to living and working in the various parts of the region
(Box 2.2.1). Not only does the Bridge seek to facilitate interaction between the two regions, more
importantly it has come to symbolise both countries’ commitment to increase sustainable growth in the
cross-border region, with a long-term view of transforming Öresund into the most integrated urban region
in Europe. It should continue to have a fundamental role in enhancing connectivity between the
two countries, particularly in terms of spatial redistribution on the two sides of the Strait. Moreover, the
symbolic quality or “monument” effect of the Bridge is likely to have an impact on the region’s image and
create new opportunities for the development of leisure and business tourism.
64
Box 2.2.1. The Öresund Bridge
The “Öresundsbroen” fixed link is the longest cable-stayed bridge for either road or railway in the world
(approximately 17 km). It consists of an elevated bridge, two connecting bridges and a tunnel. The two-floor
superstructure is constructed of steel and concrete. A steel lattice supports the upper concrete level of the motorway
and the lower level of the railroad. The railway runs through a concrete channel on the connecting bridges and on a
steel level on the cable-stayed bridge. The Bridge was opened in July 2000 after a construction period of
approximately four years. Every 20 minutes, a train crosses the Sound connecting Copenhagen, Copenhagen Airport
and Malmö and other major city areas in each direction. With the fixed connection between Copenhagen and Malmö,
it takes less than 40 minutes to travel from the centre of Copenhagen to the centre of Malmö by train and by car.
The Bridge is managed by the bi-national Öresund Bridge Consortium, which was established by agreement between
the Danish and Swedish governments. According to this agreement, it has the right to charge for the use of the
Bridge, and the proceeds are to cover the cost of operations as well as interest payments and repayment of the loan
taken to finance the construction of both the coast-to-coast link and shore installations on either side of the Sound.
Each country vouched for 50% of the Öresund Bridge Consortium and ownership is based on each of the two national
companies, A/S Öresund and SVEDAB, investing DKK 25 million in the Öresund Bridge Consortium. The Öresund
Bridge Consortium now runs the link between Denmark and Sweden, while A/S Öresund and the Swedish-Danish
Bridge Connection Company, SVEDAB AB, are respectively owned by the Danish and Swedish States and
responsible for running the respective shore installations in Denmark and Sweden.
The consequences of the bridge’s opening
In order to understand the relevance of the construction of the Öresund Bridge and of its related
infrastructure for the growth and integration of the region, it is useful to undertake a two-fold analysis.
First, the actual positive effects achieved since the opening of the Bridge will be discussed. Second, the
following section will consider the discrepancy between ex ante expectations and ex post evaluations while
highlighting the challenges that are likely to have an important place in the local and national political
agenda in the coming years.
The main effects
1) Accessibility. A widely shared positive evaluation of the impact of infrastructure concerns the
greater accessibility and interaction among the various parts of the region made possible by the
construction of the Öresund Bridge. Today, with the fixed connection between Copenhagen and Malmö, it
takes less than 40 minutes to travel from the centre of Copenhagen to centre of Malmö by train, which is
equivalent to the travel time by car. As a result, 34% more people crossed the Öresund Strait between
November 1999 and November 2000 with train traffic being 35% higher than expected. From the Malmö
point of view, the Bridge is an opportunity to absorb its considerable industrial unemployment through
access to the wide Copenhagen labour market. Moreover, for Skåne, the inclusion into a wider integrated
area has been viewed as an opportunity to gain a new identity and autonomy from the distant Stockholm.
The resulting increased accessibility has reduced, in smaller cities such as Kristianstad and even Ystad, the
perception of being marginal cities. The city of Malmö has seized the opportunity to revise its
transportation network, with the construction of the tunnel leading downtown, revealing its development
strategy aimed to renew and restructure the urban core and avoid excessive urban sprawl. On the Danish
side of the Strait, Copenhagen has looked at the opportunity offered by the Bridge to expand the catchment
area of its production system, universities and services. The plan to integrate the railway line with the new
metro responds to this favourable scenario. An aspect less stressed and also important is the possibility that
65
the Bridge might increase accessibility to further removed areas. The conclusion that may be drawn by this
evaluation is that at present increased accessibility concerns mainly the areas within the Öresund Region.
2) Competitiveness. A fundamental question is posed, regarding the extent to which increased
accessibility within the region has determined substantial enhancement of the area’s overall attractiveness
and competitiveness. To this extent, three territorial levels of analysis should be considered: the local
(including regional) level, the national level and the European level. At each level, the effects are different
and more importantly, the reactions of stakeholders are quite diverse.
−
At the regional level (Öresund), the new infrastructural links – in addition to the Bridge –
have framed a new internal network of mobility and communication which has increased
interactions among people, firms and institutions. The intensified interactions increase the
“value” of internal interdependence as a factor of robustness of the local economy and society
in terms of competitiveness and attractiveness. The main feature of this evaluation is
identifiable in the strengthening of the two main poles, Copenhagen and Malmö, but that
growth has also affected a multiplicity of areas within the region. Thus, on both sides of the
Strait, the spatial “continuity” between cores and hinterlands causes fewer problems today
than in the past. Especially in West Zealand, the closer ring appears to be better integrated
with Copenhagen, due to an improvement in services and living conditions. Integration
decreases slightly in the outer ring of the metropolitan area although HUR – the Greater
Copenhagen Authority – is playing a relevant role. On the Swedish side, Skåne’s traditional,
regional identity differs from those areas, which gravitate more intensively towards Malmö
and Copenhagen, and the more distant areas, which appear to be marginal in the Öresund
integration process. Despite this appearance, they have benefited from the region’s general
growth and can interact directly with northern Germany. In general, the greater
competitiveness of the region has not resulted in a flattening homogenisation of the area. On
the contrary, through the diversification of the emerging opportunities, growth has enhanced
the region’s rich potential, allowing for greater dynamism than that previously allowed by the
more rigid gravitation towards Copenhagen and to a lesser extent, Malmö.
−
The competitive role of the Öresund Region is also modifying its relative position within the
two countries. This is a relatively minor problem for Denmark, where Copenhagen’s leading
role increased as a national capital and as a main attraction pole in the Öresund Region. On
the contrary in Sweden, the growth of the Öresund Region will inevitably create a more
significant impact. In particular, Stockolm and Göteborg have perceived the importance of
the Öresund growth and are reacting to its increased competitiveness with a mix of
satisfaction and fear. On one side, the reinforcement of Malmö and Skåne has caused a new
development area in Sweden, speeding up the overall country output. On the other side, the
acceleration of growth in Southern Sweden has upset the traditional political agreement on
regional policy in the country. In fact, due to its marginality, the North had always been
strongly privileged in the allocation of “regional” subsidies, as the central part of Sweden
(along the Stockholm-Göteborg axis) was self-sufficient and the South, despite the industrial
decline in Malmö, had always been considered already “developed” and was not considered
worthy of particular intervention. The opportunity represented by the growth of the
Öresund Region has modified this attitude. The political orientation towards favouring
equality rather than supporting dynamism is slowly reversing and a greater attention is being
paid to the Southern part of Sweden, also because it has become a stronger link toward the
rest of Europe.
66
−
The third territorial level of competitiveness, which is indirectly enhanced by the new
infrastructural investments in the Öresund Region, takes place on an international scale. The
fact that Copenhagen and Malmö are starting to be considered a joint global hub and have
climbed in the European hierarchy of metropolitan areas is indeed playing a significant role
in the competitive growth of the region. The most meaningful factor of such increase in
competitiveness is the international integration process underway, which is unique in Europe.
The two sides of the Strait are slowly “learning to network” different factors and competitive
advantages of the economic and social life. Unlike other linking infrastructure (such as the
Tago Bridge in Lisbon or the future bridge on the Strait of Messin), which are “internal”
infrastructure projects, the shock of adjustment processes aimed to co-ordinate and integrate
different national systems is pushing territorial competitiveness at a high speed. Comparable
experiences are the Channel Tunnel between France and Great Britain, and the new highway
system planned between Wien, Prague and Budapest. But the cultural differences of the
countries involved by these links are much more deeply rooted than those between Denmark
and Sweden. The consolidation of such cross-border integration within the Öresund Region
will have to go hand in hand with the development of infrastructure that allow adequate
external interrelations. The most recent and relevant studies on regional growth and
competitiveness have ascertained the need for a region that wants to undertake a stable
growth path, to assume this perspective. If not, increased internal integration may bring to a
sort of suffocation (“asphyxia”) of the local context without any positive implication on the
competitiveness – and hence sustainability – of the growth process.
3) Urban Development. Other important achievements brought about by the Bridge are the two
main urban developments underway in Copenhagen and Malmö. These developments are the result of a
dynamic interdependence between transport and other territorial policies. The increased accessibility to
both cities has promoted urban developments and restructuring which in turn will enhance new traffic
flows. Located south of the old city centre of Copenhagen, Ørestad is an area of 310 hectares, divided into
six districts, which should be completed in 30 years. In order to fully exploit the improved accessibility
offered by the Bridge, the Kastrup Airport and new metro line, the Ørestad Development Corporation
directs the planning process and is based on a partnership between the Copenhagen Municipality and the
Danish State. Infrastructure is financed by capitalising on higher land values in the area generated by
development. Presently, the first district is under construction; it will host the new university, two IT
growth centres and the Danish Broadcasting Corporation. The overall plan of Ørestad envisages a good
integrated mix of residences (20%), businesses (60%) and other activities such as retail, culture, education,
sport, services and leisure facilities (20%). The environment and the quality of life are important factors
and are thus reflected by the characteristics of the new high-tech metro, the opening of which is scheduled
for October 2002. On the other side of the Strait, the Malmö Comprehensive Plan (adopted in
December 2000) is a partnership with Lund, other municipalities and the Skåne Region. It seeks to take
advantage of the fixed link to restructure the whole city. Therefore, the plan envisages the transformation
of the inner city, new industrial areas, the reinforcement of higher education, a renaissance of the cultural
sector as well as environmental considerations. In addition, an improved public transportation system will
be achieved through the construction of a new railway City Tunnel connecting Malmö Central Station with
the Öresund Bridge and should help to reduce car usage. The long-term strategic plan aims at providing
around 1 500 new homes and 1 500 jobs annually during the period covered by the plan.
4) Trans-border Trade. The new role of the Kastrup Airport in Copenhagen and ports of
Copenhagen-Malmö and Helsingborg as gateways to Öresund has positively affected trans-border trade.
Due to this increased accessibility, industrial firms have a greater and varied possibility of importing and
67
exporting intermediate and final goods.23 The recent formation of the Copenhagen-Malmö Port (CMP), has
created new prospects that could strengthen intermodal co-operation and logistics in the region and
facilitates freight traffic. Accordingly, freight traffic is shifting towards maritime transport. Economies of
scale, rationalisation and the specialisation of the two ports (Copenhagen for passengers and containers,
Malmö for logistics, liquid and coal transport) have resulted in a complementarity that offers new
competitive services. Thus, the CMP is acquiring a growing share of the maritime transport market and
competes with the Port of Göteborg as well as other ports of the Baltic Sea. Long distance freight traffic
between Sweden and Central Europe also partially bypasses the Öresund Bridge and thus, reinforces the
direct link between Trelleborg and Northern Germany. Furthermore, Öresund’s location attractiveness has
improved and seems to have taken the form of acquisitions rather than greenfield investments.
5) Tourism. Tourism also directly benefits from the Bridge, but the figures are much more
difficult to ascertain. For non-specified reasons of “holidays” (it is unclear from where people come and
the duration of their stay), the share of travelling accounted for by road and by train is 18% and 10%
respectively. It would be interesting to monitor how many tourists come from medium or long distances to
the Öresund Region in order to visit the Bridge. In terms of the economic impact, regarding local
expenditure, it is estimated that a non-local tourist may spend on average as much as an additional EUR 70
to EUR 80 when purposely visiting a new destination. Assuming that such tourists travel by car, after
appropriate calculations, it may be estimated that direct and indirect tourism expenditure in the
Öresund Region may have varied in 2001 between EUR 130 and EUR 150 million. In addition to the
tourism industry, other rich cultural activities in the area may also benefit from this expenditure.
Conflicting issues and policy challenges
There is a gap between the ex ante and the ex post evaluation of the direct and indirect effects
generated in the Öresund Region by the Bridge and its related infrastructure. The time elapsed since the
opening of the Bridge, is still insufficient to allow for a full appreciation of the consequences. This sort of
evaluation requires a longer period, especially taking into consideration behaviours that imply a change of
habits and mentality. Nevertheless, it is still possible to outline the main discrepancies between ex ante
expectations and ex post occurrences and therefore, highlight a set of key issues that need to be addressed
in order to fully exploit the new infrastructure and remove obstacles to the sound development of the
Öresund Region.
Traffic across the Bridge and toll schemes
Although not precisely quantifiable, the changes in traffic across the Bridge (where there were
initially high expectations) have been below expectations.24 The Bridge is far from being congested and
still bears wide margins for increases in traffic for both passengers and freight. The most common
explanation attributes this discrepancy to the negative business cycle and the increase of oil prices.
However, another explanation ascribes it to the planning of the Bridge because it was not originally
conceived as a part of a wider mobility network. In effect, the need for additional infrastructure investment
(Copenhagen metro, City Tunnel in Malmö, etc.) emerged in subsequent stages so that the network
externalities that could have arisen are not being fully exploited. Likewise, there seems to have been an
inadequate pre-evaluation of the Bridge’s effects at the intermediate (regional) level, particularly with
23.
However, the bridge is utilised less than expected by lorries and buses going to Germany. In this respect, it
is not likely to become the preferred mode of transport from Scandinavia to Germany, given that the rest
requirements for drivers make the continued utilisation of the ferry more desirable.
24.
For updated information on traffic across the bridge see www.oeresundsbron.com.
68
respect to Skåne and the Copenhagen hinterland. Regarding obstacles to the greater utilisation of the
Bridge, one of the main arguments concerns the toll of the crossing,25 which as already mentioned was
established as a prerequisite for the construction of the Bridge.26 It is rather likely that the toll scheme had
not been correctly simulated and this has caused some unexpected diversion of traffic. In this respect there
have been calls for lower prices. The Swedish government has manifested its willingness to lower bridge
tolls, taking into account the fact that the present policy has probably impeded a more rapid and consistent
development of a common market of goods and services.27 In this last respect, it is often mentioned that
cross-border shopping trips have not grown as initially expected. Likewise, surveys of companies in the
Öresund Region reveal that the price for crossing on the Öresund Bridge is considered a highly important
factor in fostering greater integration in the region. Denmark has reaffirmed its commitment to the national
traffic policy currently in place. The terms of the agreement between the two countries included the
prevention of unnecessary distortion of the region’s traffic balance, resulting from the expanded
infrastructure. Thus, previously existing transportation measures – such as the ferry – are protected from
competition from other transport means. In effect, the agreement stipulates that the tolls must take into
consideration environmental concerns, rail traffic and prices on the Helsingborg-Elsingør ferry.28 In this
context, an important alternative proposal currently being analysed concerns the possibility of making the
toll cost deductible from personal income tax declarations. Moreover, the lower than expected usage of the
Bridge may have a significant impact on the financing of its construction. The prognoses seem to have
been surpassed by actual performance. The original calculations estimated that repayment would be made
over a 30-year period; however, with the current amount of passengers, repayment will occur over a
60-year period. Some analysts have argued that this variance might even create a “poverty trap” that will
make it impossible for the Bridge to be self-financed, therefore, necessitating financial support from public
funds.
New infrastructure projects
Although they have yet to emerge, another category of effects, concerning the previously
discussed infrastructure projects and others under construction, should be taken into account to avoid
undesirable or uncontrolled impacts. The projects with regard to the tunnel between Helsingborg and
Helsingør and the possible future construction of a long distance high-speed train connection between
Göteborg and Helsingborg are relevant. The combination of the two projects, if implemented, might cause
a by-pass of the Öresund Bridge and reduce it to a mere local function, diverting consistent flows of traffic
and reducing the new “centrality” achieved by the Öresund Region. Although this may be advantageous to
other areas, negative effects could occur to the threshold economies currently reached by the
Öresund Region and to the financial equilibrium of the Bridge. For the future and in order to enhance the
25.
In order to foster the bridge’s use, there are three different toll prices that have been put in place to make
the crossing more economical in accordance to the frequency of use. Thus, there are three types of users:
frequent passengers who cross everyday in connection with their job or education, regular passengers who
use the bridge once a week, and infrequent passengers who use the bridge sporadically.
26.
From the outset, the project was to be self-financing, thus, not supported by public subsidies. In effect,
according to the agreement between the governments, the Öresund Bridge Consortium must charge for the
use of the bridge. The proceeds are to cover the cost of operation, interest payments and loan repayment,
which was taken to finance the construction – both the coast-to-coast link and the shore installations on
both sides of the sound.
27.
Likewise, Sweden would have more to gain from a reduction in the fees, given that the Danish section is
mostly metropolitan, while the Swedish part is rural, thus clearly necessitating the use of cars.
28.
Before the bridge was built, connections between Denmark and Sweden were already available, mainly in
the form of ferry services with good performance records. Thus, in transport terms, the bridge has only
shortened the time entailed to cross the strait by ferry.
69
infrastructure basis of their shared integration vision, the financial requirements to build a fixed link
across the Femern Belt are being analysed. Proponents of the project highlight the potential economic
benefits of Lolland-Faster, as well as the potential support to the integration process across the Öresund (in
the context of its increased international exposure). Nevertheless, detractors of this project have underlined
their position that big infrastructure investments will not promote integration if not accompanied by
appropriate actions in other areas of public policy. Several OECD studies (See, for instance, OECD
Territorial Reviews: Italy; OECD, 2001) alert, more in general, on the risks related to infrastructure
investments that are not coupled by adequate ex ante and ex post evaluations and coherent regional
development strategies.
Environmental impacts
Expanded infrastructure should also take into account environmental aspects. For instance, a
traffic and environment plan has been developed for Greater Copenhagen. Public debate has been
especially lively on the issue of the environmental consequences of the fixed link, which was underscored
by the Swedish government’s demand for a prior assessment of the environmental consequences. On the
basis of several expert reports, the two governments concluded that constructing the Öresund Bridge was
environmentally and economically sound. Nevertheless, such conclusions will have to be verified
constantly against the evolution of traffic flows and cross-mode changes.
Conclusions
Since the opening of the Bridge, growth has accelerated in the Öresund Region, and the area has
started to appear on geo-economic and geo-political maps as an example worthy of attention that could be
a model for other areas with similar features. The overarching goal is to further develop an infrastructure
that contributes to and is able to maintain increased mobility, thus, promoting physical-functional
integration. This calls for comprehensive investments in infrastructure construction. The management of
the pricing mechanisms is essential to the outcome of new infrastructure. Major technical problems in train
operations across the Öresund and other start-up troubles have been a daily nuisance to many commuters
and have impacted the number of passengers crossing the strait. Physical and economic barriers are of
major significance, but administrative and legislative obstacles to the development of a common labour
market also discourage the use of the shared infrastructure.
A set of policy recommendations can be put forward to address a series of key issues. They can
be divided into three general categories: 1) monitoring policies; 2) infrastructure policies; and 3) pricing
schemes.
1) A careful monitoring policy is key to assess why and with what dynamics movements across
the Strait take place. It should be carried out not only at a detailed level on traffic flows, but also on the
other variables which witness the degree of interaction within the region: relocations of households and
firms, net job creation, effects of the different taxation schemes, price differentials, and environmental
effects. A systematic monitoring activity is in fact the premise to take any further policy decision on the
future of the region. Some more sophisticated methodologies might be applied such as multi-criteria
analysis, gravitation models, forecasting and simulation techniques. The latter should be specifically
implemented in the medium- to long-run to estimate the elasticity of variations in the Bridge’s toll levels,
now that at least a short quarterly series of data is available on the crossing of the Strait with different
modes. Experimental projects of integration and governance should similarly become the object of
simulation exercises.
70
2) Infrastructure investments and spatial planning. Having clarified that infrastructure is only
a pre-condition for the area’s development and not an objective per se, a number of actions can still be
taken to further develop inter-modal integration and co-operation. As shown above, the Bridge, the Metro
in Copenhagen and the City Tunnel in Malmö will allow greater accessibility to the area. The overall
objective is the enlargement of the accessibility and the integration into this network of populations that
have yet to benefit from it as those living in the most urbanised areas (i.e. people of West Zealand and/or
of more distant areas of Skania). However, this objective does not necessarily require new infrastructure
(e.g. the Tunnel between Helsingborg and Helsingør) that in the short-run might imbalance the financial
equilibrium of the Öresund Bridge. While the tunnel and the Göteborg-Helsingør high-speed train will
accomplish an important function in the long run, in the short run it would be wise to intervene more at the
service level (when the investment on the Bridge will be eventually repaid). For example, this type of
intervention could extend the unified mobility tariff to the bus and train network in the hinterland areas or
result in greater frequency and punctuality to the existing services.
The infrastructure investments already accomplished or currently underway will increase the
demand for land. This calls for close attention to spatial planning considerations. New manufacturing
locations should probably not take place in the close vicinity of the two main urban agglomerations. It
would be desirable to locate them farther away from these agglomerations in order to enhance the
distribution of activities in the periphery or the hinterland of the “Strait agglomeration”. In this way, the
positive spillover effect of the Öresund Region’s growth could benefit more homogeneously a wider area
and avoid possible risks of congestion and polarisation. Consideration could also be given to the possibility
of creating a common spatial policy committee between the two countries, which could preferably be
established on a voluntary and ad hoc basis. In fact, authorities on the two sides of the strait are
co-operating well on a number of specific issues but actions is necessary to overcome the limits of
unframed bilateral discussions and to insure a framework for constant dialogue on strategic issues of
integrated spatial planning. Likewise, in order to achieve environmental sustainability in the region –
especially regarding the hinterland of the two cities directly connected by the train – the network interface
with the public transport system (both rail and buses) should be further implemented in order to allow for
the full exploitation of the modal shift.
3) Financial equilibrium of the infrastructure and toll scheme elasticity. With respect to tolls,
tax deductions for the bridge crossing should be further explored, given its potential positive effect on
greater interconnectivity and the core vision of greater integration in the region. A related course of action
could be the reduction of the subsidy currently oriented towards the train system by the Danish
government. In effect, public financial support for the train system has been based on inexact user
estimations and accordingly, these resources could be better oriented towards a decrease in the overall toll
for the Bridge. Likewise, a possible fee reduction would have to be done in consonance with a proportional
toll reduction on the Great Belt Bridge.
2.3. Shaping a common labour market
The creation of a single labour market is an important element in building the Öresund crossborder region. The advantages of a larger functional labour market are particularly compelling in the
context of increased global competition. In an uncertain world in which individual firms face risks
independent of their industry, the presence of a large number of employers at a given location will tend to
reduce the magnitude of temporal variation in aggregate labour demand (David and Rosenbloom, 1990).
Other things equal, smaller variation in earnings will make large labour markets more attractive to risk
adverse potential migrants. The ability to retain and attract highly skilled and talented labour will be
determined to some extent by the perceived size of the functional labour market corresponding to either
side of the strait.
71
To assess the integration of the labour markets of two cities in different countries, both national
and regional factors need to be considered. At the national level, the integration of the labour markets
results from two main drivers. The first is a shift in production factors in countries, due to higher trade
flows or capital flows, which contributes to a long-run convergence of wage rate. The second is the
movement of workforces between different national labour markets (Raines, 2000). On the one hand,
individuals should be able to consider the new region as a single region within which they can freely
choose where to live, study or work; on the other hand, companies should have the choice and
opportunities to invest and expand in any part of the region. For a cross-border region, the clearest
indication of the operational effectiveness of a single labour market is labour mobility. In fact, despite
differences in the labour markets between Skåne and Zealand, especially at the end of the 1990s, there has
not been any significant movement of people. Trends show that until recently, the Danish and Swedish
areas of the Öresund Region have largely functioned as two distinct labour markets. The total number of
cross-border commuters increased from 1 950 persons in 1994 to an estimated 3 200 in 2001. This is
particularly low compared with the 70 000 people29 who commute daily between Malmö and its hinterland
and the 225 000 people within the Greater Copenhagen Area who travel to and from Copenhagen every
day (Greater Copenhagen Authority, 2001). In 2001, 704 persons moved from Skåne to the Danish side of
the region and 1 582 moved from Zealand to the Swedish part of the region. Even though it has been
tripling during 1998-2001, it is still relatively a low number. In comparison, more than 95 000 persons
moved between the counties in Zealand in 2000.
The movement of factors across countries can face obstacles related to different national
institutions and laws. This is particularly true for a cross-border region because these movements are more
frequent and intense. In the case of Öresund, these obstacles are even more important given the explicit
shared objectives to build a cross-border region to exploit untapped development opportunities. This
section will first assess prospects for labour mobility based on determinants on the demand and the
supplies sides. This will also require reviewing the differences in structural and institutional factors of
labour markets (wage setting systems, employment legislation) which can act as both facilitators and as
barriers to the integration. The section will then review the main obstacles to labour mobility before
assessing current policies to further the integration.
Future prospects for labour mobility
There are several reasons to forecast higher labour mobility in the medium term. This requires
assessing determinant factors that will exert influence on both the demand and the supply sides. On the
demand side, prospects for the region will influence positively the demand of individual enterprises: both,
Skåne and Zealand will feature an annual employment growth stronger than the growth in the labour force,
thus reducing unemployment.30 Sectors that will exhibit greater demand in labour include business
services, hotels and restaurant, health personal and parts of the jobs in the retail sector. Skåne will have a
stronger demand for workers in the construction industry as well as in the machinery and equipment
industry. Higher forecasted unemployment in Skåne than in Zealand may reduce the differences in
tightness between the two sides of the region. Labour shortage, already observed on the Danish side, may
be more salient in the entire region, and mobility of workers may certainly be a response, as it has often
been the case in the Nordic countries – Denmark, Sweden and Norway.31
29.
Data from the Central Bureau of the Swedish National Statistics.
30.
This is according to prognoses by the Public Employment Service for the period 1999-2008, see Chapter 1.
31.
Even if a large part of these movements is short term, i.e. many people return to their countries of origin
when the economy recovers.
72
The demand for labour will also increase according to the relocation decisions of foreign/national
companies. Total wage costs differences between the two countries should not be a major determinant of
location. In spite of large differences in employers’ contribution to social payments – nearly three times
higher in Sweden than in Denmark – there are small differences in total labour costs for employers
(Table 2.2.1).32 However, Denmark, which has one of the most liberal labour market legislation in Europe
(see below), is in a better position to attract companies whose demand fluctuates greatly, for example those
depending on trade conditions, which are more dependent on greater labour flexibility. Meanwhile,
companies that have small profit margins because of, for example, a highly competitive market can take
advantage of the corporate tax levels in Sweden, which are among the lowest in OECD countries. In any
event, the rising demand for labour will mainly concern high-level skills as a decrease in the demand for
non-qualified labour is expected to continue in both Zealand, where it is already noticeable, and Skåne. As
most of the current immigrant population has low to medium skills, and given that this group will grow
over the coming years, unemployment of low-skilled labour will most probably increase. This scenario will
put pressure on active labour market policies as well as on wage growth for this segment of the population.
Table 2.2.1.
Direct and total wage costs for adult industrial workers, 2002
In DKK
Indirect cost per worker
(%)
76.1
41.8
71.8
54.3
98.0
23.0
66.4
38.1
96.5
72.7
72.4
92.7
35.0
33.0
99.2
32.1
Average wage per worker
Germany
115
Norway
137
Japan
113
Switzerland
121
Belgium
94
Denmark
146
Sweden
107
United States
127
Austria
87
Finland
99
The Netherlands
97
France
75
Canada
105
Great Britain
105
Italy
65
Ireland
83
Spain
South Korea
Greece
Portugal
Source: US Bureau of Labor Statistics (BLS).
70.9
Total wage cost per
worked hour
202
194
194
187
185
180
178
175
171
171
168
144
142
140
129
110
95
72
70
42
On the supply-side, a high-skilled labour force is available in the Öresund Region due to the
steady supply of graduates from well-developed educational institutions, thus giving firms the increased
possibility of finding appropriate candidates. Current trends in the education level of commuters show that
mobility mainly concerns the qualified labour force: in 2000, 42% of the commuters to Skåne had a higher
education and 20% a secondary education, while similar figures for commuters to Zealand are 38% and
32.
Difference in currency values since 2000 has slightly increased the total hourly wage in Denmark against
Sweden.
73
43% respectively (Table 2.2.2).33 The labour supply will however be constrained by the ageing of the
population in both countries, although the age structure is more favourable on the Swedish side. Both
countries have well-developed educational and training systems that can produce high-skilled workers –
Sweden ranks first among OECD countries regarding spending on active labour market policies, followed
by Denmark.
Table 2.2.2.
The numbers of cross-border commuters according to educational
level, 2000
Level of education
Primary school
Secondary school
Higher education
Unknown
Sum
Source: Statistics Sweden.
Commuters to
Zealand
457
1 381
1 219
138
3 195
Parts of total
%
14.3
43.2
38.2
4.3
100.0
Commuters to
Skåne
12
42
87
65
206
Parts of total
%
5.8
20.4
42.2
31.6
100.0
Overall, labour mobility will be determined on the supply side by workers’ incentives to
commute or move, which depend on a combination of wage differences and job opportunities. Current
trends show that greater commuting from Skåne to Zealand is due to Zealand’s increased employment
opportunities. Differences in purchasing power are also expected to steer people’s choice in terms of
residence and place of work. Higher nominal wages and more advantageous disposable income in
Denmark than Sweden will continue to attract workers from Skåne to Zealand. Meanwhile, people from
Zealand would move to the other side to benefit from lower housing costs and to avoid the tight housing
market in Greater Copenhagen.34 Furthermore, in the long term, differences in housing costs will decrease
with rising demand for housing in Skåne.
Differences of national labour market regulatory system
Differences in the structure of national labour market which are part of the regulatory and legal
systems may influence both positively or negatively labour mobility as well as corporate location decision.
These differences are not so striking between Denmark and Sweden as compared with the average gap
between the OECD countries, but there are some indications for the Danish labour market being more
flexible than that of the Swedish. There is less public intervention, employment protection is less
restrictive, job mobility is higher, and wages are more reflective of the productivity level. Meanwhile,
these features do not lead to a widespread feeling of job insecurity among employees, which can be
explained by two principal reasons: the predominance of SMEs in the industrial structure facilitates
mobility from one firm to another, and the relatively generous unemployment benefits are available to
workers from the first day of unemployment and over a considerable time period (Madsen, 1999).
33.
The fact that commuters to Zealand seem in general to be more educated than persons commuting to Skåne
should be carefully interpreted. The numbers of commuters may influence this difference. (There are
10 times more commuters to Zealand than to Skåne). But it may also partly be a statistical effect tied to the
lack of information on the educational level for a larger part of the commuters to Skåne.
34.
This is due to the asymmetry between Greater Copenhagen and its hinterland. The pressure is caused by
the attractive array of business, job and cultural options in Greater Copenhagen.
74
The determination process of factor prices has important effects on the integration. National
systems can impede wage determination processes while the existence of separate bargaining systems can
delay industrial adjustments following integration. Several theoretical and empirical studies assess the
relationship between economic performance and the structure of collective bargaining. According to
Danthine and Hunt (1994), during periods of integration, factor and product markets are likely to adjust
quickly in more decentralised systems – leading to a more rapid revelation of comparative advantage –
whereas countries dominated by centralised bargaining systems could experience difficulties in adapting to
the new competitive environment. However, Thomas (1998) stresses that wage bargaining at the industry
level can create negative externalities and does not internalise unemployment and fiscal externalities.
When separate groups achieve independent wage increases, pay rises are likely to shift to consumers
through an increase in the relative output price; whereas when wage bargaining takes place at the central
level, consumption wages are raised uniformly across all sectors and there is no relative price change
(Raines, 2000). Calmfors and Driffill (1988) observed that stronger performance occurred in countries with
either highly centralised or decentralised systems of wage bargaining; where wage setting systems were
“in-between” – for example, taking place at the level of the sector or region rather than the enterprise or
country – unemployment rates tended to be higher. According to an OECD study, there is little statistical
evidence for such relationships as centralisation is not the only important characteristic of collective
bargaining; the degree of unionisation, the coverage of collective bargaining and the degree of
co-ordination in bargaining should also be considered (OECD, 1997).
In both countries, wages and work conditions are determined by collective negotiations, but this
feature is more pronounced in Denmark. According to Auer (2000), their model of industrial relations
belongs to the category of “Northern corporatism” which is characterised by highly organised and
disciplined partners, intensive co-ordination, a low level of conflict and the State as facilitator (and less as
regulator).35 Both countries have a high union density (between 80% and 90%, Sweden featuring one of the
highest rates in OECD countries) while bargaining coverage is much higher in Sweden (89% against 69%
in Denmark) (OECD, 1997). In Sweden, traditionally, bargaining has been centralised between the
two sides of industry, who negotiated on behalf of their member associations. Negotiations in the private
sector have started to decentralise, with more bargaining at the sectoral level, but not as much as Denmark
which has largely shifted to enterprise-based bargaining.36 In both countries, wage formation however
retains an important influence for decisions taken at the central level.
From the labour market perspective, it is important to assess whether the wage bargaining
systems in both countries favour wage flexibility. An efficient wage bargaining system should provide
aggregate wage increases in line with labour productivity trends and greater wage dispersion. This could be
facilitated, for example, by strengthening co-ordination, i.e. the degree of consensus between the collective
bargaining partners. In Sweden, relatively inflexible real wages and compressed wage differentials prevent
wage growth and relative wages from adapting rapidly to imbalances between labour demand and supply
35.
Paul Auer (2000) makes a distinction between four models of industrial relations in Western Europe:
Northern corporatism (Sweden, Finland, Denmark and Norway); Central social partnership (Austria,
Germany, Switzerland, Belgium and Netherlands), Anglo-Saxon pluralism (United Kingdom, Ireland) and
Latin confrontation (France, Italy, Spain, Portugal, Greece).
36.
Wage systems in the Danish business sector have developed along two lines: “a normal wage” system
where centrally negotiated wage increases are reflected directly in the final wage with the possibility of
locally negotiated additions (15% of wage and salary earners in the private sector), and a “minimum wage”
system where the central bargaining only sets the floor for final wages which otherwise are fully
determined at the local level (85% of wage and salary earners).
75
(OECD, 1998). Moreover, wage drift37 at the enterprise level is less likely to be influenced by the inflation
target and remains an important risk factor in the coming years. This trend was actually observable in the
second half of the 1990s. Despite the establishment of a new Mediation Authority in July 2000 to improve
co-ordination and the Riksbank’s inflation target, the Swedish system has become less characterised by
both stronger co-ordination (due to the 1997 Industrial Agreement) and greater scope for wage talks at the
enterprise level (OECD, 2002). In Denmark, wage moderation has been the core target of the social pacts.
Besides, despite the decentralisation of negotiations to the branch level, wage dispersion is small, probably
due to the tax system and the associated incentive to take additional rewards for productivity growth in
non-taxable lower working hours than in taxable wages.
As with collective bargaining systems, minimum wages can act to raise wages above the marketclearing rate, potentially resulting in the decreasing of employment and reduced economic efficiency.
Where minimum wages differ between countries, factor price equalisation can be hindered because of the
“floors” underlying any shifts in relative factor prices. In both countries, minimum wages are not statutory
but fixed in sectoral agreements. They are higher in Denmark which, along with generous unemployment
benefits, create high reservation wages and a compressed wage distribution at the lower end. However,
wage agreements include some provisions for special jobs, with the possibility of wages below standard
levels.
The regulatory framework of national labour markets – employment protection legislation,
unemployment benefits and social contribution – is another factor influencing the extent to which
integration can take place. Employment protection legislation (EPL) is one of the major determinants in
establishing the type and extent of workforce flexibility. According to the OECD EPL indicator,
employment protection legislation is much stricter in Sweden than in Denmark (OECD, 2001)
(Figure 2.2.1).38 The trial period of employment is shorter in Denmark; it varies from none to three months
for the white collars compared to up to six months in Sweden.39 Workers in Denmark can be hired on a
final contract and the full benefits sooner than workers in Sweden. In both countries, dismissals even
during the trial period require a just cause from the employer. However, as the Swedish rules for order of
dismissal is based on the principle of “first in/first out”, the risks are greater when accepting a job with a
company in Sweden than in Denmark, where such rules are based on the merit rather than order of
arrival.40 Working-time flexibility is also important for firms as it can increase productivity – work can be
concentrated during periods of intense activity. The normal work week is 37 hours in Denmark and
40 hours in Sweden. There is no legal maximum provision for weekly overtime hours in Denmark while it
is limited to 48 hours per four weeks in Sweden (maximum 200 hours per year). Part-time work is common
in both countries, but there are indications that it is sometimes involuntary in Sweden due to stringent
dismissal rules and over generous unemployment benefit.41
37.
Wage drift refers to the difference between the centrally negotiated agreement and actual wage increase. It
depends on the ability and desire to enforce the central agreement on all the members of the peak-level
organisations (OECD, 1997).
38.
This is particularly the case for regular contracts as differences in strictness of EPL for temporary contracts
in both countries are limited.
39.
Twelve months for persons below 25 years old.
40.
The fact that new hires bear much greater risks of unemployment in Sweden increases the advantages of
labour pooling provided by larger functional labour markets. To the extent that these risks can be
moderated by a large number of alternative employment opportunities, labour market size becomes more
critical to the attraction of specialised workers.
41.
Involuntary unemployed part-time workers as a share of all part-time employed increased from 15%
in 1989 to a peak of 35% in 1997, but then declined to 25% in 2000 (OECD, 2001).
76
Figure 2.2.1.
The strictness of employment legislation in OECD countries
4
3.5
3
2.5
2
1.5
1
1.
i)
ii)
Portugal
Turkey
Greece
Italy
Spain
France
SWEDEN
Norway
Germany
Korea
Belgium
Japan
Austria
Netherlands
Czech Rep.
Finland
Poland
Hungary
Denmark
Switzerland
Australia
Canada
Ireland
New Zealand
United States
0
United Kingdom
0.5
This indicator subsumes two dimensions of employment protection legislation:
Restrictions on individual dismissals of workers with regular contracts (e.g. definition of unfair dismissal,
notice period, severance payments, reinstatement provisions).
Restrictions on the use of temporary forms of employment contracts such as fixed-term contracts or contracts
handled by Temporary Work Agencies (e.g. scope for temporary contracts, maximum number of successive
contracts, maximum duration of temporary contracts).
Source: OECD (2001).
In addition to employment legislation, the countries’ different fiscal systems have varying effects
on a balanced integration of the labour market. While in Sweden – like most European OECD countries –
social security contributions are based on payroll and paid by the employer, in Denmark, social security is
overwhelmingly funded through income taxes. The Danish contribution system does not distinguish wages
from other income sources and thus does not favour one income source against another one. Total labour
costs per unit are more or less the same in the two countries. However, with the social contribution wedge42
much lower in Denmark than in Sweden, the gap between labour productivity and labour cost is narrower,
which means that the incentive for Danish employers to increase the labour force is higher than for
Swedish ones. The different national labour taxation systems thus tend to favour the Danish labour market,
which could create a certain suction effect towards the Danish side of the Öresund.
42.
This indicator measures the difference between the employer’s gross labour costs and employee’s net
income after social security contribution.
77
Main obstacles to labour mobility
Pure market forces will certainly act as a driving force in the further integration of the labour
markets, but some obstacles may hinder labour mobility. Transport (time and price) is often quoted as the
most important obstacle. With the bridge, the travel time between Malmö and Copenhagen is no longer
than that between Copenhagen and one of its suburbs. However, the high toll may discourage bridge use
(see Section 2.2 on infrastructure). Other major obstacles to the integration of labour markets include
legislation framework of labour mobility, bureaucratic administrative procedures, regulatory barriers for
certain professions, harmonisation of education systems, differences in taxes and welfare benefits for
commuters, as well as housing rigidities. Difference in currencies also may counteract labour mobility.
Language difference may reduce the incentive to work on the other side but this obstacle remains fairly
limited.
One major barrier is related to the legislation framework of labour mobility. With the exception
of some jobs in the public sector, people from either side of the strait can travel and work on the other side,
regardless of nationality. This situation dates back to 1954 with the creation of a free labour market within
the Nordic countries. After both Denmark and Sweden joined the EU, co-ordination of social rights has
been further extended. Now people from both sides can be self-employed, set up their own business or
provide services on the same terms as nationals. Supported by own means, people may also freely study or
reside in the area across the border without a residence permit. However, limitations to labour mobility
apply to immigrants. For instance, immigrants who live in Malmö (about 22% of total population) and
have not acquired Swedish citizenship, will have to apply for a work permit to be employed in Denmark. A
similar rule applies for immigrants living in Zealand, who wish to work in Skåne.
Differences in administrative procedures also stand as obstacles to the mobility of workers.
Adapting to a new tax and social security system makes it difficult to forecast the consequences of a large
range of decisions. A simplification of administrative procedures could encourage employers to hire people
from the other side and employees to take advantage of a broader labour market. In the Öresund Region,
differences in the tax structure between the two countries may lead to similar problems (see Chapter III).
Examples include the taxing rules for commuters who have a short-term position in the other country,
different tax deduction rules on saving for pension purposes, and different treatment for commuting cost.
For instance, Denmark does not accept the bridge toll as a tax deductible while Sweden does and this until
a durable solution on the commuting tax question between the two countries has been found.
A well-functioning labour market in the Öresund Region also requires mutual recognition of
education and qualifications. Some students have been educated from several institutions in Skåne and/or
Zealand, in both formal education and adult learning. The European Union has set uniform standards for
the different member country education systems in order to facilitate an employer’s assessment of a foreign
employee’s competencies. EU regulations also include rules for mutual recognition of qualifications and
training such as official authorisations, licenses and other evidence of formal qualifications regulated by
law or industrial requirements.43 Nevertheless, some problems in the Öresund Region such as differences
43.
Certain professionals such as lawyers, veterinarians, architects or those in the health sector are regulated by
EU directives by which a person who is formally qualified to exercise a profession in a member country
shall, upon application be similarly qualified in other member countries, without having to meet additional
requirements with regard to education. However, a period of probation or traineeship might be imposed for
the following reasons: 1) the length or content of the training differs significantly from one EU member
country to another; or 2) the profession is only regulated in the work country and not in the home country;
then the applicant needs only to have relevant training and have practised the profession in the home
country for two of the last ten years. The applicant may choose between a probationary period and a
traineeship. Employers may stipulate further requirements for potential employees, such as good
knowledge of the country’s language and legislation.
78
in national evaluation systems, render it difficult to transfer education credits from one side to the other. In
this context, both national authorities have collaborated to create a Working Group to address the problems
and formulate a guideline for the transfer of educational credits.44 Regulatory barriers also exist such as the
host authority’s requirement for the necessary certification of skills. One example in the Öresund Region is
the case of a Swedish bus driver who was not allowed to drive a regular bus in Zealand.
Differences in welfare benefits systems can alter the extent to which labour markets can adjust to
integration effects. The EU rule states that an employee contributes and benefits from the social insurance
schemes of the country in which s/he works independent of where his/her family live. In both countries, the
social insurance scheme covers employees and self-employed persons as well as dependants and members
of their family, independent of the nationality of the latter group. This provision facilitates permanent
cross-border relocation. However, in the case of commuting, the responsibilities are unclear. In practice,
paying the social contributions in the work country but having the right to benefits in the residence country
may raise some problems. For instance, responsibilities for long-term sick benefits are imprecisely defined.
Since the administration of welfare benefits is to a large extent a local responsibility in both countries, their
national governments have invited the municipalities in the region to increase their co-operation for the
follow up of long-term sick benefits, especially when responsibilities are moved from one side to the other,
but concrete arrangements remain to be set up.
A practical example of an obstacle (due to social security legislation) concerns the case of people
who reside in Skåne and work in Zealand but are at home during part of the week. This problem has been
solved by a 2001 agreement by which the employer can make an agreement stating that the work country’s
social security system prevails even if the employee works partially in the residence country. However,
people in short-term positions with different employers on both sides of the strait must change
unemployment security membership with each change of work place. Although receiving unemployment
benefits from the two countries is not allowed, a person can be a member of an unemployment security
fund in Denmark and work for short periods in Sweden (the short-term income earned in Skåne is treated
as if it was earned in Denmark). Sweden is currently trying to find similar solutions for people with shortterm work in Denmark. Some problems arise when pension rights are transferred from one country to the
other due to a change in job because of different types of pension agreements, rules and calculation. Given
the situation, the employee has three options: to keep with the existing pension system, to move to the new
country’s pension system or to have a double pension system. In the first case, the employee will not get
tax benefits in either Denmark or in Sweden. In the second case, payments will be fully taxed, and treated
as in the case of an early retirement pension (in both cases, the pension diminishes considerably). In the
third case, the administration costs for the former pension fund are less.
Promoting the Öresund Region as a single labour market region implies that people use active
labour measures on both sides of the strait. A large share of the unemployed in the region benefit from
active labour market policies. In Sweden, the unemployed in the border region have the possibility to
participate in labour market training in Denmark. In Denmark the regulation is more restrictive, only
accepting participation if deemed necessary. This asymmetry of the two sides negatively affects their
co-operation. A pilot project has been put in place whereby the Öresund Labour Market Council provides
more information on how to run cross border labour market programmes and helps the unemployed find
jobs in the ICT sector. The project aims to build a cross border network among the Public Employment
Service (PES) counsellors and to set up a framework for exchanges. Other pilot projects include one that
44.
Members of the Working Group come from some of the 12 universities belonging to the
Öresund University. It has worked until now on harmonising merits and credits, translating diplomas, titles
on university degrees, etc. It is currently on an information publication candidates can attach their
applications when they are looking for jobs on the other side of the strait. The idea originated from the
Danish Confederation of Industries (Dansk Industi).
79
places an unemployed from one side in a measure on the other side. However, a shortcoming of these
projects is their inability to attract numerous participants.
Some limitations should be removed. One of them concerns mobility financial support, which is
allocated to an unemployed when s/he has to travel to another area for an interview or move for a new
position. This provision remains applicable only within the national borders. For the Öresund Region, the
costs of such an extension of the right to mobility grant would not be prohibitive due to limited
geographical distances and transport. Another limitation is job practice, which is an employment contract
of six months mainly offered to newcomers (youth, immigrants) at low wages, nearly the equivalent of the
unemployment benefits. Currently, only Danish employers offer job training to the unemployed from
Denmark, who are in Sweden, and vice versa. This restriction permits the paying authority to monitor the
employer in terms of wages and working conditions. The Danish authorities also demand that the
unemployed that are trained in Skåne have Danish wages and working conditions. Administrative
procedures differ in Skåne and Zealand regarding the level of wage subsidies offered to employers. There
are on-going negotiations between the two countries concerning Article 17 of the EU Regulation 1408/71
by which an unemployed should continue to be a member of the unemployment fund in the country of
origin although s/he is undertaking job training in another country.
The housing accommodation market is an important factor that can exert influence on labour
mobility. On one hand, tensions on the supply side may be an obstacle to incoming workers, which often
occur when housing markets are dominated by public housing for nationals. On the other hand, people may
want to move on the other side of the strait to benefit from cheaper housing rent while still working in their
city of origin. In both countries, rent control affects most of the private housing stock offered for renting,
which, along with the widespread provision of public housing through complex non-market mechanisms,
create substantial distortions, thus reducing labour mobility. These features are more pronounced in
Denmark than in Sweden where public authorities have started to retreat from their dominating role in the
housing sector. Houses and flats prices are more market-based on the Swedish side that on the Danish side
and the pressure on the housing market is greater in Copenhagen than in Malmö, which is also reflected in
the cost of housing (Table 2.2.3). Substantial reform in land use planning could partly relieve tensions on
the supply of housing in Zealand (both in Copenhagen and surrounding municipalities). It is also important
to remove rents controls applying to private rental housing.
Table 2.2.3.
Differences in housing prices
DKK
Price per m2
Average purchase price
1. Figures are for 1999.
Greater Malmö
7 900
1 060 000
Greater Copenhagen
11 800
1 640 000
Difference
49%
55%
Source: Danske Bank.
A varied supply of homes is vital to increase the potential for attracting qualified professionals to
the region as well as more new companies. For this purpose, the construction sector needs to be stimulated
to increase its activities across the Öresund. It is thus essential that companies compete on equal terms,
which requires reducing differences in the framework conditions of the construction sectors between the
two sides. For instance, three, very large construction companies dominate the Swedish construction
80
sector. Danish construction companies are smaller and more numerous. If, in the long term, the
construction sector in the region is to be integrated, differences in written and unwritten rules and norms
must be more closely charted and made accessible to the construction industry, to ensure smooth
operations on the other side of the sound.
Differences between the two countries in home financing, owner taxation and subsidies and
regulations should be removed so individuals will not be discouraged to relocate to other side. The
disparate regulations and practices in home financing should be overcome by ameliorating the conditions
of financial institutions for operating on both sides of the Öresund and offering loans on terms that are
familiar to homebuyers. Homebuyers should be guaranteed equal creditworthiness and borrowing facilities,
regardless of their country of origin. Moreover, the two countries grant housing subsidies according to
notably different regulations, which hinders housing services providers from operating easily on the other
side of the sound.
One main problem to housing-market integration in the Öresund Region is the asymmetric
incentive structure for moving across the sound. This is mainly due to property prices being far lower on
the Swedish side, but also because tax burden on homeowners is slightly lower (Figure 2.2.2). In the longterm, market mechanisms are expected to partly alleviate the asymmetric incentive structure. This will be
especially effective when property prices in Sweden rise sufficiently. Furthermore, disparities in
purchasing power between the countries are expected to even out, but disparities in housing quality will not
disappear without significant changes to Danish housing regulations along with urban renewal efforts.
Sweden has a relatively uniform quality of rental properties, while the Municipality of Copenhagen, in
particular, has many homes in older buildings, which are very small or of poor quality.
Figure 2.2.2.
Property prices index, 2001
250
200
Index
150
100
50
0
Malmö
Copenhagen
Stockholm
Source: Ökonomi ministeriet og SCB (Malmö) (2001).
81
Oslo
Hamburg
München
Current policies to advance the integration of the labour markets
Student exchange programmes
Student exchanges between the two countries can contribute to a wider integration of the Öresund
labour market. Close geographical linkages and languages as well as the calibre of the broad range of
educational institutions should attract many people from Skåne and Zealand to study on the other side of
the strait. In the Nordic countries, a high proportion of the higher-level education is financed by the State.
Consequently, a large part of the educational cost for a student from another Nordic country falls on the
country where s/he decides to study. Meanwhile, a general agreement was signed by the Nordic countries
in 1996 on cost reimbursement to promote student exchanges. The EU also actively promotes mobility by
funding student exchange programmes, including the ERASMUS programme. For most students, this
includes six months to one year in another university, following the host university’s syllabus and learning
a foreign language. Furthermore, the Nordic co-operation aims to increase student exchanges, and under
the Nordic Council of Ministers (NORDPLUS), an explicit program has been set up for the economic
support (of up to one year) of student mobility between educational institutions. An open competition
among students for acceptance to an education institution within the region is important in the long run to
build a common labour market. Some incentives could be set up to promote student mobility.
Both Zealand and Skåne are endowed with many high-quality educational institutions. However,
opportunities for students from either side to study on the other side remain only partly used. In 2000,
only 0.3% of students crossed the border, and only 0.2% of the total number of students in Skåne
(105 students) had a Danish secondary education diploma compared to 0.4% of the total number of
students in Zealand who had a Swedish secondary education diploma (260 students).45 The development of
co-operation agreements based on student exchange programmes and mutual recognition of diplomas
could serve as a positive incentive to attend universities and schools on the other side of the national
border. The largest universities – University of Lund, University of Copenhagen, Copenhagen business
school, Malmö University College and Roskilde University – have embarked upon different forms of
co-operation, both involving students and scientific personnel. The Öresund University is an example of
such co-operation. It will indirectly create a more open labour market for researchers in their fields, as the
participating universities intend to open up more of their science vacancies for applicants from other
institutions. This should make it easier for external candidates to compete with in-house candidates for
vacancies.
Institutional co-ordination
Many of the problems discussed above are linked with national regulations which means that any
changes are under the discretion of national governments. For this reason, institutional co-ordination is
crucial to promote regional integration, particularly regarding the labour market. In the Öresund Region,
ministers from both governments have been appointed at the national level and given the unique
responsibility to promote the region. When national regulations cannot be modified, regional solutions are
proposed to solve problems that would constrain labour mobility across the border. At the regional level,
the Öresund Committee bears some of the administrative responsibility for the EU programme,
INTERREG III A and with the Öresund Labour Market Council of Öresund is co-responsible for the
45.
The highest numbers of cross border students are found in the University of Lund (where 83% of students
coming from Denmark are concentrated) and in the University of Copenhagen (60% of the Swedish
students).
82
follow-up of the EU Territorial Employment Pact.46 At the local level, co-operation between the
municipalities and different institutions is quite developed. The Öresund Labour Market Council has been
created to promote active integration of the labour market in the region (Box 2.3.1). It could, however, be
more active on focussing on important problems and identifying areas that require necessary changes.
Box 2.3.1. The Öresund Labour Market Council
The Öresund Labour Market Council consists of the Public Employment Service (PES), the Social Partners, the
counties and municipalities as well as the two National Public Employment Services. Its main tasks are to follow the
integration process, identify barriers to a well-functioning labour market, agree on long-term objectives for the labour
market policy, make recommendations to the authorities in charge of regulations and decide on strategies to achieve
these goals. The Secretariat of the Council, and its executive body of 12 members, is co-managed by the PES council
of Skåne and the PES council of Greater Copenhagen. The Greater Copenhagen PES is responsible for co-ordination.
The Öresund Labour Market Council has an executive body, the Öresund AF, which co-ordinates the seven County
Public Employment Offices in the region. Services are provided by an Öresund department in the Public Employment
Service in the cities of Copenhagen, Helsingør and Helsingborg. In Malmö the department is a part of Öresund
Direct, the one-stop office for a broad range of public services. The departments have counsellors from both Skåne
and Zealand. This is judged to be an efficient way of informing the customers about work and living conditions on
both sides of the border. About 800 people a month visit the offices: about one-third in Copenhagen, a larger part in
Malmö and the rest is divided between Helsingør and Helsingborg.
Networks in the public and private sectors are key to the establishment of a common region. The
creation of a common training programme for public officials (national, regional and local) in matters
related to Öresund is under consideration. This type of planned cross-border training programme is likely
to promote efficient counselling. To stimulate further integration, more concrete targets could also be
settled at a lower level. For instance, public authorities (both regional and local) could promote more
actively a common labour market through targeted recruiting, thus, hiring people with the other nationality.
In the private sector, the Confederation of Industries (Dansk Industri, DI) has embarked upon several
regional projects, the most important of which is the Medicon Valley concept. The co-operation entailed in
this concept is relevant for an integrated labour market because it reduces the discrimination of applicants
from the other side of the strait in the industry and increases the awareness of the potential positive effects
of hiring people with slightly different backgrounds and education. An interesting research project would
be to discern whether firms engaged in regional co-operation hire more people from the other side.
At the supra-national level, the EURES Cross Border co-operation strives to promote networks
by supervising and supporting the work of the PES in the region. Thus, it is active in numerous ways,
e.g. by subsidising half of the wages of Euro advisers in employers and employees’ organisations,
supporting cross border projects in schools, supporting media programmes on labour market issues. Its
focus is on long-term matters such as building a common region by providing information to labour
unions, employers’ organisations and schools rather than on job placement. Its budget is partly financed by
the EU Commission. Co-operation projects such as EU projects (INTERREG and border EURES),
business co-operations, municipal or cultural projects could exert long-term influence. Cross-border
46.
A Territorial Employment Pact was set up in Öresund from 1998-2001. Several projects sought to promote
integration, such as common regional television and new educational materials to increase language
competencies in Swedish and Danish for pupils in upper secondary schools. Financed by INTERREG II A,
the Öresund Region’s selection as one of 22 “Regions of excellence” in EU may provide extra stimulus for
the projects (Greater Copenhagen Authority, 2002).
83
financing deepens the involvement of the actors. More active use of tenders across the strait, both in the
field of goods, services and research, could also promote a better-integrated labour market.
Öresund Direct was created as a joint initiative of the national governments to provide access to
information on job opportunities on the other side of the strait as well as comprehensive and practical
information about all the aspects of moving and commuting, taxes, housing, social security, living costs,
education and other related matters. There are three components to Öresund Direct: on the Danish side,
there is a call centre, in Malmö, there is a one-stop information office, and spanning these two is an
Internet site. The one-stop office in Malmö is run as a partnership between different public authorities,
including the Public Employment Office, Social Insurance Office, the County Administration in Skåne and
the Tax Authority in Malmö City. The efficiency and effectiveness of the Malmö office is ensured through
cost-sharing and close, continuous contact with the mother organisation through councillors from
respective authorities. Presently, Copenhagen is considering a similar project.
Workshops and exchange of personnel have the potential to give the different actors involved in
labour market public institutions better knowledge of their counterparts, learn more about the other
country’s regulations and improve service to citizens. An initial project could be launched among tax
authorities as there is a strong demand for more and better information in this field (citizens have identified
the lack of information on the practical consequences of personal tax regulations as one of the most
important barriers to the integration of Öresund) (Copenhagen Economics and INREGIA, 2001). It is also
important to produce information materials, both online and on paper. Currently, an Internet database with
a listing of vacancies and related matters in the region does not exist. People looking for work on the other
side of the strait have, however, connection to the appropriate vacancies through links on the Internet site
of the national PES.
Conclusions
The common political commitment on both sides of the strait is probably the most important
factor because it has led to substantial infrastructure investments and the creation of many political and
administrative institutions. The appointment of ministers responsible for Öresund in the national
governments (designated with the responsibility to enhance an integrated, well-functioning labour market)
is a demonstration of the states’ commitment to the integration of the area. Institutional co-ordination is
well-designed, involving a broad range of actors, but the central governments should reinforce the overall
goal to develop the region by working together to remove obstacles arising from different national
legislation and sharing the responsibilities.
Considering that the current level of integration is the result of nearly 50 years of a free Nordic
labour market and about a decade of free movement of people within the EU, reforms required for a fully
integrated functional labour market will be largely incremental. Real integration will indeed demand to
reduce differences in the regulatory systems (labour, legislation and tax, social security and pension rights).
As this can only be dealt with at the national level, it will presumably take time, although the fact that
Denmark and Sweden are EU member countries will make the task easier. However, removing current
bureaucratic and legislative obstacles to labour mobility could be the first step. Relocating from
one country to another poses minimal problems compared to the administrative difficulties that appear
when changing jobs from one side to the other side of the strait, commuting or working part-time on both
sides. It is thus essential to simplify and reduce differences in administrative procedures and bring about
institutional co-ordination. A lack of transparency, especially concerning taxes and social contributions and
benefits, seems to negatively influence the movement of labour across the border. The outcome of ongoing
negotiations on tax regulations between both national authorities is crucial for the future. Furthermore,
instead of spreading the responsibility across both countries and risking the duplication of tasks, defining a
84
one-stop office in one country could constitute a valuable tool to encourage professional and residential
mobility across the strait.
Another important step for public involvement is to actively promote cross-national hiring and
work. Easy access to information on a broad range of topics is a crucial condition. The one-stop office
could provide such information or one national authority could be responsible for commuters matters.
National authorities should also use more active labour market measures to help their unemployed find a
job on either side of the border. For instance, sending the unemployed to take training courses on the other
side will increase the probability of finding a job in that country. This experience could be a success story
and act as an incentive. Training should follow the regulations of the country of work and be designed
according to local needs. Other forms of employee support on one side should also be the same for either a
Swede or a Dane.
Finally, labour mobility currently mainly concerns high-skilled labour force and prospects
confirm this trend. This raises the question of low qualified labour force in the integration. How can they
be part of the process? The Öresund Region has the ambition to become a high-tech learning region but as
Maskell and Törnqvist (1999) observed, the region would become a Northern European stronghold for
R&D intensive firms only within selected fields. It is impossible to give all individuals necessary
qualifications to be engaged in intensive knowledge industries. However, efforts should be focused on
enhancing skill levels of non-qualified workers, in particular immigrants. For this purpose, active labour
market policies in both sides should be co-ordinated when providing training courses to this category of the
population.
2.4. Competitiveness enhancing policies: networking and knowledge development
Integrating labour market is necessary but not sufficient per se for unleashing the collaborative
potential within the Öresund. Establishing and strengthening networks that stimulate innovative activities
and better use of skills and knowledge are crucial further steps to increase competitiveness and prosperity
within the region. Most promising ongoing initiatives include extensive co-operation in the research and
education field, and the development of networking associations in several key driving industry clusters in
the region, including medico/pharmaceuticals, information technology, environmental technologies and
food science. This chapter will argue that the potential of these initiatives could be expanded and
accelerated by further action in three critical areas. The first is to improve commercialisation of new
business ideas, not only through entrepreneurship training and financial assistance to new start-up firms,
but also by expanding a culture of experimentation and risk taking. The second is to enhance networking
opportunities beyond the few driving industry clusters in the region. In particular, this second area has to
do with improving innovation in the more traditional and lower technology industries. These industries
continue to provide important employment opportunities, remain essential for the region’s economic base,
and are the most exposed to new competitors. Given the prevalent small size of firms, expanded
networking should come with specific services providing and spreading complementary skills that are
lacking in the area. Finally, the third critical area is to improve more “bottom-up” networking through
better engagement among labour unions, professional associations, cultural and social organisations in the
process of regional integration, building on the cross-Öresund networks that already exist.
Building capabilities that enhance innovation
Numerous OECD publications have stressed that companies are increasingly invigorated by and
dependent on capabilities that enhance innovation. Rapid technological change and increased capability
throughout the global economy have resulted in much shorter product life cycles and a competitive
85
environment that is both more intense and more turbulent. Capitalising on new opportunities where firms
compete on innovation requires improving information flows that can quickly develop knowledge on both
technologies and shifting consumers’ preferences. In order to obtain timely results, companies may find
traditional – though still often necessary – efforts to enhance internal capacities in R&D47 and marketing
too slow. For the majority of firms too small to support formal R&D activities, innovation processes are
the result of collaborative subcontracting and supplier relationships. In short, the linear models in which
innovations are seen to be developed – first in an isolated research and development unit and then
translated into products for sale – rarely describes actual innovation processes. Companies rather
strengthen relationships with suppliers and customers as well as with universities, research institutes,
investments firms and government agencies to exchange various kinds of information and knowledge that
are critical to their ability to innovate.
Capabilities that enhance learning and innovation often require relational proximity between
many firms and research institutions. Of course, the transfer of knowledge that is codified (for example,
written in book and taught in courses), is not dependent on such proximity – it does not matter where and
by whom knowledge is originally produced. Companies can be rapidly aware of this knowledge, learn it
quickly and use it to easily imitate new products or processes. However, in many cases, companies are
dependent on tacit forms of knowledge. Generated through complex processes of learning-by-doing, this
form of knowledge is not easy to codify and is difficult to transfer. It does not simply “flow” within firms
or across firms’ boundaries; it needs to be filtered, interpreted, applied and processed. Therefore, firms do
not really face episodic and anonymous market relations among each other or with research institutions and
providers of services, but are rather confronted with feedback loops of repeated and frequent interaction.
They tend to develop networks composed by people and business involved in similar or complementary
economic activities, such as suppliers, consultants, bankers, lawyers, education and training operators,
business and professional associations, and government agencies. Firms are not only obliged to engage in
such complex network relationships. They have obvious reasons to do so. Tacit knowledge is a competitive
asset that is difficult for competitors to access and imitate. This allows firms benefiting from this relational
proximity to do things that competitors elsewhere are not able to do as well, as fast, or as efficiently.
Networks to establish relational proximity and enhance learning and innovations are often placebased and constitute an unevenly distributed geography. In principal, relational proximity may develop
across large distances that accordingly reduces the absolute necessity of spatial proximity for building
common interpretative frameworks. Frequent digital communication, common specialist literature and
periodic travel for face-to-face interaction may allow for efficient learning networks. Nonetheless, placebased relationships facilitate the development of intimacy and familiarity that can be vital for effective and
rapid communication. They can constitute the base to establish trust as well as common standards and
conventions that facilitate low transaction costs and specialisation. The common expression of these
phenomena is firms’ consideration of local context as a factor of production contributing or damaging their
competitiveness. In other words, economic activity is often dependent on untradable resources that are
specific to individual places, helping to explain the growing importance of regional clusters over the last
decades (Storper, 1995).
In many cases, the proliferation of nodes in a network will improve their internal division of
labour, increase their range of products, extend further economies of scale and scope, making them better
able to face the challenges of globalisation. In this respect, a more integrated Öresund Region could exploit
47.
Innovation that is rooted in new scientific research or technological development can be tremendously
valuable, as the firms and regions that can take advantage of the resultant scarcity rents can be highly
profitable and grow rapidly. It is important to stress, however, that while science and technological
development can be important sources of innovation, innovation is not solely dependent on scientific
knowledge or formal R&D activities.
86
untapped opportunities to expand regional firms’ capacity for innovations and knowledge-led economic
growth given the existing concentration of independent firms within the same or adjacent industrial sectors
in the region (i.e. clusters). Moreover, together with business networking, enlarging and increasing
co-operation (agreements) between firms and different organisations for knowledge development and
diffusion could further enhance innovation capabilities. Finally, organised co-operation with a broader set
of civil organisations and public authorities embedded in the regional structure could ensure the structured
and permanently improved “soft infrastructures” that could help exploiting all local competitive
advantages.
However, despite their proximity the Danish and Swedish portions of the region are relatively
insulated from each other and face the same formidable barriers to the promotion of networking – legal,
cultural, institutional – that existed before the construction of the fixed link. How long it will take, then, to
have the full potential of cross-border synergy begin to materialise spontaneously? Odds are that it will
take a long time, that in the best case will squander opportunities for improving present comparative
advantages and in the worst case be too slow to maintain them. In fact, many people, business and
organisations may remain locked in their national and linguistic context, and closer spatial proximity.
Without active channels for business transaction, dialogue and communication, even a critical mass of
related firms may under-exploit the large potential it has. Consequently, action is required to accelerate the
promotion of cross-border networking and ensure that the time required to learn and innovate in Öresund
eclipses the lower value added strategy of copying products and processes from other regions.
Encouragingly, there are promising networking initiatives that have been created and new cross-border
institutions that are rapidly developing.
The Öresund structure
The Öresund Region has developed significant strengths in knowledge-intensive activities,
including the medical and pharmaceutical industries and certain segments of information and
communications technology industries. Food processing is also among the largest industry in the region.
As of 2000, Öresund had an estimated 32 000 people working in the broad bio-tech industry, 125 medicotech companies, 95 bio-tech companies, and 71 pharmaceutical companies as well as 26 major hospitals,
including 11 university hospitals. Both the Danish and Swedish side of the sound house numerous
prestigious international companies in the field, including Pharmacia and Upjohn, Astra Draco,
Novo Nordisk, H. Lundbeck, Lovens Kemisk Fabrik and Gambro. More than 60% of the Scandinavian
production of medicine and associated technical equipment is placed here. Thus, it is not surprising that the
region ranks fourth in Europe in biotechnological and medical research (publications output), surpassed
only by London, Paris and Randstadt (Matthiesen and Schwartz, 1999).
The IT sector also plays an important role in the development of the region.48 More than
96 000 people are employed in the broader IT, telecommunications, and related industries, with the
majority of activities located in the Greater Copenhagen area. There are an estimated 23 000 people
employed directly in IT companies, with 50% of that in data processing (software) companies. Prominent
IT companies in the region include C Technologies (digital imaging and digital pen),
Aston IT (consulting), Navision (Enterprise software), and GIGA (an integrated circuit design company
recently purchased by Intel), while the rapidly growing Ericsson Bluetooth technology, a wireless local
area network system, was developed at Lund University. Twelve universities co-operate and more than
48.
The bridge and tunnel have improved the accessibility within a region where, at the same time, the
information technology penetration is remarkably high. Scandinavia is in general an extremely well
connected area and in 2000, over 57% of Öresund inhabitants had access to computers, compared to an EU
average of 35%.
87
6 700 people study IT as their core subject. The IT research is particularly, strong with more than
400 researchers. The magnitude of these numbers is revealed in comparison to another leading IT cluster,
Stockholm/Kista, where about 91 000 people work and the number of IT researchers is about 200.
The food-industrial production includes agriculture, food-processing industry, producers of
ingredients, packaging materials, process/control equipment, large-scale kitchens, restaurants as well as
distribution and sale. The universities in the Öresund Region have extensive knowledge within the food
area, and there are potential links with the information technology and biotechnology complexes in the
region as well. The food-industrial cluster comprises only 3% of employment in the greater Copenhagen
region compared to 5.3% in Skåne. Generally, Skåne has greater competencies in this area than the greater
Copenhagen region. Skåne is the largest agricultural region of Sweden, while Denmark’s agricultural
hinterland is primarily in Jutland. Skåne provides 80% of the country’s total sugar beats crop, 40% of the
potato crop, and 30% of grains produced. Skåne has the best soils and climate in all of Sweden, and is
home to major international food production companies and processors, including Campbell Soup,
Dole Food, Findus, Orkla Foods and Unilever. Absolut Vodka has its entire production in the city of Åhus.
Skåne’s strength in agriculture and food processing provides some important opportunities for synergy
throughout the region.
These clusters are strong sources of competitive advantages in the region, but they represent only
a part of the industrial activity. One may add to the above (medical/pharmaceuticals, information
technology and food production) an environmental cluster as well with companies that either produce
environmental technologies or make production, products and services more environmentally friendly. In
particular and despite these relative strengths, a large part of the economy is still based on more traditional
and low-tech industries (Table 2.3.1). Apart from the region’s prominent pharmaceutical and medical firms
as well as IT firms, a few others have large R&D investments and good collaboration with universities.
Investments in IT and communication are growing fast across sectors but an estimated 94% of Öresund’s
manufacturing firms are R&D-extensive or intermediate (as measured by employees), and KnowledgeIntensive Business Services account for only 22% of services (OECD, 2000). This element does not
contradict but rather confirms the policy focus on networking and clustering. It is enough to consider the
dominance of SMEs in the region, which underscores even further the importance of promoting
networking. In fact, if any, lack of competitiveness for these firms is much more the result of isolation and
the often consequential weak specialisation than the effect of their small size.
88
Table 2.3.1.
Number of employees in the Öresund Region by industrial/trade sector, 1998
Öresund DK
Öresund S
Öresund DK+S
Specialisation ratio1
Business/Trade sector
% of total
% of total
% of total
Number
Number
Number
T/DK
T/S
(DK)
(S)
(T)
Agriculture and fishing
10 651
0.94
6 421
1.53
17 072
1.10
1.17
0.72
Mines, etc.
789
0.07
548
0.13
1 337
0.10
1.44
0.77
Food, drinks and tobacco
24 288
2.14
16 040
3.82
40 328
2.60
1.22
0.68
Textile clothing and leather
1 836
0.16
1 491
0.35
3 327
0.20
1.24
0.56
Tree paper and graphics
28 916
2.54
16 015
3.81
44 931
2.90
1.14
0.76
Mineral products
6 484
0.57
4 202
1.00
10 686
0.70
1.23
0.70
Electronics and optical equipment
19 095
1.68
7 963
1.90
27 058
1.70
1.01
0.90
2
32 964
2.90
22 815
5.43
55 779
3.60
1.24
0.66
Metallic and engineering
34 502
3.03
16 214
3.86
50 716
3.30
1.09
0.85
Other manufacturing industries3
IT
18 380
1.62
4 775
1.14
23 155
1.50
0.93
1.32
Electricity, gas and water
7 835
0.69
3 175
0.76
11 010
0.70
1.02
0.93
Construction industry
64 297
5.65
25 918
6.17
90 215
5.80
1.03
0.94
Vehicles; trade and repairing
174 905
15.38
55 432
13.20
230 337
14.80
0.96
1.12
Hotels and restaurants
30 313
2.67
8 193
1.95
38 506
2.50
0.94
1.28
Transport, storage and communication
4 295
0.38
27 725
6.60
112 020
7.20
19.06
1.09
Financing and insurance
45 906
4.04
7 451
1.77
53 357
3.40
0.84
1.92
Other business
90 672
7.97
30 492
7.26
121 164
7.80
0.98
1.07
Public administration and defence
89 727
7.89
25 049
5.96
114 776
7.40
0.94
1.24
Education
88 425
7.78
32 191
7.66
120 616
7.70
0.99
1.00
Social and public health sector
202 018
17.76
85 237
20.29
287 255
18.40
1.04
0.91
Organisations, entertainment, etc.
66 094
5.81
16 509
3.93
82 603
5.30
0.91
1.35
Real estate agents and services
14 789
1.30
6 200
1.48
20 989
1.30
1.00
0.88
TOTAL
1 137 181
100.00
420 056
100.00
1 557 237
100.00
1.00
1.00
1. This ratio compares the degree of specialisation (share of employees by industrial/trade sector) between Öresund and each sub-region of Öresund. If the
ratio is 1, the sub-region has the same share of employees in the industrial/trade sector as Öresund. If the ratio is lower than 1, Öresund has a lower share of
employees in the sector than the sub-region. If the ratio is higher than 1, Öresund has a higher share of employees in the sector than the sub-region.
2. Including vehicles.
3. Including chemicals and furniture.
Source: Business Guide Öresund (2002).
89
Actors and networking strategies
On the whole, given the existing concentration of independent firms within the same or adjacent
sectors, the question arises as to what strategies local communities undertake in order to raise the present
competitiveness of regional clusters and promote their future dynamism. In this respect, several actors at
multiple levels are aware of the region’s competitive strengths and seem persuaded that a more integrated
region can further expand firms’ capacity for innovation and knowledge growth. Some of them are even
playing an important role in enlarging co-operation between firms and organisation for knowledge
development.
Education sector as a leading actor in promoting networking
The education sector seems to be in the forefront of promoting co-operation for knowledge
development. With a total of 20 universities with 130 000 students, the Öresund Region has many
strengths in the education and research sector. More important than simply the existence of these resources,
however, is the co-operation between universities that has developed over time.49 The long-term informal
co-operation was formalised in 1997 with the creation of the Öresund University. This institution has been
a leading actor not only around formal scientific research and education (i.e. Öresund Science Region), but
also around the creation of institutions to promote more informal networking activity and information
sharing for economic activities. Working in collaboration with researchers, business leaders and policy
makers throughout the region, the Öresund University has helped in identifying critical driving growth
clusters and facilitating the development of networking associations in each of those clusters. These
organisations – Medicon Valley Academy, Öresund IT Academy, Öresund Food Network, and
Öresund Environment – are already playing an important role in promoting networking and integration
across the region, and show a great deal of promise for the future.
Medicon Valley Academy (MVA) started out as a publicly funded initiative, set up in 1997 as a
regional and bi-national network organisation. In 2000, it went through a significant re-organisation to
become a membership-based organisation, funded primarily by membership fees (that accounted for 67%
of total funding for the year, with conference fees providing another 17%). The development of a
membership base had the aim to invest companies in networking and help make the Academy effective in
meeting their needs. In fact, it has helped broaden the base of support of the organisation, which,
nonetheless, remains critically dependent on public support. As of December 2000, universities and public
hospitals paid for 55% of membership fees. The Academy has sponsored several conferences each year.
Workshops and seminars are organised more frequently around specific challenges that have been
identified by members. They are aimed at strengthening a regional biotech forum for debate and
networking. The Academy has also organised a series of ongoing sub-groups promoting networking
around topics, such as human resources in bio-tech, bio-molecular structures and dynamics, cancer
research and health economics. A Ph.D programme involving 12 students is part of the MVA and aim at
strengthening co-operation between public institutions and private companies about product development.
While catalysed by the Öresund University and significant public sector funding, the organisation has now
49.
One interesting evidence of this is the early efforts to develop a commonly administered “Öresund Summer
University” for international students, who take courses at different institutions in the region. Currently,
co-operation in education and research affect many aspects of the activities of universities. Still, utilisation
of resources could be intensified, including such areas as courses offered, library collections, laboratories
and other facilities, which can be made readily accessible to students and researchers throughout the
region.
90
developed a dynamic of its own and plays an active role in promoting information sharing and knowledge
development in the region.
Due to the successful experience of the Medicon Valley Academy, the region is undertaking
similar actions in order to support other clusters, such as those related to information technologies and
food, or to face growing environmental issues and opportunities in the area. As for the other clusters,
IT Öresund, founded in November 1999, is a co-operative organisation for cross-fertilisation of Swedish
and Danish actors in information and technology industries and for the development of the IT cluster. Early
activities focussed on marketing the cluster both regionally and globally. More recently, they have
completed a detailed study mapping the entire IT sector in the Öresund Region50 and they have developed
a detailed database of over 500 IT-related companies.51 Moreover, the report reveals that Öresund is the
Scandinavian IT centre.52 The organisation is also trying to develop ways of connecting new ideas to
sources of venture capital in order to contribute to firm creation. In co-ordination with the Medicon Valley
Academy, IT Öresund is developing a cross-border, post-doctoral programme building links between
information technology and biotechnology, scheduled to begin in autumn 2002.
Öresund Food Network53 was founded with the goal of creating synergies between public and
private research and among companies to establish the Öresund Region as one of the world’s most
dynamic agro-alimentary regions. The entire food-industrial cluster includes agriculture, the food
processing industry, producers of ingredients, packaging materials, process/control equipment, large-scale
kitchens, restaurants as well as distribution and sale. Food processing is one of the largest single industries
in the region and employs over 40 000 people. The initial work of the Öresund Food Network is
concentrated in five sub-areas within which networks are being built, and projects initiated: quality and
food safety;54 process technology;55 food biology;56 logistics, distribution and e-trade;57 and food and
health.58
As for the environmental issues and opportunities, it is important to recall that the region is
undergoing a growth and expansion phase, reflected by the large number of building projects of various
sizes and by the likely expansion of the traffic volumes. On the one hand, the Öresund Region is home to
companies and research institutions that specialise in the environmental adaptation and sustainability of all
phases in the life of a building (planning, construction, use and demolition). In some cases, research
institutions and companies are already pioneers of systems that automate and optimise the operation of
environmental plans. On the other hand, local authorities have to co-ordinate, plan and build the best
possible traffic infrastructure and to exert a positive influence on future behaviour and travel habits.
50.
This report, compiled by Povl A. Hansen and Göran Serin from Roskilde University, contains detailed
statistics and analysis from the regional IT-industry, education and research.
51.
www.it-match.com.
52.
These numbers can be compared to another leading IT cluster, Stockholm/Kista, where about
91 000 persons work and the number of IT researchers is about 200.
53.
www.oeresundfood.org.
54.
Including food safety, traceability, risk assessment, analytical methods, sensory science and chemometrics.
55.
Including dairy technology, fat technology, hygienic design, membrane processes, bio-separation and
enzyme technology.
56.
Including bio-technology, microbiology/mycology, bio-preservation, starter cultures and cell biology.
57.
Including packaging, e-business, electronic marketing and logistics.
58.
The importance of food from a nutrition and health point of view, including functional qualities of food
e.g. antioxidants.
91
Öresund Environment59 is an organisation attempting to build links between research, the business
community and the public sector in the environmental field. It is intended to concentrate in the start-up
phase of four main topics: traffic and air, optimised environmental systems, construction industry, and
food.60 After some preliminary research showing the basis for a strong cluster in environmental
technologies, Öresund Environment was established in September 2000. A steering committee started
work on the project in September 2000. The committee has 10 members and a chairman who are drawn
from the business community, research and local authorities on both sides of the sound.
In short, within the four driving clusters (medical/pharmaceuticals, information technology and
food production and environment) and the four industry cluster associations, the Medicon Valley Academy
is the oldest and most established. The other three are just in the process of getting structured and building
their networks, but are already showing promise. It may be early to draw general conclusions on the overall
approach for enhancing competitiveness adopted in Öresund. Nevertheless, it seems appropriate to say that
leaders in the region are adopting a strategy for network development that appear effective and positive.
They are not trying to dictate technology developments, but rather build the organisational infrastructure to
promote information sharing and knowledge development between actors within the cluster. While there is
no guarantee of success – there are in fact many cluster initiatives around the globe that have not been
successful – the approach seems quite effective. The initiatives utilise very practical steps designed to meet
specific business needs and open up new markets rather than frame development goals around abstract
discussions of regional integration. There seems to be a widespread understanding of promoting
information sharing and social network creation, rather than organisation building. The approach is
flexible, and rooted in organically developing projects that are likely to build effective “communities of
practice” over time.
In addition to helping set up networking organisations in each sector, the Öresund University and
the other relevant regional actors have also set up an organisation to help building links across the multiple
industry clusters. This initiative, called Öresund Science Region, was formally launched in August 2001
and brings together IT Öresund, Medical Valley Academy, Öresund Environment, Öresund Food Network
and the Öresund University. The umbrella organisation aims to stimulate growth in each of the sub-sectors,
stimulate new knowledge, and promote integration across borders in the region (including between
disciplines, between academia, industry and the public sector, between Denmark and Sweden, and between
Öresund and other regions in the world). This structure provides a strong basis for ensuring extensive
networking within the region.
Business associations, public sector initiatives and civil society
Businesses in the region have organised a variety of cross-border associations (Box 2.4.1). These
business associations seem to be playing a valuable role in promoting knowledge and networking
activities. It is difficult, however, without more in-depth research to assess the effectiveness of these
organisations in promoting networking amongst their members, and between their members and other
entities in the region.
59.
www.oresund-environment.org.
60.
A large amount of research and development work is done in the Öresund Region on the food of the future,
the optimisation of food production processes and the minimisation of the industry’s environmental impact.
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Box 2.4.1. Business associations in Öresund
The Öresund Business Council was established in 1998, as a forum of the 30 top business leaders from each side of
the sound. Their purpose is to develop a close dialog with the Öresund University and Öresund Committee, and voice
collective trade viewpoints towards regional as well as national politicians and authorities (Business Guide
Öresund AB, 2002). The organisation is chaired by the head of the Confederation of Danish Industries and the Head
of the Chamber of Commerce and Industry in Southern Sweden (SydSvenska Industri-Och Handelskamkmaren) in
Malmö.
The Öresund Chamber of Commerce61 is a broader joint venture of the Danish Chamber of Commerce and the
Chamber of Commerce and Industry of Southern Sweden.
Business-Bridge62 is a Danish-Swedish private networking organisation for trade and industry in the Öresund Region.
It is a private organisation, with 200+ members, trying to promote concrete business ties across the sound.
Venture-Cup Öresund63 is designed to promote entrepreneurship in the region. It tries to help entrepreneurs take their
business ideas and turn them into professional businesses, through their network of venture capitalists, entrepreneurs
and other professionals. It is a non-profit organisation sponsored by business organisations and companies in the
region.
IT-Branchen Öresund64 grew out of two trade organisations, IT Företagen in Sweden and IT-Brancheforeningen in
Denmark, which together established this new Öresund Interest group, with the goal of supporting interested parties
of the IT sector in the whole region and contributing to putting Öresund on the high-tech world map.
In addition to these explicitly cross-Öresund initiatives, there are a multitude of other business networking
organisations in the region that seem to play a significant role in promoting networking, information sharing and
knowledge development. The most prominent initiatives include:
− The Confederation of Danish Industries (Dansk Industri DI): represents some 5 800 companies in both
manufacturing and services.
− Svenkst Näringsliv: represents some 48 000 small and medium-sized enterprises within 47 branches and
employers.
− Sydsvenska Industri-och Handelskammaren: The Chamber of Commerce and Industry of Southern Sweden is a
private organisation of enterprises in Southern Sweden.
− HTS (former Danish Chamber of Commerce): HTS trade, transport and service is the main organisation which
collects more than 10 000 businesses and 90 branch unions, HTS is Denmark’s second largest business and
employers’ union.
− IT-brancheforeningen: The Danish IT Industry Association (DITIA)1 represents companies which market products
and services in the area of IT, Telecom and Electronics.
− ITEK is a trade association in the fields of IT, telecommunications, electronics and communication, which was
established by the Confederation of Danish Industries in 1999.
The Danish Venture Capital Association makes a new forum for venture capital associations, investment banks,
banks, funds, innovation milieus, consulting agencies, etc.
61.
www.oresundchamber.com.
62.
www.business-bridge.com.
63.
www.oresund.venturecup.org.
64.
www.itb.dk/oresund/”\t”_blank.
93
As for the public sector, there is clearly a high level of commitment on the part of public officials
to promote integration reflected in a proliferation of cross-Öresund co-operative projects. The
Öresundskommiteen (Öresund Committee)65 is the most prominent effort to build regional co-operation
and networking across the Öresund in the public sector. This Öresund Committee is a cross-border
co-operation forum for local and regional politicians in which the two governments only have an
observatory role. The goal is to enhance the development of the region and the cross-border co-operation
on all levels. The Committee is a catalyst and network builder, a meeting place and a political platform. It
also hosts the secretariat for the EU INTERREG III.
There are a variety of other cross-Öresund initiatives amongst public sector agencies in the
region. For instance, the HH-samarbejdat/HH-samarbetet66 is an effort to promote co-operation across the
Helsinor-Helsinborg straight. This initiative began in 1995 with a formal collaboration between the
municipalities on both sides. It has expanded now to include the Helsingør Trade Council, the county of
Frederiksborg, and the South Swedish Trade and Commerce Department. AF-Öresund67 and
Öresundsregionens Arbejdsmarkedspolitiske Råd (ÖAR) are labour market cross-border institutions that
have been described above. The statistics agencies on each side are co-operating to integrate data gathering
and reporting systems. This ORESTAT initiative is supported by INTERREG III A.
In contrast, there appear to be relatively few cross-Öresund initiatives from civil society, at least
on a formal institutional level. This may hamper the development of an “Öresund identity” and frustrate
efforts to initiate bottom-up forms of integration. The Öresund Network web site,68 for instance, includes
25 different categories of links, but not a single category that might include professional associations or
community organisations. Similarly, a detailed review of links on other Öresund web sites, including the
Medicon Valley Academy, Öresund Food Network, Öresund Committee and so on, revealed little
information suggesting significant cross-border civil society organisations. The Danish Confederation of
Professional Associations,69 and the Swedish Confederation of Professional Associations70 seem to have no
information on their web sites suggesting any attention to cross-Öresund activities. The IT Öresund web
site did identify the existence of “First Tuesday” associations in both Denmark and in Malmö.71 This
association is one of the premier global forums helping professionals, entrepreneurs and business leaders in
the information technology field come together, and there are First Tuesday networks in more than
40 countries around the globe. Activities in the Öresund Region, however, seem to be minimal and limited
to each side of the Öresund.
A possible exception may be on the side of unions. Business Guide Öresund72 did identify that
labour unions in the region have set up a trans-national structure to help provide services for their members
on both side of the region. Such Interregional Trade Union Councils (ITUCs) have been recognised by the
European Trade Union Council73 as important in the process of integration within the European Union. The
Öresund Industrial Council has three main areas of focus: 1) resolving differences between Danish and
65.
www.oresundskomiteen.dk/english.
66.
www.hhsamarbejdet.dk.
67.
www.aforesund.org.
68.
www.oresundnetwork.com.
69.
www.ac.dk.
70.
www.saco.se.
71.
www.stratventure.com.
72.
www.bgoresund.com.
73.
www.etuc.org.
94
Swedish employment legislation and contractual practices; 2) providing common information activities,
such as digital information services and seminars; 3) influencing and debating political decisions with
politicians and authorities, in order to advance regional development where both labour and services are
secured a free and unlimited trade across borders. This initiative includes the Swedish Metal and Industry
Unions, and the Danish CO-industry and Engineering Unions.
The seeming lack of involvement of civil society organisations in cross-Öresund activities may
simply reflect the lack of functional integration within the region. Over time, as cross-border activities and
interaction increases, this may change. A significant danger emerges, however, if initiatives to promote
cross-border activities are seen by local residents as being imposed on them, rather than them being active
participants in the process. There are some indications that the effort to promote cross-Öresund integration
is viewed in some quarters as a top-down initiative. While it is unlikely that wide-spread opposition to
integration within the Öresund Region would develop, unless more attention is paid to citizen participation
and more bottom-up integration within the region, it will likely be seen by many residents as at best
irrelevant to their day-to-day activities, and at worst a significant waste of public resources and attention.
Discussion and negotiation of joint projects could better involve organisations of civil society and help
developing more intense participation at regional level. In several fields and not only economic
development, public actors could set incentives to civil society participation in designing, negotiating and
implementing contracts. These contracts should state the specific responsibilities in public action of the
different actors, including private and non-governmental ones. The medium-term aim could be establishing
conventions and rules so to practically build a regional table for “negotiated governance“, a network within
which solutions to common problems can be jointly discovered, discussed and sustained. The condition
may be promoting a large campaign for a change of practices.
Öresund is confronted with a challenge that appears more and more crucial in many countries. It
has to do with connecting development policies and governance issues. In several countries, a number of
responsibilities have been transferred to the regional and local authorities as the knowledge needed to
devise and to deliver locally relevant public goods is dispersed among many different local and national
agents, including the private sector, unions, trade associations, NGOs. At the same time, local institutions
become more aware that the production of public goods and services can benefit from economies of scale
and scope and that many of the externalities produced have an impact beyond the local context. Thus, the
capacity to involve all relevant actors is crucial for the impact of policies. However, multiplying the
number of actors requires a high degree of co-ordination among administrations and improved co-operation
between public and non-public bodies in policy design and implementation. It requires as well to
permanently up-date knowledge of the specific local situation. Institutional partnerships based on contracts
among levels and branches of government are often experimented to replace traditional top-down decision
making that are less and less capable to cope with the complexity of regional and local systems.
Existing challenges for networking and knowledge development
In analysing the networking activities currently underway in the region, they are much strength
and some promising initiatives underway. Nonetheless, there do appear to be some important gaps, some
of which leaders in the region seem to be well aware of, but others which seem to be neglected. The
following provides some broad recommendations in three areas: 1) improving the commercialisation of
new business ideas; 2) expanding networking opportunities beyond the few driving industry clusters in the
region; and 3) promoting more “bottom-up” networking in the region.
95
Commercialising research and diffusing services
Clearly one of the central goals of the Öresund Science Region, and related initiatives, is not
simply to promote new research in critical areas of technological development, but to help ensure that
those new inventions are translated into new business opportunities. Traditionally, one of the main ways
this goal has been pursued is through the creation of science parks – university linked industrial parks in
which new start-up firms, connected with university researchers, can benefit from subsidised rent and
infrastructure along with customised business services to help facilitate business creation and expansion.
The Öresund Region has at least six such science parks, all of which have had some success in promoting
new business formation (Box 2.4.2). Are they an appropriate tool? International studies of science parks
have shown that in general science parks have had mixed success.74 The critical factor in whether they are
effective seems to be not so much their existence and the support of neighbouring universities, but rather
the social relationships that exist between businesses located in the science park and other businesses and
institutions in the region.75 In this perspective, the networking organisations that have been created in the
major high-tech sectors of the area and the Öresund Science Region, the umbrella organisation, that has the
intent to help building links across the multiple industry clusters are initiatives oriented in the right
direction. Their connection with existing parks should be maintained and improved.
Box 2.4.2. Science parks in the Öresund Region
These include:
Medeon in Malmo (www.medeon.se): a science park for companies in bio-science and medical technology, located
in the centre of Malmo.
Krinova I Kristianstad (www.krinova.se): Krinova Science park in Kristianstad, next to the university. CAT (Center
for Advanced Technology) Science Park (www.catscience.dk) was originally set up Risø National Laboratory,
Technical University of Denmark (DTU) and Roskilde University (RUC) in Denmark, with the goal of translating
high-tech research into business opportunities. It now has over 60 high-tech companies located in its facilities.
Ideon (www.ideon.se): founded in 1983, is affiliated with Lund University and claims to be Scandinavian’s first
research park. Again, their goal is to assist R&D companies in IT, biotechnology and other high-tech areas, to
develop and grow to meet the demands of the open market, and now has more than 170 companies affiliated with it.
Symbion (www.symbion.dk): is a privately owned and financed science park located in Copenhagen, established in
the mid-1980s. They specialise in IT and biotechnology, and currently have 85 companies employing 650 people.
The Danish Science Park (www.forskningscentret.dk): in Hørsholm claims to be the largest science park in Denmark,
hosting more than 70 companies employing more than 3 000 people. Established in 1962 by the Danish State, it
works in close co-operation with the Technical University of Denmark, and focuses on the fields of biotechnology,
environmental technology and IT.
74.
With some being highly successful (such as the Hsinchu Science Park in Taiwan), while others showing
less positive results (Massey, Quintas and Wield, 1992).
75.
What is necessary is building an “innovative milieux” (Castells and Hall, 1994), or in Anna Lee Saxenian’s
words: “creating a high-tech region is not a matter of combining ingredients (i.e. university, start-up firms,
science parks, highly skilled workforce, etc.). It requires building institutions and relationships that support
innovation.” (Saxenian, 1988).
96
However, while they have had some success in helping new firms, the overall impact of existing
science parks in the Öresund Region seems to be limited. In the Regional Innovation and Technology
Transfer Strategies (RITTS) project of the Greater Copenhagen Authority (HUR) in co-operation with
the EU, researchers identified that while universities have strong research capacity, their arrangements for
working with companies are under-developed, compared to other regions in Europe and the United States.
In particular, university-industry co-operation is limited regarding SMEs that in many cases are currently
not sufficiently involved in the regional innovation system. Moreover, researchers stressed that the existing
training in entrepreneurship is limited and there is no centre for entrepreneurship in Greater Copenhagen.76
Thus, the recommendations that emerged out of this study included improving university-industry
linkages, especially aimed at SMEs, organising stakeholder groups to develop research strategies, establish
a Greater Copenhagen Innovation Centre, and promote greater entrepreneurship training and financial
assistance in the region. Following these recommendations for the entire Öresund Region would be highly
valuable.77
It is important to admit, however, that building a new business requires more than the ability to
recognise new market opportunities and the provision of appropriate financial assistance. It also requires a
range of other competencies, including experienced management, especially as a company grows beyond
its original founders, extensive legal assistance, not only to help with processes of incorporation but also to
deal with detailed regulatory and legal requirements, and good accounting and human resource
administration skills, all of which small firms lack. Studies of Silicon Valley, for instance, have
documented the extensive networks of supportive contract companies that specialise in providing these
services to start-up firms, allowing inventors to focus on the technological development and making the
business creation process as seamless as possible (Kenney, 2000; Lee et al, 2000). Similarly, studies of
venture capital firms in Silicon Valley and New York have shown that the access to these various areas of
competencies for new start-up firms that venture capital firms provide is perhaps even more important than
the financial investment itself (Zook, 2002).
Diversifying innovation strategies
A second major area that clearly needs further development is the expansion of innovation
strategies from the core research knowledge-based industry clusters to the variety of other economic
activities that make up the Öresund economy. While the core economic clusters identified by the Öresund
Science Region initiative – medical/pharmaceutical, information technology, food science and
environmental technologies – are extremely valuable for the region, they contribute to a minority of
employment and gross regional production. As mentioned above, the medical/human life sciences
industries and the IT industries together are estimated to employ some 132 000 people in the region.
Agriculture and food processing employs perhaps 60 000 (Business Guide Öresund AB, 2002) and there is
yet to be an estimate of total employment in the fields covered by Öresund Environment but total
employment is likely to be small. Thus, with total employment in the region totalling over 1.5 million,
these four clusters, even in their broadest definition, employs fewer than 20% of the total workforce. Broad
prosperity will depend on the continued competitiveness of a wide range of other industries.78
76.
A point was also raised about a lack of transparency within the funding schemes for innovation in
companies.
77.
The creation of a greater Öresund Innovation Centre, with both public and private sector funding could be
considered, with the explicit purpose of providing entrepreneurship training and assistance to firms
throughout the region. This institution could become a centre for venture capital as well.
78.
One of the more interesting indicators of the importance of these other activities to economic innovation in
the region lies in an analysis of “gazelle firms” in the Öresund Region. Gazelles – firms that show
97
Cultural industries79 are one of the most promising opportunities for further development of
networking initiatives. A comprehensive study of the cultural economy in the Öresund Region has not yet
been done, but it is clearly an important sector, with significant opportunities for cross-border synergies. A
listing of institutions in the region includes 61 theatres, 23 art museums, 84 other museums, 130 galleries,
340 public libraries, 67 cinemas, six symphonic orchestras, and 13 B.A./M.A. courses in Art and Culture.80
Copenhagen is a major culture centre, with world-class music, theatres, museums and dance.81 While less
well-known, Skåne also has major cultural industries, with a dynamic music, theatre and drama community
in Malmö. It is also an important centre for Scandinavian Film Production.82 Given the existing resources,
there have been some efforts to promote cross-Öresund cultural collaboration.83 There remains, however,
lots of room for expanding networking opportunities and innovation. In this respect, it would be useful to
develop a membership organisation that could play a more active role in promoting ongoing networking
opportunities, and build ties between some of these cultural industries and some of the new media and
information technology sectors in the region; as multi-media, communication and wireless technologies are
leading to entirely new cultural products and means of distribution. Furthermore, such an organisation
could play a critical role in documenting the economic importance of cultural industries in the region,
while helping to identifying and advocate for public policy initiatives that could expand economic
opportunities.
Other critical sectors include transportation, tourism, traditional manufacturing, and
retail/wholesale distribution. Particularly interesting are the last two. As for traditional manufacturing, an
estimated 90 000 people work in the iron, steel and engineering sector in the Öresund Region, more than
any other single sector, with a third in Skåne, and two-thirds in Greater Copenhagen. Small workplaces
dominate the sector, with 70% of enterprises having less than 10 employees, and only a couple of per cent
with over 100 employees. The number of jobs in the sector has increased in recent years, and is expected to
continue to increase. Metal products are the single largest sub-sector, and the automobile sub-sector far
bigger in Skåne (70%) than in Zealand. Within the regional economy, the computer, electrical and optical
industries only account for 7% of total employment, while food processing (6%) wood products and
printing (5%) basic metal industry (9%) and construction (13%) reach similar or superior levels. Little
attention has been paid in the cross-Öresund policy debates to the importance of traditional manufacturing
sectors in building the regional economy. It would be a mistake to neglect opportunities for innovation in
these sectors.
consistent rapid growth over at least a four year time period – are typically seen as an important indicator
of innovation, economic growth and job creation. Frequently such rapidly growing firms are expected to be
in areas of new technological development. A study of gazelle firms in the Öresund Region conducted by
Greens Analysis Institute, however, found that 54% of the 308 firms in the Öresund Region that met their
rapid growth criteria were in the service, retail or repair sectors. Another 42% were in construction,
manufacturing and transport sectors (Business Guide Öresund AB, 2002).
79.
Film production, theatre, music, dance, sport and other forms of entertainment are increasingly recognised
around the globe as being critical components of economic prosperity of many regions (Scott, 1997).
80.
www.oresund.com/welcome2.htm.
81.
The Danish government, including municipal as well as national government, spent more than
DKK 11 billion in 1999, nearly 2% of total public expenditure.
82.
It has networks of production technicians and creative talent in the region, and such organisations as the
Swedish Film Institute, Swedish Film Network and Danish Film Institute providing important networking
opportunities in the industry.
83.
The Kultur-Öresund web site, developed by the Öresund Committee, provides a valuable calendar listing
of cultural events in the Öresund Region on an ongoing basis. Kulture-Bro sponsors a biennial cultural
celebration for the region, designed to consolidate the tradition for cultural co-operation across the sound
and strengthen the profile of cultural institutions in the region.
98
As for the retail sector, it employed approximately 104 000 people, accounting for some 6-7% of
all employment in the region. Convenience goods is the single largest trade sector, accounting for
approximately 40% of total retail sales in the Danish part of Öresund and 50% in the Swedish part. A
significant portion of employment, particularly in the Danish side, is in warehouse employment, though a
recent Danish government ban on further warehouse developments is likely to limit growth in this sector.
Large centralised retail chains, including Dansk Supermarked, FDB and Swedish ICA, KF and D-Gruppen,
dominate the convenience goods sector. There are also a variety of centralised procurement associations
that exist for several of the major convenience chains84 whose goal is to leverage relationships with
suppliers and manufacturers and improve efficiency of procurement systems. Increasing integration in the
region may provide some benefits to the Swedish side, as opening hours are longer, currency is somewhat
devalued and the duty is lower than in Denmark. Improved innovation in the entire sector could have a
significant impact on the entire regional economy.
In short, while strong and competitive driving clusters are a critical component of a region’s
economic growth, overall prosperity depends on the productivity of all its industries, not just driving
clusters. “High-tech” clusters, while highly productive and paying high wages, in fact are a relatively small
component of overall employment in most regions. An important part of jobs in traded industries are
typically in sectors that are not generally perceived to be “high-tech”. This includes business services,
financial services, transportation and logistics, hotels and tourism and so on. Often innovation in these
local industries and other traded clusters depends less on the development of new research, and more on
process innovations and the application of existing technologies in a new context (Box 2.4.3). There are
some significant initiatives in many of these sectors to promote innovation and improved development, but
these industries lack the sustained attention to networking, information sharing and institution building that
exist in the core clusters discussed above. Again, the key role for the public sector in these areas is not to
try to pick “winning” industries or firms. Instead the goal is to build networking relationships among actors
in the sector, and between actors in the sector and actors in related sectors, in order to promote information
sharing and innovation.
Box 2.4.3. Wal-Mart
One compelling piece of evidence that amply demonstrates the importance of process innovation in these non-driving
industry clusters is the case of Wal-Mart in the United States, and its impact on productivity and efficiency in the
retailing and wholesale logistics sectors. In 1987, Wal-Mart had just 9% market share in retailing, but was 40% more
productive than its competitors, as measured by output per hour. By the mid-1990s, its market share had grown
to 27% while its productivity advantage widened to 48%. Wal-Mart achieved these productivity advantages by
automating their inventory management and distribution systems, using relatively simple, pre-1995 information
technology solutions, including barcodes, scanners, and picking machines combined with warehouse management
software systems for inventory control and tracking. Wal-Mart’s market strength forced its competitors and supplier
networks to adopt similar mechanisms, including economies of scale in warehouse logistics and purchasing,
electronic data interchange (EDI), and wireless barcode scanning, in order to stay in business. Because wholesale and
retail trade is such a large component of the economy, these relatively simple improvements had a dramatic effect on
the overall US economy. A recent study of productivity increases in the United States, for instance, found that more
than 50% of the acceleration in labour productivity in the late 1990s (which averaged 2.5%, compared to 1.4% in the
previous decade) is attributable to increased productivity in wholesale and retail trade (McKinsey Global
Institute, 2001). The economic boom in the late 1990s in the United States is frequently attributed to the rapid growth
associated with the development of the World Wide Web and new information technologies. Yet in the most
important measure of economic prosperity, it is the application of some of the simpler aspects of these technologies in
older industries that has had the greatest impact on economic prosperity.
84.
ATBAS for Danish FDB and Dagrofa, DKB for Danske Supermarked and Supervib, AMS for ICA allkauf
99
Civil society networking
Finally, if there is one clear theme that emerges from an examination of information sharing,
networking and knowledge-related activities in the Öresund Region, it is that the process is primarily being
driven from the top-down, rather than the bottom-up. That is to say that the level of functional economic
integration across the Öresund is still quite low. The primary impetus for economic integration comes from
researchers, policy makers and some business leaders who recognise the significant economic potential of
greater economic integration in the region. Some of this economic potential is already being realised, but
for many residents of Skåne and Zealand, the idea of an Öresund Region remains an abstract concept with
little application to their day-to-day lives or their economic futures. In order to build a fully integrated
region, the Öresund must become a tangible part of people’s identity and regular social interaction.
Creating this will require a much greater participation of the vast array of civil society organisations in the
process of integration. Professional associations, neighbourhood and community organisations, unions,
churches, and so on are an important part of social life in the region, and as yet seem to be only
peripherally involved in Öresund integration.
The first task in building these civil society linkages is to identifying the existing, informal social
linkages that already exist across the Öresund. One promising place to start would be a survey of Danes
living in Skåne, and Swedes living in Copenhagen, designed to find the social networks and institutions
they are involved in that may cross the Öresund. These communities of “expatriate” Danes and Swedes are
an important and seemingly under-utilised asset for the region. They are individuals who have already built
integration within the region in their own lives, and there are undoubtedly extremely valuable lessons that
could be learned from them. Their numbers are not insubstantial, and significantly larger than the number
of people who commute back and forth on a daily basis. There are an estimated 3 600 people born in
Denmark living in the city of Malmö, for instance.85
Once existing informal and perhaps formal social networks amongst this community have been
identified, policy initiatives could be developed to provide organisational support to help sustain and
expand these networks, and improve their linkages with other institutions in the region. Finally, efforts
could be developed to enlarge access to these organisations to other residents of the region on both sides of
the border.
Conclusions
The previous sections have attempted to analyse current processes underway in the area of
networking, information sharing and knowledge development in the Öresund Region. Clearly there is a
great deal of cross-Öresund activity underway, and numerous initiatives in place facilitating social and
business networks across the region. The most promising of these initiatives lie in the area of cluster
promotion, where institutions have been set up not simply with the goal of promoting particular industry
clusters, but with the recognition that one of the best ways of doing this is improving communication and
co-operation amongst researchers, businesses, public officials, and other organisations and individuals
active in the sector. Given the contemporary economic context, with the unpredictability of technological
change and high levels of volatility in the competitive environment, this “networking” approach to
economic development helps build the innovative capacity and flexibility of these industry clusters in the
region. Its focus is on the institutional mechanism for delivery of various public and private services that
are essential for economic integration and knowledge promotion in the region. This includes not just
education and training, but technology assistance, incubator services, infrastructure provision, financial
and Edeka.
85.
Elisabeth Pålson, Statistical officer, City of Malmö.
100
support, management assistance and so on: there is significant potential for the exploitation of economies
of scale and scope and the reduction and/or elimination of duplication in service provision in the region.
It is important to emphasise, however, that building effective communication and collaboration
across the Öresund is not an easy task. Effective and rapid communication requires high levels of trust, and
the development of commonly shared mental frameworks. These frameworks will require time to be fully
developed, as people on both sides of the Öresund engage in common projects, building shared learning
communities as they work, study and engage in social processes. There are significant physical, cultural,
and legal barriers that will make it difficult to build such cross-Öresund “communities of practice”, as
many people, businesses and organisations will continue to find it easier to build these relationships with
others from their same national and linguistic context, and closer spatial proximity. The improved physical
infrastructure, and sustained integration policies and programmes that currently exist in the region will
undoubtedly go a long way towards reducing these barriers to cross-Öresund information sharing and
knowledge development. While these initiatives are promising, however, the development of the full
potential of networking and knowledge development in the region require a permanent and determined
engagement.
101
CHAPTER III
GOVERNANCE WITHOUT GOVERNMENT
The Öresund Region is cut into two by a national border and shaped by two different national
frameworks and legislation. There are two national labour market policies, fiscal policies, environmental
protection, planning, and education policies. No single common body has the explicit legal or
administrative authority to co-ordinate and implement joint development strategies in the Öresund Region,
and there is no prospect of merging the two authorities or of a process towards this objective. The
governance framework of Öresund, as a result, must be adapted to the idiosyncrasies of a cross-border
region. This requires different governance mechanisms than those within a uniform national background.
Cross-border integration is thus “governance without government”, which has a number of implications for
scope and limits of development and cohesion objectives of the region. This chapter gives an overview on
cross-border issues and methodological basics to address them. It describes the different cross-border
governance frameworks in Europe and North America and analyses current governance in Öresund, while
also focussing on taxation, an area where the Danish and Swedish governments are increasingly trying to
co-ordinate and to achieve common positions. The chapter finally discusses a number of emerging issues
that might require adaptations in the governance structure of Öresund.
3.1. Emergence of cross-border governance
Some theoretical considerations
Governance across borders is a mechanism to integrate a region divided by one or several
national borders and to bridge differences in institutional frameworks. “Governance” encompasses the
establishment and adherence to a set of rules and norms that defines practices, assigns roles and
responsibilities, and guides interaction between organisations, so as to better tackle collective problems
(Scott, 1999). Cross-border governance refers to rules established between the local level and between the
regional level on opposite sides of a border. Cross-border governance or “transnational regionalisation” is
the result of two counteracting trends: first, increasing supra-national integration in order to break down
trade barriers between countries and encouraging exchange, and second, increasing decentralisation,
thereby putting more power into the hands of subnational governments. Both trends lower the costs and
increase the benefits of collaboration across the border and stimulate the demand for adequate governance
frameworks. Cross-border regions become important actors on the international scene, and cross-border
governance is gradually completing, if not competing with, traditional international treaties as a means for
transborder co-operation.
What is the objective of governance frameworks? Governance is not an aim in itself but a means
to achieve development objectives. Cross-border governance aims at improving the development outlook
in border regions, by overcoming or circumventing obstacles to integration. Most cross-border governance
frameworks relate to the specific politico-territorial situation of their border regions. Many border regions
are neglected by their “home” countries and try to increase political appeal by creating links with other
border regions. Often, border regions feel the friction created by diverging fiscal or labour market
102
regulations and some try to circumvent this friction through intensified cross-border co-operation. Other
regions aim directly at creating cross-border physical and institutional capital, an endeavour, which
facilitates exchange and enhances integration giving a boost to local development. In general, cross-border
regions have a comparative disadvantage with respect to the achieving of adequate levels of social and
physical capital, and establishing cross-border governance schemes can be seen as a policy means to
overcome this disadvantage and to increase their competitiveness.
The emergence of specific governance mechanisms, their success (or failure) and their
adaptations to changing circumstances can best be explained with the help of transaction cost economics –
a theory of organisation. It analyses governance structures in firms, markets, non-governmental
organisations and public agencies, under the assumption that the surrounding institutional framework
cannot be changed in the short- and medium-term (e.g. a national border between two countries and the
resulting institutional differences will not be abolished).86 Cross-border collaboration can be viewed as a
transaction. Governance structures, such as the Öresund Committee or any other public or private
endeavours across the border, are a means by which rules are established to deal with conflict in order to
realise the mutual gains of such transactions. Transaction comes at a price, but this price is higher or lower
depending on how the transaction is governed. Different governance frameworks generate different costs,
so individuals and organisations are in a constant quest for more efficient governance. A certain
governance framework becomes stable once no other framework can reach a superior transaction or
opportunity-cost/benefit relationship. The policy question is which governance rules and which principles
are best to achieve stated political objectives and to adapt to changing institutional circumstances. The
most important policy applications of transaction cost economics today can be found in the ramifications of
regulatory reform and antitrust law.
Governance frameworks can also be explained in terms of political science. Cross-border
governance can be evaluated in terms of how well it serves the local region to achieve certain stated
development objectives. The terms used here are “thickness” and “embeddedness”. “Thickness” refers to
the ability of the local network to influence the local outcome of global-local interactions; in particular,
whether this network is stable and at the same time flexible enough to adapt to rapidly changing economic
circumstances. “Embeddedness” refers to the ability of institutions to stabilise a range of collective
economic practices on a particular territory (Church and Reid, 1999). The various policy-oriented literature
says that cross-border frameworks and their ability to reach political objectives can be evaluated along
four lines: 1) the nature and integrity of co-operation (social capital in the region); 2) the positioning
strategies of the partners (costs and benefits of co-operation versus non-co-operation); 3) the contribution
to organisational diversity (risk diminution and stability); and 4) the interaction between cross-border
co-operation and other national, local and regional networks (transaction costs).
Cross-border governance in Europe
In Europe, given the large number of small countries, cross-border issues are ubiquitous, and they
grew even more important with the wave of EU integration during the 1990s. Supranational integration
made cross-border collaboration easier since it lowered the cost of interchange. Integration and cohesion
are viewed as essential in maintaining an effective and internationally competitive European Union; as a
result, border regions have become somewhat the darling of regional policy. As demand for cross-border
governance has multiplied, so has the supply of governance and programmes sustaining it. The
European Union has started numerous programmes to foster cross-border collaboration such as the
86.
A survey of how governance mechanisms can be analysed with the help of transaction cost theory is found
in Williamson (1995). The question of how institutions define transaction costs can be found in
North (1991).
103
INTERREG programme, but also other programmes that intend to hoist the number of transnational
networks and to increase the competitive edge of border regions. The European style of cross-border
integration has often resulted in a multitude of organisations that cover many policy areas simultaneously
by relatively complex governance structures. This appears different from the pattern on the
North American continent where governance structures tend to be more pragmatic and flexible, more
oriented towards a few purposes, better able to react to specific problem situations and more driven by the
private sector and local governments (Box 3.1.1).
Despite their ambitious declarations, cross-border governments in Europe have often failed to
reach regional development objectives. The cost of co-ordination and common decision making often
appears to outweigh expected benefits. It appears that horizontal partnerships are successful and
sustainable only if they create a benefit to both partners and moreover, if this benefit is distributed roughly
equally.87 Effective collaboration fails in cases where both regions stand in strong competition or where a
common endeavour benefits only one of the partners.88 Particularly in the field of urban planning or fiscal
co-ordination, local ambitions and strong competitive pressure have impeded most attempts at better
co-ordinated cross-border regionalisation. In some cases, cross-border collaboration has hardly extended
beyond the reach of EU sponsored INTERREG projects (Scott, 1999). Moreover, there remains a high
degree of administrative complexity and public sector dominance on co-operation incentives. Europe’s
dense institutional and policy networks supporting cross-border co-operation have not automatically
resulted in the establishment of new public-private alliances to address regional and local development
issues. At its most successful, collaboration has worked mainly where public agencies have been strongly
involved and had a direct say in project definition and implementation.
Box 3.1.1. North America cross-border governance
North America’s drive for regional integration is motivated much more by direct economic concerns rather than by a
sense of a common “North American destiny”. Unlike Europe, integration initiatives rest on strong economic and
social asymmetries that are particularly visible when comparing the United States and Mexico. Cross-border
governance is thus driven mainly by the need to overcome regional asymmetries.
Cross-border co-operation (CBC) has a very pragmatic appeal in North America. There is no broad policy platform
for CBC and little national incentive for co-operation at the local level. It is not driven mainly by the idea of
“overcoming borders” but rather by case-to-case problems, which for their efficient solution require selected action
across the border. There is no lack of regional transnational problems such as water resource management
(particularly in the case of Mexico-United States), environmental protection, public health and in more densely
populated areas, fiscal and labour market regulation issues in cross-border commuting regions. The governance
solutions follow the case-to-case approach: they are mostly carried out by single body associations such as Water
Advisory Boards, Commissions on Environmental Co-operation and others. Since NAFTA was signed, several
organisations mostly at the national level, such as the North America Development Bank, were made responsible for
providing loans to projects on the US-Mexican border. Whereas INTERREG in Europe provides subsidies,
NADBANK only makes loans at commercial rates.
87.
Such may include common infrastructures, facilitating educational exchange, tourism activities,
environmental protection water and nature parks and reserves, other local facilities and their cross-border
use, where projects have flourished.
88.
For a more extended analysis of scope and limits of horizontal collaboration, see OECD (2002, Territorial
review of Switzerland).
104
Box 3.1.1. North America cross-border governance (cont.)
An interesting feature of North American cross-border structures is that co-operation was for long driven mainly by
international treaties and programmes at the national level rather than initiatives at the local level, despite the large
responsibilities that US and Canadian subnational entities enjoy. In some cases, fear that cross-border collaboration
could threaten local autonomy has impeded local participation; a strain particularly strong in the US-Canadian
context. This led to the regulation by international treaties of even purely local and regional problems. The 1990s
have brought about a new spring for cross-border collaboration. A vast number of small initiatives in community
development, health and environmental politics have emerged, sponsored by non-governmental organisations and
other interest-led groups at the private level. The different approaches on both sides of the North Atlantic are reflected
in the different forms of governance: whereas co-operation in North America is driven mostly by special bodies each
dealing with one specific topic, Europe is more keen on a roof organisation that is able to incubate and co-ordinate
different initiatives and activities across the border.
EU cross-border initiatives and the INTERREG programme
In the European Union, the move towards a more transnational approach to governance structures
has a long history and has clearly picked up the pace in recent years. In the 1960s and 1970s various
bilateral and multilateral governmental commissions were established to deal with issues such as local
cross-border spatial planning and transport policy. It was on the Dutch-German border that the words
“euregio” and “Euroregion” were coined (in its original meaning, the latter denoted a formal collaboration
between border municipalities involving a council, a presidency, a secretariat and subject-oriented working
groups). Overall, the first cross-border initiatives were based on agreements with varying degrees of
formality, but which relied mostly on voluntary co-operation. In recent years, cross border
co-operation (CBC) has become more concrete. In particular, it is possible to perceive the consolidation of
more defined organisational forms that allow for more efficient decision making and implementation of
common projects. In particular, the introduction of INTERREG has had a considerable impact on the
development trajectory of most CBC initiatives.
Traditionally, the most dynamic CBC initiatives in Europe have been driven by municipal and
inter-municipal action. Nevertheless, with the introduction of INTERREG, they have become increasingly
embedded in networks involving higher-level public authorities. In effect, CBC occurs in three relatively
separate institutional realms: 1) the locally based structures (e.g. the Euroregions); 2) the INTERREG
related structures; and 3) the governmental commissions. Overall, CBC is de facto governed by twin
structures: the CBC organisations with their representative and administrative bodies, and the supra-local
structures constituted by the INTERREG committees and authorities involved. Both bodies are usually
bi-national. Whereas the design and submission of project proposals is delegated to the cross-border
regions, the final project selection remains with the INTERREG co-ordination bodies. Therefore, a
relatively clear division of labour between the two tiers of CBC governance exists. Decision making on the
expenditure of INTERREG funds is a task of the steering committees, i.e. the bodies responsible for the
implementation of the Structural Fund policies. This means that the Öresund Committee is one of many
CBC structures that can apply for funding from INTERREG.
INTERREG-related governance structures operate as multi-level networks involving virtually all
levels of public administration from the local, district, regional, and central to the European level, while
also maintaining horizontal links to their counterparts on the other side of the border. CBC is “horizontal”
and usually brings together a large number of departments as well as the structural fund managers. While
in many ways beneficial, the network character of CBC also incurs cost in the form of additional
co-ordination difficulties and time delays associated with the implementation of specific operations. Partly
at the request of the EU, and partly because of the mobilising force of local interests, local networks have
begun playing an essential role in delivering INTERREG policies. The European Commission currently
envisages the further devolution of the implementation of CBC projects to the local or district level, as a
105
way of finding new partners for more effective policy delivery. The Commission is legally prevented from
direct policy implementation at the territorial level.
3.2. Governing Öresund
Cross-border governance in the Nordic framework
Despite many similarities between the two countries with respect to culture, language and – to a
lesser extent – industrial structure, bilateral cross-border initiatives and integration across the SwedishDanish border started late, and the initial framework that governed cross-border collaboration was not
particularly thick. First, the Öresund strait was a natural barrier for an extended bilateral governance
network. For a long time the strait separated rather than linked the two countries; even the Öresund bridge
during its planning and construction was first and foremost considered an international endeavour – linking
Sweden to mainland Europe – before it started to be actively used as a tool for local and regional
development. Second, the Nordic Council of Ministers, i.e. the mechanism for co-operation among the
Nordic countries (Norway, Sweden, Denmark, Iceland and Finland), has in many ways anticipated regional
co-operation. Indeed, during the 1970s and 1980s, when cross-border networks in mainland Europe were
still in an embryonic state, the Nordic countries were already tightly interwoven at the regional level.
Nordic countries co-operate with each other and also with the rest of Europe, often using empowerment
strategies at the local level (Baldersheim and Stahlberg, 2001). Nordic “multilateralism” has thus
extenuated the need for bilateral co-operation between Denmark and Sweden.
Figure 3.2.1.
Decentralisation ratios in OECD countries, 1999
Share in general government receipts and expenditure
0.6
Canada
0.5
Receipts
0.4
Germany
0.3
Austria
0.2
Finland
Switzerland
Sweden
Japan
Denmark
United States
Spain
Norway
Italy
Portugal Luxembourg
Hungary
Ireland
Greece
UK
Mexico
France
0.1
0
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Expenditure
1.
Greece: data for 1995. Ireland: data for 1996. Canada, France, United States: data for 1997. Mexico, Portugal:
data for 1998. Finland, Luxembourg, Norway, United Kingdom: data for 2000.
Source: OECD, National Accounts of OECD Countries (2001).
106
Box 3.2.1. Decentralisation and cross-border integration in Denmark and Sweden
Both countries are among the most decentralised countries of the OECD (Figure 3.2.1). The allocation of
responsibilities and resources reflects the strong, well-rooted position of local self-government (Figure 3.2.2 and
Table 3.2.1). In both countries, local expenditures are above own tax resources; and the central state has to fill the
fiscal gap with an extended transfer system. Inter-governmental transfers have a built-in equalising mechanism,
which allows all counties and municipalities to provide their citizens with similar public services at roughly the same
tax rates. While both countries have an almost identical share of total public resources, the expenditure ratio is much
greater in Denmark, being the country with the largest local government sector of all OECD countries. This reflects
partly the very large pallet of Danish local governments’ responsibilities. However, the difference should not be
overstated. Danish municipalities perform duties on behalf of the national government for which in Sweden, the
national state pays directly. For instance, local authorities pay out a number of social benefits such as old age pension
and child benefits on behalf of the state. The difference in expenditure ratios reflects a difference in accounting
procedure rather than genuine expenditure authority.
The comparison of responsibilities and expenditure structures in Denmark and Sweden gives a clearer picture of
similarities and differences between local authorities on both sides of the Öresund. In Denmark, tasks of local
authorities are split between the municipal and the county level. The main tasks of the municipalities are within the
social area, primary education, and the environment, while the tasks of the counties focus on health, secondary
education and other tasks requiring larger populations. Most tasks are defined by national law. Therefore, local
authorities must take over a certain public function, but within the limits of the law, they may themselves determine
the local service level. Local authorities run a number of institutions, including day-care facilities for children and
nursing homes for the elderly. The largest proportion of local authority spending on social welfare and health
concerns institutions and services for children and the elderly. Municipality expenditures are around the double of
county expenditures.
In Sweden, the tasks of municipalities include schools, social services, elder care, care of people with physical or
intellectual disabilities, physical planning and building, certain environmental tasks and rescue services, whereas
health and dental care are the main responsibility of the counties. Education is one of the biggest and most important
remits of Swedish municipal governments, which are responsible for virtually all schools below the university level,
while in Denmark, responsibility is shared between municipalities and counties. The differing responsibilities for
education are probably the main dissimilarity between the two countries. With the “experimental” region of Skåne
and the Greater Copenhagen Area as a new supra-county body, the local structure in Öresund is somewhat different
from the Swedish and Danish governmental architecture.
In both countries, the tax structure of local governments is quite similar. Income taxes contribute the overwhelming
part of municipal and county budgets. Danish municipalities levy a low property tax, whereas Sweden has no
property tax at all at the local level. The fiscal gap is covered by a vertical transfer system from central to local
governments and – for equalising purposes – by a horizontal system from rich to poor municipalities. Poorer local
governments, cover around 20% of their budget by transfer payments. In Skåne, vertical transfers also amount
to 20 %; in the Copenhagen region, it is much less.
107
Figure 3.2.2.
Expenditure structure of Danish and Swedish local authorities
DENMARK
A. Municipalities
Urban
development
1%
Administration
15%
Urban
development
1%
B. Counties
Public utilities,
environment,
transport
1%
Roads
3%
Public utilities,
environment,
transport
2%
Administration
7%
Education and
culture
27%
Social welfare
**
13%
Roads
2%
Education and
culture
13%
SWEDEN
A. Municipalities
Social
welfare
**
53%
Hospitals and
health services
62%
SWEDEN
A. Municipalities
Individual and
family
assistance
8%
B. Counties
Others
9%
Education and
cultural activities
5% and
Education
cultural activities
5%
Infrastructure
7%
Business and
industry support
Business and
schemes
industry support
9%
schemes
9%
Childcare
13%
Education
32%
Health and dental
Health
careand dental
care
84%
84%
Assistance for
disabled and
aged
31%
Source: Background report, Statistics Sweden.
108
Care for mentally
and
Caredisabled
for mentally
social services
disabled
and
2%
social services
2%
Table 3.2.1.
Responsibilities
Education, investment
Education, wages
Social
Hospitals
Water and waste
Roads
Public transport
Economic development
Source: Dexia.
Responsibilities of local governments in Denmark and Sweden
Denmark
Municipalities and counties
Municipalities and counties
Municipalities and counties
Counties
Municipalities
Municipalities and counties
Municipalities and counties
Municipalities and counties
Sweden
Municipalities
Municipalities
Municipalities
Counties
Municipalities
Municipalities
Municipalities and counties
Municipalities and counties
Danish-Swedish regional co-operation must be seen in light of the strong local governments in
both countries (Box 3.2.1). Since devolution creates ability as well as incentives89 for the establishment of
cross-border structures, strong local governments are in general favourable to cross-border regionalism.
The ability of Danish and Swedish local governments to shape policies is therefore a valuable tool for
implementing cross-border governance. However, devolution is a necessary, not a sufficient condition for
successful integration. Cross-border governance incurs various institutional and political transaction costs.
First, the power of local governments can also thwart integration. Co-ordinating the many local
jurisdictions that have to reach decisions for a whole region can be complex, time-consuming and prone to
failure. The set up of an intermediate level on both sides of the Öresund certainly facilitates the
co-ordination process without harming too much local vested interests. Second, Swedish and Danish local
governments do not always have the same authority in a given policy area. One example is education. Such
institutional asymmetries might become even more pronounced in the future since Sweden follows the
Nordic regionalisation movement but Denmark does not. Differences can also be observed in the attitude
towards the EU structural funds whose approach – contract-based rather than hierarchical relationships –
has gained a stronger foothold in Sweden than in Denmark (Jernek and Gidlund, 2002). Third, setting up
cross-border institutions inevitably means a shift in the regional balance of power. Local governments tend
to guard vested rights jealously, and local ambitions and political sensitivity may prevent any strong
collaboration. Anecdotal evidence suggests that local governments are not much in favour of a stronger
Öresund Committee and would rather oppose strengthening its power. In the eyes of local governments,
the political cost of integration in the form of reduced power could outweigh the benefits.
Governance framework in the Öresund Region
As explained above, Nordic multilateralism has made bilateral governance less crucial.
Integration issues have been addressed mainly by multilateral agreements such as treaties on fiscal and
labour market issues. Local exchange in the public sector has been restrained to education and transport
infrastructures. In the private sector, a report published by the end of the 1980s pointed out the surprising
dearth of industrial cross-border activity, e.g. revealed by the low number of firms having subsidiaries on
the other side of the border. In the beginning of the 1980s, “Öresundskontakt” was founded as a contact for
firms that wanted to settle in the region. It was only in 1993, after the decision was made to build the fixed
link, that the Öresund Committee was founded as a mechanism for integration of both sides of the border.
Today, the Öresund Committee is the main political body of bilateral collaboration in the Öresund Region.
89.
Devolution (or decentralisation) creates ability in the sense that local governments have more freedom to
get involved in horizontal activities across the border. Local governments also have an incentive to
collaborate if this lowers the cost of local and regional public services or enhances the competitive edge of
both partners.
109
The establishment of the Öresund Committee created a broader platform for horizontal
partnerships and formalised advice and information exchange. The Committee is composed of local and
regional political bodies from both sides of the Sound and – which is quite exceptional for transnational
regionalism – by the two national ministries as observers. There are no private actors in the Committee.
Although elected local politicians represent the Committee, it does not act as a local or regional
government but as a meeting place for the elaboration of public strategies on both sides of the border. The
Committee is the crossroads and pivotal point of many cross-border activities; in the language of
“transaction economics”, the mutual gains probably outweigh the cost of maintaining this roof
organisation, especially compared to costs incurred by a collaboration network without any co-ordinating
entity. The process of integration in Öresund is therefore achieved not through the set up of an additional
government layer but through the voluntary co-ordination of policies of its members. The Committee
represents a relatively new arrangement of formal co-operation that emerged mostly in European countries,
such as on the French-Belgian-Luxembourg border, or the Swiss-German-French border (Church and
Reid, 1999). The Committee has been acting as a catalytic converter for numerous cross-border activities
such as the cultural forum and the above-mentioned ÖAR, AF Öresund or Öresund University. However
the Committee only manages and funds a few of them.
Box 3.2.2. Inter-governmental relations
In Denmark and Sweden, the central-local relationship mirrors the already mentioned “Nordic approach” towards
local self-government and their strong position towards central governments.90 However, the effective extent to which
local governments can decide on the level and quality of publicly financed goods varies between the two countries.
Although the Danish government has formally devolved a large number of responsibilities, it exerts considerable
control over local budget policy and states a number of policy objectives and targets in individual policy areas. While
in some areas, this amounts to issuing declarations of intent and defining priority, in other areas, such as childcare and
hospital operations, the central governments state detailed targets and technical procedures. Over the last decade, the
central government has – albeit not formally – re-centralised some functions, started to micro-manage certain
municipal administrations and begun to treat the municipalities as deconcentrated agencies rather than independent
decision makers.
Swedish counties and municipalities have – albeit not reflected in the decentralisation ratios table – more leeway in
determining service levels and technical procedures, and the division of responsibilities between the central and local
level is more clear-cut. Moreover, with the removal of the constitutional ceiling to municipal tax rates, local
governments are better able to choose the level of public services that serve best their citizenry. A number of publicly
available benchmarks allow citizens to compare public service outputs and encourage Swedish municipalities to
concentrate on service delivery rather than on maximising expenditure. The decentralised approach in many policy
areas provides ample scope for innovation and experimentation and an incentive for local authorities to search for
new techniques and mechanisms to satisfy citizens’ demand. In general, in cases of shared responsibilities, Swedish
intergovernmental arrangements are much simpler, more clearly defined and less contentious, leaving local
governments considerable managerial freedom. In sum, despite a widely equal system of local self-governance on
both sides of the border, some differences in the framework of intergovernmental relationship are currently visible.
The creation of the Greater Copenhagen Authority on the Danish side and the Skåne Region on
the Swedish side could fuel improved governance of Öresund. Today, although municipal authorities have
in a number of areas to comply with national framework and often to co-ordinate their actions with the
higher levels of government (Box 3.2.2.), they are the ones mainly responsible for the integration strategy.
90.
For a more detailed description of central-local relationships in Denmark and Sweden, see OECD (2001)
and OECD (2002).
110
Since each local government acts on its own behalf and interests between them may diverge, the
transaction costs of reaching agreement across the strait are relatively high. HUR and Skåne will be
responsible for addressing an increasing number of topics crucial for integration, such as spatial planning,
regional development, public and private transport, business development and culture. This increase in the
number of policy areas that are handled by two instead of several bodies could facilitate consensus finding.
The frictions that appear to emerge within the Öresund metropolitan – essentially between the “centre” on
the Danish side and the “suburban areas” on the Swedish side – are easier to cope with if for some central
policy fields the number of political actors is reduced. Even if conflicts of interest between the two sides of
the Strait intensify, the lower number of local authorities will make interest bundling and conflict solving
easier.
3.3. Co-ordination between two governments on Öresund: the example of taxation
Fiscal co-ordination is a test for central government trying to achieve transborder region
integration, one main reason being that taxation provides ample impediments to the flexible allocation of
workplaces and residence across both countries and to cross-border commuting (Box 3.3.1.). Moreover,
international tax treaty can create financial disparities between local governments on both sides and thus,
increasingly, interfere with regional cross-border dynamics. The political challenge for Öresund, as one of
the most integrated border regions, is in the short term, to navigate between the two different fiscal
systems. As underlined above, the most efficient strategy is to simplify the rules for the firms, individuals
and administrations that have to cope with both tax systems. The insecurity and administrative costs for
firms and individuals that emanate from complex and opaque regulations are often more important than the
visible tax differentials between the two countries. This means that simplifying the rules for cross-border
taxation and enabling commuters to switch easily from one fiscal system to the other should be a priority
for both countries. Authorities might even find it useful to set up a common tax office in the form of a
one-stop shop, as discussed in the section on labour market, where all requests that relate to cross-border
taxation issues are treated. Simplification and transparency should precede harmonisation, even at the risk
of a transitory increase of distortions and the subsequent arbitrage mentioned above.91 In the long run, the
Öresund authorities should strive for interregional co-ordination that goes beyond bilateral integration and
could include countries with similar geographical, economic or social background. The Nordic Council
provides ample evidence that such regional integration – which goes farther than the EU rules – can be
very successful, even if two countries (Iceland and Norway) are not members of the EU. Integration at
“differing speeds” is an option that could work to the benefit of the Öresund Region. At its best, Öresund
can act as an active regional anchor for the co-ordination of national rules, be it for the Scandinavian,
Nordic or Baltic states.
91.
“Harmonisation” of fiscal systems aims at avoiding externalities and distortions that are provoked by
differing national tax systems. The price of harmonisation is a certain loss of national and subnational
autonomy, which could potentially have detrimental effects. Decentralisation of fiscal decisions and the
resulting fiscal competition can help keep tax rates under control, even if entail some fiscal externalities.
International fiscal policy should thus carefully balance the need to minimise fiscal externalities –
particularly at national borders – with a fiscal framework that leaves enough taxing power to national and
subnational entities. Rather than striving for full harmonisation, elimination of the most significant
distortions appears to be a more promising way for international tax agreements.
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Figure 3.3.1. Tax revenue structure of Denmark and Sweden, 1999
1000 - Income & Profits 3000 - Payroll 5000 - Goods & Services -
2000 - Social Security 4000 - Property 6000 - Other -
Sweden
Denmark
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Source: OECD (2001).
Box 3.3.1. Fiscal barriers to integration
The differing fiscal systems on both sides of the border thwart an effective single market and have become a major
factor of concern for balanced integration. The most significant difference concerns social security. While in Sweden
– like most European OECD countries – social security contributions are based on payroll and paid by the employer,
in Denmark, social security is overwhelmingly funded through income taxes. The fiscal structure thus looks quite
different for both countries (Figure 3.3.1) and likely to cause friction for people living in one country while working
in another. Although commuting across the border is covered by international agreements, various ambiguities arise
when the workplace is not territorially embedded or the person is working in both countries. Mechanisms to avoid
double taxation are subject to administrative complexities. Businesses have repeatedly claimed that having
subsidiaries on both sides of the Öresund causes a considerable administrative burden. Reportedly, some Danish
enterprises have disregarded recruiting people from the Swedish side who want to work partly at the workplace in
Denmark, partly at home on the Swedish side. Moreover, for some individuals that work on both sides of the
Öresund, it has become virtually impossible to calculate their real tax burden. Although commuting and “virtual”
workplaces are still rare across the Sound, it is a symbol of barriers that prevent firms and individuals from easy
interchange. Although in 2000 and again in 2002, both countries agreed on simplifying some tax administration and
facilitating cross-border employment, fiscal obstacles to free movement across the border persist.
While in some instances differing fiscal systems can prevent integration, in others they can be at the origin of active
fiscal arbitrage, i.e. individuals and firms may reduce the fiscal burden through a targeted selection of workplace and
residence. In general, income tax rates, including social security, tend to be lower in Denmark, and property taxation
is lower in Sweden.92 In fact, total taxation and net disposable income can differ considerably, according to where one
lives and works, particularly for high-income earners (Table 3.3.1). The overall tax structure influences locational
decisions; there are a number of incentives for Danes and Swedes to work on the Danish and to live on the Swedish
side. Firms may also actively get involved into arbitrage since the rules for corporate taxation differ considerably
between the two countries, usually to Sweden’s benefit which has lower tax rates and more generous depreciation
rules.93 Given that more and more firms no longer have physical production plants and can thus easily transfer
headquarters across the border, locational decisions based on fiscal considerations will become more widespread.
92.
In both countries, property taxation is fairly below the OECD average. This would give governments – and
particularly local governments – a certain scope for increasing this tax base which has the advantage of
being immobile.
93.
www.bgÖresund.dk
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Box 3.3.1. Fiscal barriers to integration (cont.)
It should be recalled that Öresund is not the only border region that has to cope with two different frameworks.
Particularly in Europe where political fragmentation meets with a large variety of national systems, national social
security and fiscal frameworks are often incompatible with smooth cross-border activities. The European Parliament
has thus identified harmonisation as one of the most pressing policy issues to labour mobility within Europe and/or
cross-border commuting (European Union, 2000). However, even if a certain convergence of regulatory systems
within Europe can be expected, mainly due to the co-ordinating rule of the EU, border regions will have to cope with
this kind of friction for a long time. Political pressure from the Öresund Region for more rapid harmonisation might
have limited success. Denmark and/or Sweden will probably be unwilling to accept changes in their framework in the
fear that this could create new frictions on borders with other countries such as Germany, Norway or Finland. And a
regulatory harmonisation that is limited to the respective border regions could rise new barriers within the
neighbouring countries.
Table 3.3.1.
After-tax income in Denmark and Sweden, 2000
Domicile country
Denmark
Working country
Denmark
Sweden
Gross income : DKK 250 000
127 000
117 000
Gross income : DKK 500 000
226 000
255 000
Source: Danske Bank: ” Öresundsregionen – ett år efter broinvigningen” (2001).
Sweden
Denmark
127 000
226 000
Sweden
108 500
204 000
So far the allocation and distribution of tax revenue from people living in one country and
working in the other has been a topic of regular debate between Denmark and Sweden. Both governments
have changed rules and agreements on cross-border taxation several times. Before 1997, taxpayers paid all
taxes – local and national – in their country of residence; the country of work only obtained payroll-related
social security contributions. Based on an initiative of the Danish government, in 1997, a new agreement
was concluded which changed the principle of residence-based taxation towards a workplace-based
taxation. With increasing integration after the opening of the fixed link, the system came under pressure
again. The increasingly asymmetric commuter streams from the Swedish to the Danish side relocate more
and more tax revenue from Sweden to Denmark. This fiscal asymmetry led the Swedish side to urge for
re-negotiations of the treaty. In 2002, both countries will discuss a new agreement, which at the time of
this review had not yet been settled.
The current tax agreement is inspired by an OECD model, which is applied to most bilateral
taxation issues (OECD, 2002) (Box 3.3.2). The OECD Tax Convention on Income and on Capital provides
a means of settling (on a uniform basis) the most common problems that arise in the field of international
juridical taxation. Its main objective is to avoid double taxation or tax evasion across international borders.
It sets a number of rules, standards and norms, which states may use for bilateral treaties. As a rule, the
exclusive right to tax is conferred on the state of residence. One of the most notable exceptions is wage
income, which may be taxed by the country of source or situs without any limitation. As a consequence
and in conformity with the OECD convention, since 1997, wage income from people living in one country
of the Öresund but working in the other is taxed in the country of workplace. Other items, such as property,
are taxed in the country of residence, but given the limited weight of property taxation in both Denmark
and Sweden, the application of the model has little impact on tax revenue distribution.
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Box 3.3.2. The OECD Tax Convention on Income and on Capital
International juridical double taxation can be generally defined as the imposition of comparable taxes in two or more
states on the same taxpayer in respect of the same subject matter and for identical periods. The harmful effects of
double taxation on the exchange of goods and services and movements of capital, technology and persons are well
known. For this reason, the OECD countries have set up a Model Tax Convention on Income and on Capital whose
main purpose is to provide a means of settling the most common problems that arise in the field of international
double taxation.
For the purpose of eliminating double taxation, the Convention establishes two categories of rules. First, a number of
articles determine, with regard to different classes of income and capital, the respective tax rights of the state of source or
situs and of the state of residence. In the case of a number of items, an exclusive right to tax is conferred to one of the
contracting states. The other contracting state is thereby prevented from taxing those items and double taxation is
avoided. As a rule, this exclusive right to tax is conferred to the state of residence; however, wage income is supposed to
be taxed in the country of source. In the case of other items of income and capital, the right to tax is not an exclusive one.
As regards dividends and interest, although both states are given the right to tax, the amount of tax that may be imposed
in the state of source is limited. Second, insofar as these provisions confer on the state of source or situs a full or limited
right to tax, the state of residence must allow relief so as to avoid double taxation.
The Nordic Convention on Income and Capital entered into force by Denmark, Finland, Iceland, Norway and Sweden
was concluded in 1983 and replaced in 1987, 1989 and 1996. It provides a practical example of a multilateral convention
between a group of Member countries and follows closely the provisions of the OECD Model Convention. The regular
revisions of the Nordic Convention show the increasing importance of the cross-border taxation issue. Although not
explicitly designed for border regions, the permanent development and refinement of international tax treaties are crucial
for their long-term financially balanced development.
Source: OECD (2002).
Applying the OECD Model Convention affects the spatial distribution of tax revenue and
municipal budgets in Skåne. This can be shown if one takes Öresund as a single metropolitan area where
the Central Business District is located on the Danish side and the Eastern suburban areas are located in
Sweden.94 As in any metropolitan area, the workplaces-to-residents ratio is markedly higher in (central)
Denmark than in (suburban) Sweden, therefore more people commute from a Swedish municipality to a
Danish workplace than vice versa. The net balance is around 2 500 people commuting from Sweden to
Denmark. Since these commuters pay most of their income taxes in Denmark, there is a flow of resources
from the Swedish to the Danish side of the Öresund. This asymmetry not only leads to a financial shortage
on the Swedish side, it may also violate fiscal equivalence: while commuters pay their taxes in Denmark,
they continue to use local facilities and benefit from public services provided and funded by the
municipality where they reside. However, in order to avoid that Swedish municipalities have to carry the
burden of an international treaty, the Swedish state compensates around 95% of the foregone tax revenue.
3.4. Governance reforms in the Öresund – some discussion points
The fixed link has increased the demand for cross-border governance. Supply has followed
accordingly and numerous cross-border activities have been created. Now the question might arise as to
where to go from here. Is the current cross-border governance framework effective? What are the policy
94.
This model somewhat simplifies the more complex situation of a large metropolitan area (Copenhagen) on
the Danish side and a smaller urban area (Malmö) on the Swedish side, each having their own centreperiphery hierarchy. However, some data (not least commuting) indicate that Malmö slowly turns into a
part of the Greater Copenhagen Area.
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questions that have to be addressed? Are there aspects of integration which are not covered by the current
governance structure? What are the future challenges of cross-border governance? Which governance
demands might arise in the future? Where are the gaps that still impede smooth economic development
across the Sound, and what governance frameworks are best suited to tackle them?
Governance is a means to an end; namely, better policy results. This means that governance
frameworks must follow policy strategies. Discussions on governance frameworks should therefore start
with the question of what policy objectives are at stake and what results are to be sought. When
considering governance reforms, its policy dimension should always be kept in sight. Both sides of the
strait might want to improve integration, but for different reasons and in different ways. In the following
sections, we present six policy issues that could challenge the Öresund governance framework, and we
suggest possible governance reform strategies to cope with these issues. The Öresund Committee and other
regional actors may neglect some governance aspects (“form”) if they consider the underlying
policies (“function”) not strategic for integration. Moreover, the OECD does not make explicit reform
proposals but rather presents the issues in the form of “if, then” eventualities. The six discussion points are
presented under the assumption that the institutional framework is exogenous, i.e. that the border will
persist, that there will be no policy harmonisation and no autonomous political body with the insignia of an
“Öresund power”.
Institutionalisation
In view of the many cross-border projects and the work of the Öresund Committee, the
governance framework seems quite “thick”. The Öresund Committee acts as a strategic spearhead, while
many other collaboration endeavours are focused on specific tasks to facilitate interregional exchange.95
Moreover, the Öresund network has established itself as a trusted means to achieving regional integration
and is competing with bi- and multilateral treaties; for instance, evident in the case of Danish-Swedish Tax
Convention, whose re-negotiation was instigated exclusively by local and regional demands. The Öresund
clearly follows the “European approach”, which includes the supranational INTERREG programmes to
spur integration, in addition to economic, philosophical views on cross-border integration and which foster
a wide range of horizontal and vertical partnerships.
However, the strong institutionalisation in Öresund may also jeopardise the flexibility of
co-ordination and cause efficiency losses. Governance can reduce the transaction costs of collaboration,
but co-ordinating and maintaining the network may cause transaction costs as well. Strong and “thick”
networks tend to solidify over time and to become removed from the political objectives for which they
were initially designed. Solidified or “institutionalised” frameworks can even create “lock-in effects” and
act as barriers to alternative and smoother forms of governance. The strategic question is whether a roof
body such as the Öresund Committee should take an even stronger lead in the definition and
implementation of cross-border projects. There is a certain charm in having one single body with a
strategic vision and a programmatic approach for the region, but the resulting barriers to integrating
differing views on regional development could be too high a price for keeping the governance framework
alive. Local grumbling about the “rising Öresund power” can be heard in some instances. Whatever the
future governance framework in the Öresund Region, it should remain flexible, contractual and reflect the
“geometric variable “of different actors and policy areas.
95.
Other cross-border regions have much weaker and less stable governance structures, and some types of
partners that make part of the Öresund network are missing. The Trirhenia Region, e.g. well integrated
though, has no equivalent of the Öresund Committee.
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Taxation across the border
Tax treaties, like between Denmark and Sweden, address fiscal issues across the border in a
different way than do national models across their internal borders. If a person is living in a different
jurisdiction from where s/he works, the international model requires that s/he pay taxes where s/he works,
while national models usually require that s/he pay taxes where s/he lives. International tax treaties thus
favour the workplace while intra-national models in general favour the place of residence. This difference
has a significant impact in metropolitan areas where workplace and residence are geographically separate
from each other and located in different jurisdictions. As explained above, in the intra-national model
much tax revenue goes to the residential suburban areas, while the central cities have to cope with the twin
problems of shrinking tax revenue and increasing public expenditures.96 The current Danish-Swedish treaty
somewhat reverses this effect, by allocating tax revenue to the central area (Copenhagen in this case) at the
expense of the suburban areas (the municipalities of Skåne close to Denmark). The tax model can thus be
seen as compensation for the central cities for costs accrued by commuters. In brief, whereas “internal”
taxation models usually benefit suburbs, the “international” model tends to benefit the city centres.
International treaties and cross-border governance requirements are increasingly interfering with
each other. The political strategy to address this problem has to reconcile the demands of fiscal federalism
– which means opting for a resident-based taxation – with the demands of international taxation models,
which require taxation at the place of work. This strategy necessitates a reform of local public finance in
both countries, where national taxes are clearly separated from local taxes, the latter being paid at the place
of residence. Such a reform would call for wide harmonisation of tax levels in both countries, a careful
definition of what tasks are allocated to the central and local levels, and a financial mechanism between the
two countries to compensate free-riding of local public services across the Sound. Such a reform is hardly
conceivable in the short- or medium-term. A feasible alternative is “compensation”, whereby the region of
residence and the region of workplace share the tax yield. Technically, Sweden and Denmark could either
follow the approach adopted between Germany, Belgium and the Netherlands – that apply the Tax
Convention but send a part of the tax revenue to the country of residence – or the German-Swiss model –
where the workplace country taxes wages at a reduced rate, which can then be deducted from the tax bill
in the country of residence. Tax sharing models of this type can be easily re-negotiated and require no
adaptation to the fiscal rules in both countries. They could thus be introduced in Öresund without delay.
For metropolitan areas located on or close to international borders, this model seems a pragmatic
compromise between two “pure” solutions that either would harm central cities’ or suburban
municipalities’ budgets.
Metropolitan governance
In a spatial context, Öresund is a metropolitan area divided between two countries. On a stylised
map, the centre of the region and a part of the conurbation lies in Denmark while another part of the
conurbation lies in Sweden. With the bridge being operational, and thereby facilitating free movement of
goods and people across the border, the Öresund Region will rapidly come closer to obtaining the
characteristic structure of a metropolitan area – but with a national border in between. Growth and
institutional structure of metropolitan areas and the policy problems they cause (particularly in the field of
fiscal, environmental, social and transport policy) are at the heart of a number of governance issues that
have been tackled in various OECD publications (Box 3.4.1). The presence of an international border in
the Öresund Region makes its metropolitan area even more complicated: metropolitan governance must be
96.
The “twin problem” of shrinking tax revenue and rising expenditures, particularly for social welfare, are
extensively treated in OECD Territorial Reviews: Hungary (2000); Switzerland (2001); and
Canada (2001).
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established within not one single national framework but within two systems. This not only requires
additional co-ordination mechanisms but particularly well established tools for solving conflicts that arise
between “the centre” and “the suburbs” due to their conflicting views on various territorially relevant
policy issues.
Box 3.4.1. OECD principles of metropolitan governance
The 2001 OECD publication, Cities for Citizens discusses systems of metropolitan governance to enhance economic
prosperity, social cohesion and environmental sustainability. The principal conclusion identified that the challenge for
governance was greater in metropolitan areas. The following “principles” are the result of the key issues raised in the
report.
There is no one model of metropolitan governance. It is clear that (in addition to the broad principles which underlie
any adequate system of democratic government – transparency, accountability, accessibility, representativeness,
constitutionality, and protection of fundamental freedoms) a number of principles can also be applied in order to
define the adequacy of systems of governance for metropolitan regions in the 21st century.
Cities for citizens: Cities should be developed, not only to meet the needs of the economy, but also to help fulfil the
aspirations of people for a higher quality of life through measures that can also maintain and enhance the
attractiveness and liveability of cities.
Coherence in policy: The objectives and institutional frameworks of metropolitan governance should be adapted to
and focused on key local problems such as economic development, affordable housing, congestion, sprawl, safety,
environmental quality, and the regeneration of older areas, which should be tackled simultaneously, taking into
account linkages and trade-offs.
Co-ordination: Metropolitan governance must reflect the potential and needs of the entire urban region. The roles
and responsibilities of each level of government in respect of metropolitan areas should be clearly defined in order to
facilitate policy coherence and cross-sectoral integration. Given the administrative fragmentation of metropolitan
regions, co-ordination is also necessary among local authorities across jurisdictions, and between elected authorities
and various regional boards or agencies with functional or sectoral responsibilities.
Endogenous development: Rather than basing economic development mostly on attracting investment through
financial and fiscal incentives, emphasis should be put on investment in infrastructures and human development to
take best advantage of local resources. Metropolitan governance can help to set priorities, taking a coherent approach
to development based on the strengths and opportunities of a region.
Efficient financial management: Metropolitan governance should allow for the costs of measures to be reflective of
benefit received and assure complete transparency, accountability and monitoring. It should also guarantee that all
parts of the urban region are considered in assessments of the appropriate level for and of the costs and benefits of,
public services.
Flexibility: In order to adapt as necessary to economic and social trends, technological innovation, and spatial
development, institutions have to be open to changes. A forward-looking, prospective approach is also indispensable
to allow for flexibility as well as sound strategic planning.
Particularity: Except where the case for standardisation is justified, policies and institutions of government must be
crafted to fit the unique circumstances of various parts of the country and to achieve the best cost efficiency of
measures.
Participation: Given the growing diversity and size of metropolitan regions, governance must allow for the
participation of civil society social partners and all levels of government involved in the metropolitan area. New
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Box 3.4.1. OECD principles of metropolitan governance (cont.)
technologies and methods of communication can encourage and support more interactive policy environments,
bringing government closer to people.
Social cohesion: Metropolitan governance should promote a mix of population, non-segregated areas, accessibility
and safety, and the development of opportunity, and facilitate the integration of distressed urban areas.
Subsidiarity: Services must be delivered by the most local level unless it has not sufficient scale to reasonably
deliver them, or spill-overs to other regions are important.
Sustainability: Economic, social and environmental objectives must be fully integrated and reconciled in the
development policies of urban areas, as reflected in the concepts of the healthy city and the ecological city; in the
context of the wider bio-region, this implies greater co-operation between urban and rural areas.
Source: OECD (2001).
In some instances, the governance structure appears to be quite well adapted to tackle
metropolitan problems; in others, some improvements may be advisable. In some policy areas, the current
conflict solving mechanisms appear to be quite advanced (e.g. on the problem of the share of taxes from
commuters that live in one country and work in the other). Moreover, the creation of the Greater
Copenhagen Authority is a step toward facilitating urban governance. In other cases, conflict resolution
practices appear somewhat less well established. How much to charge for crossing the bridge by private
transport, in particular for commuters, is a typically controversial topic within metropolitan areas. While
the suburban population is more concerned with ensuring rapid and inexpensive transport connections
leading to the centre, the population in the more central areas opposes excessive use of private
transportation for environmental reasons. Other policy areas where co-ordination should be better
established is in metro-wide spatial planning where the presence of two planning systems in Denmark and
Sweden might give rise to conflicts. Two regional strategies appear useful to tackle cross-border
metropolitan problems. First, to equip both regional bodies (Region Skåne and Greater Copenhagen Area)
with political power and adequate management tools to tackle policies with area-wide impacts. Second, to
set up an Advisory Committee, composed of all three government levels of both countries, that can discuss,
typical metropolitan governance problems and to co-ordinate policy responses horizontally and vertically.
Inclusion of the private sector
The current Öresund Committee is composed exclusively of public sector officials such as
delegates from local and national governments. It does not include actors from the private sector, such as
business associations or trade unions, or the larger civil society (non-governmental organisations and the
like), which have a stake in integration. The Öresund Committee in this respect differs from other crossborder organisations, which often include private organisations. One example is the newly created crossborder body that governs the Swiss-Italian “regio Insubrica” whose task is comparable to the Öresund
Committee. Besides local, i.e. municipal and regional elected officials, this body encompasses private
associations (from the business sector, tourism associations, etc.) (Box 3.4.2). The inclusion of private
actors enables a more rapid flow of information and well-targeted action plans for the economic
development of the transborder region. Since most transborder private sector problems are linked to state
activities or regulation – transport connections, labour market policies, fiscal problems – the inclusion of
the private sector ensures additional insight for more effective policy implementation.
The Öresund Committee should therefore consider offering a number of seats to non-public
members. The Committee would thus become an interface between the public and private sectors. This
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would allow the private sector to address policy questions more directly, it would raise awareness in the
public sector about private sector needs and demands and could ultimately enhance the effectiveness of
policy implementation on both sides of the strait. Conflict solving would be more internalised, and
transaction and information-seeking costs reduced. However, potential problems could arise with respect to
possible distortions in the public decision-making process. The inclusion of private associations would
give organised interests a better say in political decisions. Special interest groups could obtain preferential
treatment to the detriment of general public interests. If too many private organisations are included, the
Committee could degenerate into continuous discussions. If the private sector is to be included, it is
probably useful to separate clearly consultation (e.g. on an advisory board or in working parties where
concerned groups are official members) and decision making, which would be left to the Committee on the
basis of the consultation mechanisms.
Box 3.4.2. The Regio Insubrica and its cross-border body
The Regio Insubrica spreads over three Italian provinces (Verbano-Cusio Ossola, Varese, Como) and the Swiss
canton of Ticino. The national border cuts across a culturally and geographically homogenous territory. The region is
peripheral for both countries, but it is an essential pole of communication between Northern and Southern Europe.
The region itself is very accessible. The road and rail network is particularly dense, contributing to high trans-frontier
flows of people. Lugano, a major city situated at the centre of the Regio Insubrica, is accessible within an hour and a
half by more than 5.8 million people.
The body responsible for local and regional cross-border co-operation in the Regio Insubrica acts mainly as a forum
for discussion. The private sector participates through round tables organised by the chambers of commerce of the
four Regio Insubrica members, various labour unions, and many economic associations, including foundations and
banks. Several ad hoc working groups examine the issues where CBC is needed. The fields of environmental
protection, tourism, trans-frontier labour migration, education and transport are under particular scrutiny. The most
important projects include co-operation in the field of transportation for commuters, environmental issues such as
purification of the lakes Maggiore and Lugano, and a better integration of professional curriculae in the two countries
via the association of professional institutes. The Regio Insubrica has been particularly active in organising
sponsorships to promote cultural and sports competition events locally.
Source: OECD (2002). (Territorial Review on Switzerland).
Integration of INTERREG
While the Committee seems to have found quite a good equilibrium between bottom-up (or
grassroot) co-ordination at the local and regional level and inclusion of the national level, the inclusion of
the European level in projects from INTERREG seems rather piecemeal. The strong reliance on horizontal
collaboration could constitute an advantage since it shows that the co-operation zeal is not driven by a
supranational body or even the prospects of additional European funding but rather by a genuine localised
need felt on both sides of the border. The strong and even successful lobbying activities (e.g. the repeated
attempts to re-negotiate the Tax Convention between Sweden and Denmark) shows that cross-border
integration works largely without support from the supra-national level.
In international comparison however, concerning the incubation effect of INTERREG
programmes, the Öresund case looks a little underdeveloped. Although the INTERREG Secretariat
occupies the same building as the Öresund Committee, there is little co-ordination between INTERREG
projects on one hand and Öresund Committee-inspired collaboration endeavours on the other side.
Moreover, as underlined in Chapter II, the Öresund appears to receive little financial funding from the
European Union, compared to other urban regions. The Öresund Committee and other cross-border
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collaboration bodies should therefore try to intensify strategic links with the EU and use INTERREG
programmes as a strategic resource for triggering projects whose success at the purely local level would be
difficult to achieve.
Democratic accountability and legitimacy
The increasing number of cross-border activities raises the question of democratic accountability
and legitimacy of public action. Within Öresund, the number of collaboration endeavours has widened the
variety of organisational patterns in the last few years. More and more decisions are being taken not
directly by the respective local or national governments but by bodies that have been created through
horizontal agreements across the border. While this may enhance the speed of integration and in general
increase the efficiency of public integration, it may create some problems with respect to the democratic
control of such bodies. This happens even within countries across subnational borders. Horizontal
collaboration usually means a shift of authority from the local government to a new intergovernmental
body or special agency. Citizens no longer have direct control over the provision of public services.
Instead, their preferences are filtered by the management that finally executes the task. Given that the
population often does not elect the delegates of intergovernmental bodies, politicians and the bureaucracy
tend to take precedence over citizen demand and become less accountable. With time, a non-transparent
entanglement of special bodies with different legal backgrounds and differing territorial coverage leaves
the citizen with little influence on local and regional public services and local development programmes.
In the strongly decentralised and democratically accountable environment of Denmark and
Sweden, legitimacy is a key issue for managing cross-border activities (Jerneck and Gidlund, 2002). The
rise of a new power in the form of the Öresund Committee already triggers scepticism within local
governments on both sides, and attempts to give the Committee more power meet with reluctance or
outright resistance. Local governments are not only trying to defend their position against the national
level, they are also attempting to safeguard rights and prerogatives of their population vis-à-vis these new
co-ordination bodies. Here managerial efficiency, (i.e. lowering transaction costs), meets the principle of
democratic accountability (i.e. popular control over state activities). The natural tension that results will
always have to be taken into account horizontal collaboration. The need for increased integration, which
will inevitably result in an increase of cross-border special bodies or agencies to deal with special
integration policies and measures, has to be carefully assessed against the background of integration that
considers the needs of the majority of the population. Therefore, governments must seek cross-border
governance frameworks that improve the managerial efficiency of cross-border activities while complying
with principles of democratic accountability in all state activities.
3.5. Conclusions
Cross-border governance frameworks are not established in a policy void. They depend on the
objectives of the population and should follow the general strategies of regional integration and
development. Most governance decisions depend on the objectives of integration and the specific
integration measures that the region is seeking. If the operation of infrastructure projects is a major means
of integration, then public-private partnerships could be an adequate governance solution for the region. If
metropolitan issues are on the political agenda, then actors might find it useful to follow and implement the
OECD metropolitan governance principles. If enhancing cross-border learning or better labour market
integration is the main issue, then inclusion of the private sector and civil society in the
Öresund Committee might be a long-term option. And if local democracy becomes the main concern of
development, then the search for adequate representation of citizens in all kinds of cross-border endeavours
should be top priority for the integration process. “Form follows function” should be the lead principle for
shaping the cross governance framework.
120
The “governance without government” framework works well in general in the Öresund Region.
A new political unit that can make autonomous political decisions is neither feasible nor desirable in the
long run. The institutional resemblance of both countries involves low transaction costs and renders
collaboration relatively easy; indeed, only a few institutional obstacles impede the emergence of a truly
integrated region. The fact that there is not now and will not be a “transborder government” could even be
considered an advantage with respect to the self-organisation of local private actors. Nevertheless, Öresund
is facing the risk of fragmentation and lack of consistency among cross-border activities. In particular, the
consuetude of informal bilateral consultations on specific issues might hinder the design and
implementation of a coherent strategy for the region. In order to avoid these risks, among the wide array of
solutions possible, ranging from the present status quo to the creation of a cross-border regional authority,
forms of “light institutionalisation” of cross-border relations should be considered. In particular, a system
of incentives and contracts could help to re-frame cross-border co-operation while avoiding the creation of
new institutions.
121
ANNEX: BENCHMARKING CROSS-BORDER REGIONS
Introduction
The development of cross-border regions has translated into variable territorial expressions
around the world. In order to provide the Öresund Region with some best practices and learning
experiences, different case studies of cross-border regions in North America and Europe are presented. On
the basis of the initiatives that have been implemented in these benchmarking regions, the Öresund Region
could develop new perspectives on cross-border co-operation and integration, fully exploit common
opportunities and create productive synergies among all actors on the territory.
Learning from North America:
interdependencies
promoting
functional
co-operation
based
on
economic
Cross-border regions in North America have followed a very different logic than in Europe. In
contrast to the European approach that adheres to the gradual creation of a coherent integrated space in line
with the sense of one European identity, the North American approach has rather been driven by economic
concerns aiming to enhance functional co-operation and interdependencies between border cities, without
envisaging any kind of common “North American destiny” or “borderless” North America (Scott, 1999).
The Öresund Region, whose integration process has been heavily relying on the European Union (EU)
structural funds policy framework, could significantly complement its development strategy by drawing
inspiration from the strengths of North American experiences. In response to the challenges of economic
competitiveness entailed by globalisation, North American cross-border regions have distinctively focused
on exploiting potential externalities out of informal co-operation, involving the participation of non-state
actors. In particular, NGOs and other groups have accomplished a large number of grassroots initiatives in
community development, public health, environment protection, energy and water resources management
and other concerns.
Economic integration and local partnership initiatives: the example of Detroit-Windsor
(United States-Canada)
The Detroit-Windsor region (United States-Canada) notably resembles the Öresund Region in
terms of cross-border bridge infrastructure (the Ambassador Bridge) and provides an illustration of
functional co-operation fuelled by economic interdependence. While the Öresund Region is the trading
gateway between Scandinavia and the rest of the European continent, the Detroit-Windsor border region
(Figure A1) is also a key crossing point for trade between Michigan (United States) and Ontario (Canada),
in the North American continental heartland. Detroit is a large and urban agglomeration, whereas Windsor
is a relatively smaller and industrial city.
122
Figure A1. Map of the Detroit-Windsor region
Detroit
Windsor
Source: OECD Territorial Database.
On the American side, the City of Detroit constitutes a centre of economic activity in itself, but
accounts for only 25% of the total population living in the Greater Detroit region (known as Detroit PMSA
or Primary Metropolitan Statistical Area), which consists of about 250 distinct municipalities.
Greater Detroit is the sixth largest metropolitan area in the United States, with a total surface of 10 534 km²
and a population of about 4.4 million people. There is no over-arching political authority for this broad
entity. Instead, a number of special commissions or planning bodies as well as less formal mechanisms are
in charge of handling cross-jurisdictional metropolitan issues.
On the Canadian side, the City of Windsor is a municipality operating under the authority granted
to it by the Province of Ontario. In a fashion similar to Detroit, there are a number of (dramatically smaller
and in general more rural) neighbouring municipalities that make up together the greater region known as
Greater Windsor, with a total surface of 1 852 km2 and a population of about 375 000 in 2001 (Table A1).
123
Table A1. Population, surface and density in Detroit and Windsor
Detroit (Detroit PMSA1)
Population
4 441 551
Size of territory (km²)
10 534
Population density (inhab./km²)
422
1. PMSA = Primary Metropolitan Statistical Area.
2. CD = Census Division.
Windsor (Essex County CD2)
374 975
1 852
202
Source: US Census Bureau, Census (2000); Statistics Canada, Census (2001).
As it is the case in Öresund, the labour force is relatively well-educated on both sides of the river.
The share of people without a high school diploma is lower in Detroit and Windsor than in the
United States and Canada respectively, whereas the share of people who have a university degree is close
to the national level (Table A2). In terms of post-secondary institutions, Detroit has a total of
seven universities and 10 colleges and Windsor has one university and one college. Both regions display a
fairly high standard of living, with an average annual income per capita of USD 39 520 in Detroit and
CAD 35 420 in Windsor.
Table A2. Education attainment in Detroit and Windsor
% of population aged 25 and over
Detroit
Michigan
No high school diploma
15.2
13.8
High school diploma
84.8
86.2
University degree
25.7
23.0
1. Data from 2000 for Detroit and from 1996 for Windsor.
United
States
16.0
84.0
26.0
Windsor
Ontario
Canada
31.9
68.1
15.5
30.6
69.4
18.8
32.8
67.2
17.4
Source: Jeffrey Roy (2002).
Economic integration
Although there are signs of a growing degree of economic integration within both Öresund and
Detroit-Windsor, significant differences can be noticed in the dynamics of the two regions. In particular,
the Öresund project aims at fostering closer ties between two local economies that, while connected, have
traditionally been more integrated into their national, socio-economic landscapes than with one another,
whereas in Detroit-Windsor, economic interdependence is underpinned by a common focus and reliance on
one industrial sector. Even though differences in the way industries are categorised in the United States and
in Canada make it impossible to compare harmonised statistics between Detroit and Windsor, both sides of
the river are driven by the automobile industry: many parts are manufactured in Canada and then shipped
to the United States for assembling. This is the reason why “with many automobile manufacturing
facilities, Windsor shares some of Detroit’s economic base characteristics and since the North American
124
Free Trade Agreement (NAFTA) came into effect, the level of local trading of goods and services between
the two cities has increased substantially and is expected to continue to grow”97 (Box A1).
Box A1: The impact of NAFTA on the Detroit-Windsor cross-border trade
Since the advent of NAFTA in 1994, the relationship between the United States and Canada has been marked by
increasing interdependence, which holds particularly true for the State of Michigan and the Province of Ontario, but
also for Detroit and Windsor on a local level.
− On a national level, the United States is Canada’s largest trading partner (in 2001, merchandise trade from Canada
to the United States amounted to USD 217 billion) and Canada is also the United States’ largest trading partner
(in 2001, merchandise trade from the United States to Canada amounted to USD 164 billion). Total merchandise
trade between the United States and Canada accounted for USD 381 billion in 2001, i.e. over USD 1 billion per day
(Table A3). In 2000, Canada was the leading export market for 38 states in the United States.
Table A3. Merchandise trade between Canada and the United States, 1997-2001
Billions of USD
Canada to the United States
United States to Canada
Total trade
US-Canada trade balance
Source: Jeffrey Roy (2002).
1997
167
152
319
15
1998
173
157
330
17
1999
199
167
366
32
2000
231
179
410
52
2001
217
164
381
53
− On a provincial/state level, both the State of Michigan and the Province of Ontario are leading trading partners for
their cross-border neighbouring country. In 2000, 58% of Michigan’s exports were absorbed by Canada, and in
terms of absolute value, Michigan exported more than any other American state to Canada and also to Ontario. In
the same year, the United States accounted for over 93% of Ontario's total exports and the province supplied 54% of
all US-bound Canadian exports. Total trade between Ontario and the United States was over USD 243 billion
in 2000.
− On a local level, more than one third of all trade between the United States and Canada goes through the DetroitWindsor border points. Growing economic flows have also led to increasing human flows between the two sides of
the river. Commuters take advantage of the bigger labour market across the border: the job market in Detroit is
15 times bigger than in Windsor and Canadian residents can enjoy both a lucrative job in Detroit and a quiet, less
expensive suburb-like lifestyle in Windsor. Thousands of people also cross the border each year for health care
reasons. For example, since 2001, more than 20 000 people from Michigan have undergone laser eye surgery in a
Windsor clinic for economic reasons. Inversely, many Canadians go to the United States for certain specialised
treatments or emergency surgeries, or simply to avoid long waiting periods in Canada.
With respect to the specificities of the Öresund Region, it is neither advisable nor feasible to
transpose the Detroit-Windsor model as such. However, the example of Detroit-Windsor illustrates the
benefits of building a local production system that triggers off economic complementarities across the
97.
See “City of Detroit, Economic Profile for Investment” on www.ci.detroit.mi.us/environaffairs.
125
territory. The Mayor of Detroit recently evoked the challenge of building “clusters of innovation” for the
region by making both sides of the river work together, pointing out that a regional cluster approach
involving business, governments and universities would help the area capitalise on its strengths and stay
ahead of other areas that want to compete for business. According to him, everyone has a role to play in
order to set the stage for investment and long-term growth in the area. Such an approach is clearly needed
in Öresund where the potential for co-operation between firms and institutions from both sides of the
sound has not yet been fully tapped. The economy of the region could be strongly boosted through the
development of a few key cross-border clusters in some of the medium- to low-tech industrial sectors.
Local partnership initiatives
In particular, in Detroit-Windsor there are only a small number of cross-border partnerships but it
is interesting to note that they have developed purely out of local initiative and are the result of local needs.
An example of cross-border co-operation is the “Border Kids” programme, a project of the Canadian
Consulate General in Detroit that targets about 1 000 grade eight Canadian and American students to teach
them that Canada and the United States have different laws. Another cross-border initiative is the CanadaUnited States Business Association (CUSBA), which was created in 1989 and promotes contacts between
the members of both business communities of Detroit and Windsor.
Considering such an objective, ensuring free mobility and greater accessibility in both sides of
the territory through an appropriate infrastructure policy constitutes a prerequisite, in Detroit-Windsor as
well as in Öresund. In the Detroit-Windsor region, transportation infrastructure has been developed to
accommodate the high levels of traffic due to its strategic location, so that both Detroit and Windsor serve
as important inter-modal hubs where rail, water, road and air transportation all contribute to making the
region an important trading point. However, the distinction between Detroit-Windsor and Öresund is that
in Öresund, the infrastructure was envisioned and now acts as a catalyst for more economic flows, whereas
in Detroit-Windsor economic flows are stretching the infrastructure to an unacceptable degree. There is
widespread agreement on both sides of the border that the current border crossing points between Detroit
and Windsor are incapable of continually and effectively coping with the increasing North American trade
traffic and are soon expected to be inadequate to absorb economic integration.
What is noticeable in Detroit-Windsor is how cross-border transportation issues have spurred
different kinds of partnerships among all actors across the region. Transportation is at the core of many of
the recent joint Canada-US initiatives that have been taken at various levels of government and by
economic development corporations on both sides of the border. In the public sector, high-level
government officials from both countries have actively committed themselves in cross-border co-operative
projects and are currently discussing the possibility of building a new bridge or a new tunnel in the region.
Moreover, the Ontario-Michigan Border Transportation Partnership – a working group which includes
representatives from four partner governments (the United States Federal Highway Administration,
Transport Canada, the Michigan Department of Transportation and the Ontario Ministry of Transportation)
– is conducting a Planning, Need and Feasibility Study to assess the existing transportation network,
including border crossing and long range transportation planning, opportunities and options in the region of
Southeast Michigan and Southwest Ontario. At the same time, there have been greater efforts from both
sides of the river to enhance linkages. During a recent conference entitled Linkages Across the Border: The
Great Lakes Economy, the Governor of Michigan evoked the different forms of linkages between Detroit
and Windsor and explained his intention to explore seriously the idea of having a gondola to carry
passengers between Detroit and Windsor.
126
Regional NGOs: the example of the Cascadia region (United States-Canada)
An example of a young but dynamic cross-border region in North America is Cascadia at the
western edge of the US-Canadian border. Cascadia is dominated by the Pacific Northwest Economic
Region (PNWER), a public-private partnership which was founded in 1991 among legislators,
governments and businesses of five American states – Washington, Oregon, Idaho, Montana and Alaska –
and three Canadian provinces/territories – British Columbia, Alberta and the Yukon. Over two decades, it
has grown into a comprehensive institution that promotes regional economic development and
competitiveness. PNWER has forged a unique collaboration between the public and private sector.
PNWER has designated nine targeted sectors of business and industry that are strong within the PNWER
jurisdictions and developed proactive working groups for each sector. Each working group is led by a
legislative, public sector, and private sector co-chair. The working groups have initiated legislation,
sponsored teleconferences, industry forums, and produced research papers.
What could be of great interest for Öresund in Cascadia is the involvement of local civil society
in cross-border issues. In particular, many environmental NGOs and associations developed on both sides
of the border – due to the frequency of earthquakes in the region and other natural hazards – before real
cross-border institution building among them started in the early 1990s. For instance, the Seattle-based
Puget Sound and the British Columbian Georgia Strait Alliance have signed an Environmental
Co-operation Agreement in 1992 and united their strength in the Puget Sound-Georgia Basin International
Task Force.
Learning from Europe: supporting cross-border co-operation within an institutionalised framework
As a European and especially EU cross-border region, Öresund shares certain characteristics with
other cross-border regions in the continent. In particular, it is marked by the importance of formal or semiformal organisations that compose a highly institutionalised policy framework for cross-border regional
co-operation. Within such a context, some examples of regions that are well under way can be found:
Trieste-Koper (Italy-Slovenia) in terms of co-ordinated strategic planning or RegioTriRhena (GermanySwitzerland-France) with respect to building up an integrated and proficient labour market.
Co-ordinated strategic planning: the example of Trieste-Koper (Italy-Slovenia)
The Trieste (Italy)-Koper (Slovenia) region (Figure A2) is surrounding a border that has had
great symbolic value for many years because it was the border line between Western and Eastern Europe.
It is still one of the outer borders of the EU and the Schengen Agreement area. One of the major
characteristics of this cross-border area lies in the fact that its two components belong respectively to one
EU member country (Italy) and one future EU member country (Slovenia should have access to the EU
in 2004-2005). The two municipalities of Trieste and Koper together cover a total area of 395.69 km², with
a population of about 262 800 inhabitants.
127
Figure A2. Map of the Trieste-Koper region
Trieste
Koper
Source: www.matkurja.com.
The complexity of the territory necessitates co-operation from a variety of actors in order to
manage it properly. Within 30 km, there are not one but two land borders (Italy-Slovenia, SloveniaCroatia) and three sea borders (Italy-Slovenia, Slovenia-Croatia, Italy-Croatia). One basic administrative
and legal difference in the territorial organisation of Slovenia versus Italy is that Slovenia has only
two institutional levels (the central government and municipalities)98 and did not envisage a regional
administrative level until the recent constitutional reform.99 In Italy, cross-border and transnational policies
fall within the jurisdiction of both regions and municipalities (decentralised co-operation) whereas in
Slovenia the central government is the only level in charge. Therefore, an Italian region or municipality has
to negotiate directly with the Slovenian central government on cross-border issues, with evident difficulties
and slowness. Moreover, Slovenia has not yet ratified the Convention of Madrid (1980), a framework
convention which defined cross-border co-operation as a spontaneous form of co-operation between local
authorities belonging to neighbouring countries. Only this ratification would make a bilateral agreement
between Italy and Slovenia possible on all the issues concerning cross-border co-operation, territorial
jurisdiction included.
Cross-border co-operation is at an advanced stage by now in terms of the promotion of projects
and programmes between Italian and Slovenian partners, although it still needs to deal with numerous
difficulties related to the time it takes to approve projects and the management of EU funding and projects.
98.
Nonetheless, the small territorial and demographic dimension of Slovenia should naturally be kept in mind.
99.
At present, administrative functions are exclusively attributed to the central government in Slovenia, and a
trend inversion was registered only recently. A bill of law on the creation of provinces is indeed being
approved. This bill was submitted to Parliament for the first time in May 1999. However, to become a fully
effective law, this bill should be accompanied by a partial constitutional change concerning the jurisdiction
of local authorities.
128
The initiatives promoted with INTERREG II (1994-1999) have achieved concrete realisation and will be
further developed within the framework of the new cross-border and transnational planning of
INTERREG III (2000-2006), especially through the pre-membership instruments on the Slovenian side
(including PHARE, PHARE-CBC, ISPA and SAPARD). One of the many most positive aspects is that
INTERREG II enabled the overcoming of existing mistrust and improved mutual knowledge and
acceptance which are essential for the joint planning of a “common” territory, regardless of national
administrative borders.
Complementary to the INTERREG programme is the Slovenian national planning programme
PHARE-CBC. Like INTERREG, the PHARE cross-border co-operation programme managed to establish
dialogue and co-operation which promoted better mutual knowledge and positively influenced the
launching of common development strategies in the border area. For 2000-2006, the PHARE programme,
aiming at a concrete cross-border approach, has sought ties to a wider policy of regional development
within the context of the pre-membership strategy.
Some of the recommendations applicable to Trieste-Koper can inspire new lines for action for
Öresund. In order to avoid negative competition, duplications, waste of resources, higher costs and a fall in
competitiveness, integration could be strengthened through the following:
−
an integrated network for local transports, based on a single effective planning of internal
connections;
−
a financial system more willing to promote business synergies and joint ventures to start up
new companies;
−
a strong link between research institutes/scientists and local businesses;
−
a differentiated and integrated offer to be based on joint planning decisions on the location
of specialised shops and bigger trading centres;
−
common initiatives for tourism in the whole cross-border area, especially during major
events with a substantial influx of visitors.
Building an integrated labour market: the example of RegioTriRhena (Germany-SwitzerlandFrance)
Today, the RegioTriRhena is often looked upon as a model for other cross-border regions.
Despite large constitutional differences between the participating countries, RegioTriRhena is interesting
because of its large cross-border labour migration and a high degree of functional integration made
possible by various cross-border agreements that can provide an example of pragmatic policy for Öresund.
RegioTriRhena is located right in the heart of Europe, representing parts of north-western
Switzerland, southern Alsace (France) and southern Baden (Germany) (Figure A3). RegioTriRhena counts
about 2.2 million inhabitants whereof 545 000 live in Switzerland, 670 000 in France and 960 000 in
Germany, and the region covers a total area of 8 700 km2. The density of population is 248 inhabitants
per km2. RegioTriRhena constitutes the southern part of EuroRegion Upper Rhine, which entitles it to take
part in the INTERREG programmes.
129
Figure A3. Location of RegioTriRhena
RegioTriRhena
Source: OECD Territorial Database.
RegioTriRhena is a preferred economic location in the heart of Europe; especially by Swiss,
French and German companies that settle down in their neighbour countries to benefit from the good
availability of skilled labour, the excellent transport infrastructure and cluster effects. The economic
pattern is different in each of the three sub-regions (Figure A4) but they are often complementary. Whereas
the chemical and pharmaceutical industry plays a key role in north-western Switzerland, mechanical
engineering and car manufacturing are leading industries in the Upper Alsace region. Southern Baden is
characterised by various companies in the fields of chemistry, mechanical engineering, car manufacturing
and electronic engineering. The Basel area is also famous as an international financial centre, being a home
base for many banks and other financial institutions. Although the value creation per capita is very high in
the chemical industry in the RegioTriRhena, the greatest value is created in the service sector, which is
typical for industrialised countries. Another driving force of the RegioTriRhena is the fair business.
About 200 fairs and events attract over 4 million visitors each year. Fair organisers in Basel, Mulhouse,
Colmar and Freiburg have become aware of the importance of co-ordinating their efforts and making their
specific know-how accessible to other fair organisers in the region to better satisfy visitors and exhibitors.
130
Figure A4. GNP by economic sectors, 1996
Million EUR
Northwestern Switzerland
Southern Baden
Upper Alsace
RegioTriRhena
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
Primary sector
Secondary sector of which : chemistry
Tertiary sector
TOTAL
Source: Schröder (2000).
In RegioTriRhena, more than half (57.3%) of the region’s GNP is generated by the service sector
that also employs the highest share of the labour force (61% of a labour force that counts roughly about
one million workers). Unemployment rates vary considerably within RegioTriRhena (Figure A5). Because
of RegioTriRhena’s being an attractive business site, unemployment rates in the three areas are lower than
the average rate in their respective countries. In addition, unemployment rates have decreased in all
three regions, mainly due to economic growth and the resulting demand for labour.
131
Figure A5. Unemployment rates in RegioTriRhena, 1999
In %
7
6.5
6.5
Upper Alsace
Southern Baden
6
5
4
3
2
2.1
1
0
Northern
Switzerland
Source: Wirtschaftsstudie Nordwestschweiz, INSEE, Landesarbeitsamt Baden-Württemberg.
One reason for RegioTriRhena being such an interesting cross-border region is the large number
of cross-border workers leading to an integrated labour market. Many high-tech companies, especially
those operating in the field of chemicals and pharmaceuticals, are dependent on specialised employees.
Many of them come from across the border daily (55 000 people commute across the border to their
workplaces).100 Another reason for this high volume of cross-border labour migration is the salary level.
Salaries in Switzerland are up to 40% higher than in Upper Alsace and about 20% higher than in
Southern Baden, which makes Switzerland an attractive place to work for foreigners. People travel across
the border not only in order to work but also because of shopping and housing. Figure A6 summarises
cross-border migration and its respective motivation and importance.
100.
The 55 000 commuters can be divided into the following four sub-groups: 30 000 commuters from France
to Switzerland, 18 000 commuters form Germany to Switzerland, 5 400 commuters from France to
Germany, and a small number of people commuting from Switzerland to Germany and France and from
Germany to France.
132
Figure A6. Cross-border migration and its motivation
Southern Baden
Upper Alsace
North-western Switzerland
Cross-border migration motivated by:
Shopping
Working
Housing
Intensity of cross-border migration:
Important
Very important
Unimportant
Source: Eder, Sandtner (2000).
Although a large number of people cross the border each day, RegioTriRhena is not yet a fully
integrated region. As in Öresund, there are still many obstacles to cope with, such as work permits,
different taxation policies and social security regulations. One future goal of the Council of the
RegioTriRhena is to enhance mobility on the regional job market and reduce existing restrictions.
Work permits
In contrast to Öresund where both countries belong to the EU, in RegioTriRhena it is necessary
to distinguish between EU member countries (France and Germany) and countries which are not members
of the EU (Switzerland) because general access to the Swiss labour market is not automatically given to
foreigners. There exist different kinds of work permits, allowing cross-border labour migration in a limited
way (Box A2).
Box A2: Work permits in RegioTriRhena
Most people living in Germany or France and working in north-western Switzerland live in a defined border zone.
Swiss employers willing to hire foreign workers have to apply for a cross-border work permit that is given under the
following restrictions:
− Applying employers must prove that an equivalent Swiss employee cannot be found at the moment.
− The foreign worker must have been living in the border zone for at least six months and the working conditions
(salary, conditions, etc.) are to be inspected by Swiss authorities.
133
Box A2. Work permits in RegioTriRhena (cont.)
The cross-border work permit is valid for one year and can be renewed. This kind of work permit is only given to
workers returning to their home country on a daily basis.
There exist other permits, such as the B-permit which additionally is a residence permit but valid only for the job for
which it was issued. It is also valid for one year and can be renewed. After five years, a B-permit is exchanged into a
C-permit that grants its holder almost the same rights as to Swiss citizens in terms of working and living. However,
this permit system will be affected strongly by the implementation of the bilateral agreements between Switzerland
and the EU.
Taxation and social security
On the other hand, taxation and social security are two other important fields in which
RegioTriRhena has implemented innovative mechanisms that may provide substantial policy material to
Öresund. In each of the three countries there are different regulations and systems on taxation and social
security, but various bilateral agreements in RegioTriRhena and throughout the EU allow free movement
of people and are therefore crucial to building an integrated region.
Double taxation agreements between two countries are an important tool in order to prevent
double taxation in cross-border labour markets and to prevent people working and living in different
countries from paying taxes that exceed the total tax burden of a person working and living in the same
country. Contrary to the general taxation rule according to which taxes should be paid in the country where
the money is earned, cross-border commuters living in a defined border zone have to pay their taxes at the
place of residence and not at the place of work (Box A3). With the bilateral agreements between
Switzerland and the EU that entered into force on 1 June 2002, cross-border commuters will need to make
only weekly trips back home (instead of daily trips).
Box A3: Cross-border taxation agreements in RegioTriRhena
Between Switzerland and Germany, taxation regulations are a little bit different to the general rule. A German person
working in Switzerland and living in Germany pays in Switzerland a withholding tax of 4.5% which is directly
deducted from the monthly salary. In Germany the tax burden is reduced by this amount paid already in Switzerland.
Swiss citizens working in Germany also pay this withholding tax of 4.5%. The tax burden release amounts to
one-fifth of the total tax bill and does not exactly correspond to the 4.5% paid. Between France and Switzerland,
commuters do not have to pay a withholding tax. Cross-border commuters between Germany and France pay taxes in
their country of residence.
134
Today the EU member countries and Switzerland are making large efforts to co-ordinate the
different social security systems. The goal is not to create one common system, but to prevent that
individuals working in countries other than their home country lose part of their rights and claims for social
security benefits (Integration Office et al, 2002a). For citizens working or living in Switzerland or in one of
the EU member states, the following rules apply (Integration Office et al., 2002a and 2002b):
101.
−
An employed person must be insured at the place of work. Therefore, a Swiss person working
in Germany has to pay social security contributions in Germany and vice versa (place of
employment principle). This rule does generally not apply to people working temporarily for
a Swiss employer in a EU member country (posted persons who remain insured in
Switzerland during the posting).
−
People working in Switzerland and in an EU member country at the same time must in
principle be insured in only one of the two countries. If they live in one of these countries,
that is where they pay all insurance contributions.
−
People having worked in different countries can claim a pension from each of those
countries. Each country will pay a share of the pension corresponding to the length of time
(pro rata system) the person has contributed there, provided that contributions have been paid
for at least one year.
−
Two new concepts are introduced to unemployment insurance: according to the principle of
aggregation, all periods of employment in different countries contribute to the minimum
contribution threshold, and the benefit export for three months at most makes it possible to
look for a job in an EU member country for up to three months. For this period,
unemployment benefit is exported.
−
The last country of employment must pay unemployment benefit. There are exceptions for
cross-border commuters and short-term residents. Cross-border commuters being out of work
will receive benefits from their country of residence (according to bilateral agreements
between Switzerland and its neighbour countries, Switzerland transfers the contribution of
cross-border commuters to the unemployment insurance in their country of origin).
Employees with temporary residence permits can choose whether they wish to draw
unemployment benefits; either in the country where they were last employed or in their
country of origin.
−
The principle of residency also applies to EU residents. Unemployment benefits are received
from the country of residence although contributions have to be paid in the country of
employment.
−
Cross-border commuters are covered by health insurance in the country of employment.
There exist various exceptions considering health insurance. Residents of various countries
who are employed in Switzerland can choose whether to be covered by insurance in the
country of residence or by Swiss health insurance.101
See also www.europa.admin.ch/ba/expl/factsheets/e/fs2001.pdf.
135
The bilateral agreements102 between Switzerland and the EU entered into force on 1 June 2002.
These agreements have strongly affected the previous regulations and procedures, generally making crossborder issues less complex. Some of the recent changes are briefly described below:
−
the free movement of people will be introduced step-by-step and will eventually guarantee
equality of treatment of Swiss and EU labour;
−
cross-border work permits will be issued without the obligation to have lived in the border
zone for at least six months and the border zone will be enlarged;
−
the national social security systems will be co-ordinated;
−
another goal is the mutual recognition of diplomas and degrees;
−
Swiss and EU citizens shall be treated equally in terms of working and living.
Cross-border governance and information policies
Compared to Öresund, the integration process in RegioTriRhena is a historically advanced one
since it has been going on for almost 40 years. Official cross-border co-operation was launched in 1975
when the agreement of the Swiss, German and French governments on formalising cross-border activities
came into force as one of the first inter-governmental agreements on cross-border co-operation in Europe at
this time (Zoller-Schepers, 1998). The result of this agreement was the German-French-Swiss Government
Commission, which consists of three national delegations led by the national ministry of foreign affairs,
each of them counting eight members representing their respective government. However, cross-border
co-operation dates back to 1963 in the City of Basel when a group of business, university and political
representatives founded the Regio Basiliensis association in order to consider the Greater Basel Area,
including Southern Alsace and Southern Baden, as a unity, bearing a great potential for development
(Pfeiffer, 2000). The City of Basel in particular wanted to improve its peripheral location by initiating
formal co-operation with the two neighbouring countries. This idea was later copied in Southern Alsace
and Southern Baden, forming the Région du Haut Rhin and the Freiburger-Regio-Gesellschaft as
counterparts of Regio Basiliensis. Initiated by these three associations, a regional co-operation network
was born. Again these Regio associations formed a co-ordination committee that later developed the idea
of creating the Council of the RegioTriRhena in 1995, a 60-member council bringing together
representatives of cities, municipalities, economic organisations, and universities that meet at least twice a
year. The Council of the RegioTriRhena operates as an organ of co-operation parallel and complementary
to the nationally agreed Upper Rhine Conference that represents a much bigger area.103
In a tri-national area such as RegioTriRhena, there are a lot of national peculiarities (e.g. where
various permits can be obtained, taxes regulations, social security systems, education, etc.) that citizens of
the respective countries are familiar with but not their foreign neighbours. Therefore, a system of formal
and informal information distribution is crucial to the development of an integrated region. Cross-border
institutions such as INFOBEST PALMRAIN, tri-national congresses and other initiatives (Box A4)
102.
For more information on the bilateral agreements between the EU and Switzerland, see also
www.europa.admin.ch.
103.
The Upper Rhine Conference holds biannual meetings and is responsible for discussing and resolving
different cross-border issues concerning the bigger EuroRegion Upper Rhine. It consists of
three delegations, each of them counting 25 representatives from their respective countries’ executive
branch (members of governments and ministries, chambers of commerce, regio associations, etc.)
(Pfeiffer, 2000). Today, tri-national teams with more than 20 permanent expert committees are working on
the core issues such as economy, traffic, energy and environment, spatial planning, culture and health.
136
enhance cross-border projects and initiatives by making important information easily available to the
public.
Box A4: Cross-border information policies in RegioTriRhena
Created in 1993, INFOBEST PALMRAIN is a tri-national information and consulting centre (financed by
INTERREG and 12 state and community representatives until 1998; by regio associations, universities and others
since 1998) that answers the questions of citizens, administrations, associations and politicians on all cross-border
issues between Switzerland, Germany and France (citizens’ daily life, work and business; cross-border projects;
addresses and contacts).
Since 1998, usually bi-annually held tri-national congresses are alternately organised by the three countries and allow
an in-depth discussion of core issues. Prior to the congress, various initiatives, projects and events are organised
according to the theme of the congress, fostering relationships between administrations, citizens, firms and
educational institutions. The results of these projects and initiatives are presented at the congress and programmes for
future improvement of cross-border co-operation are developed. Being citizens in the Upper Rhine is this year’s
theme for the congress being held in October. The effort of putting citizens in the centre of cross-border co-operation
is part of a strong general tendency, which will continue to be observed in the Europe of the future.104
In addition, there exist various other boards, organisations, ad hoc task forces, initiatives and programmes of
information, among which: a common booklet listing events, restaurants and recreation facilities in Basel, Lörrach
and Mulhouse, various Internet pages providing cross-border information, Guide Michelin (the first cross-border
travel guide published in French and German), Regio Ambassadors (more or less famous people act as ambassadors
of RegioTriRhena, promoting cross-border networking). The region’s residents should be inspired and motivated to
realise their own projects and ideas.
Conclusion and recommendations
In terms of lessons to be learnt from cross-border experiences, successful integration requires
strong political and civic agendas and initiatives to foster meaningful cross-border ties. Above all, crossborder governance capacities need to be moulded and strengthened, which requires a significant process of
intergovernmental collaboration. A mere political project or infrastructure projects in themselves are
insufficient: they should serve as catalysts for greater integration. The border regions presented in this
review and Öresund can learn a lot from each other by sharing experiences and best practices. Further
co-operation could be done in the following fields:
104.
−
exchange of experiences, solutions to common problems and new ideas regarding crossborder co-operation on a regular basis;
−
regularly held meetings discussing the future development of the different regions and their
co-operation;
−
visits or exchanges for authority members in the respective regions for a certain amount of
time to get insight in the other region’s way dealing with daily business;
−
exchange of university students, joint research programmes or even a joint Master’s
programme involving each region’s universities and research institutions.
See also www.3regio.net.
137
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