REGIONAL DEVELOPMENT STRATEGY IMPLEMENTATION IN THE WEST POMERANIAN REGION

Grzegorz Spychalski

ABSTRACT

The paper presents the strategic implementation process of West Pomeranian Province development on the basis of an operational program. In the first part of the paper, the author describes the legal and organisational foundations of Polish regional policy during the transition period and the implementation action sequences of development strategies. A program for entrepreneurship and innovation support in the West Pomeranian Province was selected as the implementation measure to be analysed. Its goals, assumptions and selected instruments of implementation have been described. The paper ends with diagnostic and prognostic conclusions about self-governmental regional development.

Key words: region, development, strategy, infrastructure..

INTRODUCTION

Due to the act regarding the West Pomeranian Province’s self-government dated June 5^th 1998, [2] representative bodies of the largest unit of the country’s territorial division gained new instruments for enacting regional policies. The first instrument involved creating a provincial development strategy with provincial programs; the second was to enact the accepted strategic arrangements contained in the provincial land development plan. Apart from determining development goals, the provincial self-government negotiates contract conditions with the central government administration, which is a basis for financing elements of the regional programs. All self-government provinces in Poland signed the first contracts and started the practical management of the regions. However, they wrestle with many problems connected with the difficult situation of public finances, a general economic recession and reforms of the public service sector. There also exists a problem of the effective di vision between provincial self-government and institutions of the central government administration concerning the determination of the conditions and goals of local development.

Development programming is an inherent element of the regional policy and is a requirement of self-governments that apply for any external financing sources for their infrastructure investments, and also when soliciting support from the World Bank and European Union. In this context, the aim of this paper is to evaluate the regional policy procedures in the decentralized system of local support within the West Pomeranian Province. Research materials include: the Regional Council’s documents concerning regional development long-term strategy, provincial programs connected with the strategy, and professional literature. The research methodology includes documentary analysis and descriptive statistics as a part of deductive reasoning with supplementary elements of active observation.

REGIONAL POLICY IN POLAND AFTER 1999

The economic resources in material and structural apprehension are distributed on the area of every country and create spatial structure of national economy. Entities, technical and social infrastructure, as well as institutional connections form a special system of economic relations on the national level but also on the regional level as distinguished by natural and administrative barriers. Implementing a policy of influence on the economic system, the government uses general instruments but also attempts to diversify instruments of the economic policy directed to the sector of the national economy as well as areas with different socio-economic characteristics (refer to table 1).

It is essential to coordinate the instrumental forms of determining economical development with growth changes causes in selected sectors and regions of the country.

Regional policy in this context is understood as an economic authority’s influence on features of an economic subsystem sectioned by administrative boundaries from a system of the national economy. It is usually examined from two aspects. The first concerns forms and the range of the economic centre’s impact on regional development; the second is connected with self-governments’ and local entities’ activities which may result in quantitative and quality improvement of economic indicators.

The level of regions’ development in Poland is quite diversified. It is caused by natural resource factors which determine in various ways the socio-economic potential of different parts of the country, by historic factors dating back to the partition period, but also activities of the interwar period and many investments of real socialism period. Some authors claim that there is a “crisis of Polish space” connected with the critical state of the natural environment, irrational structure of management in a considerable number of regions, investment distortion in rural areas, and the lack of basic elements of infrastructure in rural and recreational areas [6]. At the same time, there are strong income and civilization disproportions deepened by the processes of political and system transformations during the last 13 years. Most of the Polish provinces are poorly developed and are often dominated by decadent branches of industry. To accelerate positive changes in regional policy, a new territ orial division with simultaneous self-government provincial units was implemented in 1999. The act imposed on each of the Polish administrative areas the duty to carry out regional development policies strategically structured and implemented as provincial programs. On May 3, 2000, the Parliament passed an act about the rules of regional development support [4], which specified cooperation between the central government and local administration. After the passage of this act, the government drew up priorities for regional development in Poland, rules for distinguishing areas that need support from public sources, and the criteria for public financial support for each provincial program. All these elements have been contained in the National Strategy for Regional Development policy, passed as a Council of Ministers resolution. Due to this document, regional policy activities are formal provincial contracts, which are civil law agreements between the Polish government, represented by the minister for regional d evelopment, and the provincial self-government, represented by a marshal of the province. Because of this contract, there are budgeted transfers of resources to realize the objectives of the development strategy. Detailed support areas concerns include:

• development of individual regions of the country,

• improvement in the quality and conditions of living for inhabitants and addressing the needs of the local community,

• creation of conditions for increasing the competitiveness of local communities,

• compensating for differences in the development of individual areas of the country, reducing backwardness in poorly developed regions that have the most unfavourable development conditions.

Contracts detail clear procedures for spending public finances, with the financing of regional objectives being possible only in the form negotiated in the civil law agreement. Detailed information about contract preparations is found in the Council of Ministers’ resolution about the approval of Support Programs for the years 2001-2006 [3]. The basis for concluding the contract is submitting, by provincial administration, motions for support with the strategy accepted by the regional council and the provincial program. Afterwards, the negotiating procedure starts, during which participants make an agreement on activity priorities and objectives financed by public means. Entities entitled to gain support through the contract are territorial government units (provinces, poviats, and communes), entities of economic and vocational self-government, non-government organizations, science institutions, entrepreneurs and other entities connected with regional development [5].

IMPLEMENTATION OF THE WEST POMERANIAN DEVELOPMENT STRATEGY

The Marshal of the West Pomeranian province signed the provincial contract on the 19^th of June 2001, in which there were accepted five priorities of regional development according to the National Strategy for Regional Development for the years 2001-2006. These priorities resulted from an assessment of the Polish North-Western periphery state. There are:

1. Development of technical and social infrastructure beyond local significance.

2. Potential and competitiveness growth of the economy.

3. Development of human resources.

4. Development and activation of rural areas.

5. Development of regional and border cooperation.

These priorities should be useful, for the general vision of West Pomeranian province included in the strategy is as follows: “The mission of West Pomeranian is to obtain sustainable and long-lasting development in accordance with European Union standards through optimal use of all available provincial advantages and accession condition negotiated by Poland” [7].

Within these development activities, many investment undertakings will be realized, especially connected with the building and modernization of transport networks, health services (hospitals), sanitary sewage systems and sewage treatment plants, as well as institutional elements of public services. Conditions for provincial technology and innovation transfer through building a Technological Park attached to Koszalin Technical University and the European Centrum attached to University of Szczecin will also be created. Moreover, local authorities are planning to promote entrepreneurship, improving personnel of small and medium enterprises and developing active measures to reduce unemployment. These activities will be financed with the help of European Union funds within the PHARE II fund.

The government divided budget funds for the first two years of provincial contracts implementation. The total amount of expected expenditures in this period is going to be 307805 thousand zlotys and 46235 thousand euro, which means 4.76% of total national funds allotted to financing the support program. Until the end of October 2001, the Marshal of Province entered into contracts with entities, which implemented tasks co-financed within the contract. The Regional Monitoring Committee, appointed by the provincial governor with cooperation with provincial administration, is responsible for supervision and monitoring the implementation of the contract.

SECTORAL OPERATIONAL PROGRAM

The development strategy of the West-Pomeranian Province created general frameworks for implementation of regional policies. It delegated detailed tasks to the sectoral operational programs, which by decision of the Regional Council became a form of local law. Such a program accepted by a Regional Council resolution is the “Program for entrepreneurship support, growth of innovation in economy and directions of unemployment prevention in the West-Pomeranian Province”. The strategic aim of this program is to improve competitiveness in the provincial economy and indicate activities in areas to support socio-economic growth conditions. The program’s background focuses on the lack of balance in the labour market in the region caused by structural unemployment, especially in rural areas. The second phase of economic transformation resulted in depreciation of a large number of big firms in cities within the province. Demographic analysis indicates that until 2006 there will be 100 thousand more pe ople at an economically productive age. It’s anticipated that there will be a simultaneous decline in a number of youth, estimated at the level of 67 thousand at primary school and 39 thousand at secondary school. Employment for such labour resources is a fundamental challenge for the economy, especially when the total number of employed people accounted for 581.5 thousand. It is of concern that in less than two years this number decreased by 36 thousand. Currently, there are 161 thousand unemployed people in the province, which results in one of the highest unemployment rates at the level of 21.7%. It varies greatly in individual poviats from 9.1% in Szczecin to above 33% in Drawsko, Sławno, Gryfice, Świdwin and Białogard (see figure 1).

The situation of graduates who are looking for their first job has been worsening recently and there is an increase in the number of areas threatened with structural unemployment. The only part of the regional economy indicating growth is a sector of small and medium enterprises, whose growth has currently reached 169758. There are a number of instruments of regional policies that can support this economic sector. Taking these development factors into consideration this region is expected to attain the following objectives:

1. Growth in the level of knowledge and education for personnel of Small and Medium Enterprises.

2. Entrepreneurship growth through extension of the institution’s network which support small business.

3. Activation of labour market support for local initiatives connected with the government programme “The First Job”.

4. Development of technology and growth of innovation through institutional and organizational activities initiating research and development processes.

5. Promotion of the region in order to obtain local investments.

Operational aims will be realized with financial support of the special entity appointed by the Marshall of the province – the Regional Finance Institution. Ultimately, this organization will administer and manage support instruments for small and medium enterprises on the regional level. Its partner on the national level will be the Polish Agency for Enterprise Development, which will carry out sectoral policies of the government towards SME.

Apart from the presented operational aims, the program also plans to implement many activities in accordance to strategic objectives. The list is detailed in table 2.

As can be seen, many activities have an institutional character connected with the establishment of networks for entrepreneurship support, economic information, loan and investment funds or employment agencies. Some of them combine regional activity with government programmes. An interesting element of the programme is the Regional System of Entrepreneurship Support, which operates to stimulate individual activity and assist with the orientation of entrepreneurs who want to set up business activity. With this help, it is expected that within the province a network of support centres for entrepreneurship can be established in every poviat. They will fulfil the following functions:

1. Information and consulting - consisting of law service, tax financial consultancy, help in preparing a business plan for the investment enterprise, marketing analysis and market research.

2. Training - consisting in improvement of vocational qualifications, promotion of general economic knowledge and propagation of modern management methods.

3. Organizational - connected with creating spheres of intensive management of entrepreneurship’s incubators, where are offered advantageous conditions for economic activity in one place or specific technological idea is propagated.

4. Financing support - such as the Credit Guaranty Fund, preferential credit lines, and support programmes.

The aim of this project is use of material and human potential of economic self-government entities, which sometimes possess local and technical resources that can serve new firms or entrepreneurs looking for modern technological and organizational solutions. The next action of the programme, which improves the competitiveness of the regional economy, is quality promotion in business activity. Taking into consideration the necessity to implement standards acceptable to the International Standard Organization and quality certificates in relation to the European Union, firms wishing to be competitive should implement quality management as a permanent element of its management system. In order to facilitate these actions, there is a quality-promoting programme directed specifically to small and medium enterprises, which includes:

• creating a quality culture within regional economic policy,

• popularising quality issues and its role in enterprise development,

• disseminating information about certification and systems in the country and all over the world,

• disseminating and exchanging enterprise and institutional experiences connected with quality issues,

• promoting firms that have a certificated management system.

These tasks will be realized and coordinated by the special provincial organization, the Regional Centre for Quality Promotion, which will be the centre of knowledge about quality management. The most important challenge of this institution will consist of planning and preparing individual procedures of quality standards to implement in small and medium enterprises with cooperation of certificating bodies. Often smaller entities fail to implement quality management programs because of lack of economic means. Organizational help could be a chance for them to exist in increasingly difficult market conditions. Ultimately, the program’s authors hope that a considerable number of West Pomeranian firms will implement the Total Quality Management system, which would not only improve the entities’ competitiveness, but also guarantee them free participation in the common European market.

Supplementing the proposed actions is the Regional Credit Guaranty Fund, whose role is to stimulate activity of financial and loan institutions and improve bank funds availability for firms with a limited credit rating. The Fund’s efficiency depends on the volume of involved capital and a number of agencies entitled to give credit guaranties. It is supposed that in the province it is necessary to invest 20 mln PLN on a Fund’s account and organization of a dozen or so units affiliated as agencies running operating activity. Guaranty action will especially support:

• investments in fixed assets which will create new jobs,

• innovations, particularly implementation activities,

• guaranties for entities from areas that demand support, especially poviats being at risk from structural unemployment.

With the passage of time, the Fund is supposed to be the basis for a provincial investment fund that invests its assets in inventive enterprises, at the borderline of innovation, which opens new technological and management horizons. Its role is going to be to create conditions for the establishment and functioning of high-risk funds like “Venture Capital”, which in many countries are major players in the innovation processes. They amass capital surpluses from different sectors of the economy and invest them in enterprises with an unpredictable return rate, but at the same time they bring extraordinary profits in case of its success.

It is difficult to overestimate the Funds’ role in the province where deep transformation of production and employment structure connected with the development of information and service technologies supported by informatics technology will be required. The second area of development is going be biotechnology involving the newest engineering ideas with the simultaneous use of industrial forms of production organization and a natural way of producing various products. The third development sector in the region should be pro-environmental technologies both connected with environmental protection engineering and making agriculture more ecological, as well as measures used to lessen the negative influence of the industry on natural resources.

CONCLUSION

The West-Pomeranian Province is the one region without research and development units associated with the Polish Academy of Sciences. Expenditures on research and development activities are the lowest in Poland, amounting to 69.3 mln (11^th position) which is 1.5% of the total national expenditures. D&R activity in the industrial sector is even lower and amounts to 1.49 mln - 0.7% of the total national expenditures, which makes technological progress and improvement of competitiveness more difficult in the regional economy. In order to facilitate and accelerate these processes, support for innovation and entrepreneurship of provincial firms should be implemented, especially through the realization of operational programmes from the strategy of regional development. Implementing program activities by provincial self-governments should be positively assessed like other detailed programme’s conceptions that support the growth of innovation demand and stimulate entrepreneurial act ivities.

It is essential to connect institutions responsible for regional development and who shape regional economic policy in the programme. Government administrations with self-government administration bodies have chances to realize strategic and operational aims by using local resources and by encouraging the participation of social partners.

The idea of provincial contracts as a form of financing regional policy derived from French experiences should work well in Polish conditions, especially when there is a lack of public support measures. It is important to avoid making addendums and renegotiating a contract after finalizing it because it damages the sequence of activities being run by the lower levels of self-government (poviats, communes), which also realize many objectives within regional development. The most difficult problem to solve by regional authorities is coordinating financial assistance in connection to public support measures, especially government subsidies with support funds from the European Union and the World Bank. This is problematic because each of these resources imposes different rules when applying for support and different procedures of monitoring expenditures. Meanwhile the Board of the Province planned financing from diverse resources and investment objectives can make programme realization more dif ficult (table 3).

A needed solution in the programme is to create a Regional Financing Institution as a partner of the Entrepreneurship Support Agency, which could act as a coordinator and accountant of the different sources of financing to assist in achieving operational activities and objectives.

The programme’s authors expect to see a number of educational activities connected with teaching young people entrepreneurial attitudes and activity in market economy conditions. A change of attitude and way of thinking may occur as a key to long-term development processes, whose authors must be creative and innovative, using knowledge and material resources.

The West Pomeranian Province, being at the Northwestern periphery of Poland, is far behind the leading provinces (like Mazovia, Lower Silesia or Wielkopolska) in the field of entrepreneurship, scientific research and innovation. With regard to accession to the European Union, the development of the region will be determined by the growth of entrepreneurial attitudes. For that reason, it is necessary to support all activities serving the development of those attitudes, especially those creating an institutional entrepreneurship framework.

A self-government operational programme is a completely justified instrument of regional policy implementation concerning provincial development priorities. It should be positively evaluated from an intellectual point of view, though its practical realization is at risk because of scarce financial resources as well as an inadequate determination of implementation units.

1. Council of Ministers’ resolution No 105 from December 28th 2000 on National Strategy for Regional Development 2001-2006 acceptation (MP 2000 No 43 item 851

2. Dziennik Ustaw 1998 No 91 item 576

3. Dziennik Ustaw 2000 No 122 item 1326, with further changes

4. Dziennik Ustaw 2000 No 48 item 550, with further changes

5. Faliński J.J., 2001: Provincial agreement as an instrument of regional Policy implementation. Region 2001 - Conference Materials: Regional development of Poland and European Regional Policy. University of Szczecin, Szczecin.

6. Kołodziejski J., 1997. Diagnosis of spatial economy state. Final report. Study of Committee for Spatial Country Planning, Polish Academy of Science, Warsaw.

7. Strategy of West Pomeranian Province Development till 2015, Provincial Self-government resolution No XVI/147/2000, October 23^rd 2000

8. Winiarski B. (ed.), 1999: Economic policy. Ed. University of Economy in Wroclaw, Wroclaw.

Responses to this article, comments are invited and should be submitted within three months of the publication of the article. If accepted for publication, they will be published in the chapter headed ‘Discussions’ in each series and hyperlinked to the article.