4. Spatial cohesion

Spatial cohesion expresses the degree to which different sub-regions of the BSR offer similar levels of quality of life to their inhabitants. Disparities will always exist due to different structures and natural conditions. Cohesion stands for equal chances in diversity not for uniformity.

Main criteria for cohesion are economic levels of welfare, and accessibility of a wide range of services, facilities and jobs. Accessibility is dependent on the structure of the urban system, and on the quality of transport infrastructure and services.

4.1 Growing regional disparities

Different starting points at the beginning of the 1990s, and different development trends since then have led to growing economic disparities in the BSR.

Regional disparities in per/capita production in the BSR are among the highest in the world. The region includes some of the wealthiest as well as some of the poorest areas of Europe, in many cases bordering directly on each other. The largest economic gaps exist at the borders between Finland (and Norway) and Russia, and between Germany and Poland.

Counteract growing welfare disparities between and within countries

But of growing concern is an increasing relative difference of economic performance within countries, notably between capital or large city regions and other areas (statistical problems tend to exaggerate such differences, but nevertheless give a proper trend indication).

In the EU as a whole this trend towards more imbalance has been halted during the 1990s. But in Sweden and Finland where regional disparities used to be small, these seem to be growing. The same is true to an even higher extent in transition countries, where rapid economic development concentrates at the very vicinity of few powerful urban areas.

Hamburg has among the highest GDP/capita (measured in purchasing power standards, PPS) of all EU regions and highest in the BSR (92% above EU15 average in 1996). That same year Schleswig-Holstein was 3% above average. In contrast, corresponding figures for Mecklenburg-Vorpommern and Brandenburg were was 39% resp. 33% below EU average (less than one-third the level of Hamburg). This reflects the largest economic gaps within one country in the entire European Union.

In the Baltic States Estonia and Latvia have the highest regional disparities with the difference between Tallinn (Harjumaa county) and all other Estonia being more than 100% and between Riga and the rest of Latvia nearly as much. In Lithuania Vilnius has a GDP/capita a fifth higher than the country on average and the difference between Vilnius and Taurage (lowest) is more than 50%. Klaipeda in western Lithuania also lies above the national average.

In Poland Warszawa, but also Katowice, Szczecin, Poznan, Wroclaw as well as Legnica have higher income rates. Other larger city regions such as Gdańsk or Bydgoszcz have not fared equally well, although also they lie near the Polish average. The difference between Warszawa and Łomza (lowest) is nearly threefold and GDP/capita levels are in general lowest in eastern Poland.

Internationally comparable economic indicators on the Belorussian and Russian regions are not available. Regional data for 1995 indicates that the city of St Petersburg is the second-largest regional economy in the Russian Federation (after Moscow). Estimations from Statistics Finland indicate that GDP/capita levels in Belarus and the Russian regions in 1996 were between a fourth and a fifth of the EU15 average, and even slightly lower in Novgorod, Pskov and Kaliningrad.

Regional disparities in unemployment

While national unemployment rates depend largely on national economic policies, regional differences within countries may indicate spatial disparity problems.

Regional variations in unemployment are significant and, moreover, seem to be increasing. But the spatial patterns differs somewhat from GDP/capita indicators.

Capital regions usually have lower-than-national-average unemployment rates. Berlin is an exception.

The registered unemployment rates in Latvia show the largest regional variations in the whole BSR. The difference in unemployment rate between Riga and several regions in the eastern Latgale area can be as much as six or sevenfold.

In Poland apparent unemployment rates are generally higher in the northern regions than in the south. But their is high hidden unemployment in the eastern Polish regions with a large subsistence agriculture. In Norway, Finland and Sweden, the general difference is on a north-south axis, whereas it in Denmark is an east-west one.

The development in north-western Russia is quite the contrary and most alarming. In Murmansk oblast unemployment more than doubled from 10.3% in 1994 to 23.3% in 1998 and correspondingly in Karelia from 7.7% to 16.6%. Also in Novgorod, Leningrad and Pskov Oblasts unemployment has increased substantially during the period, whereas it has remained at a fairly stable level both in St Petersburg and in Kaliningrad.

Factors promoting regional disparities

The developing knowledge society, reduces the importance of transport cost for location choice. This would benefit more decentralised developments.

But the knowledge economy has highlighted the importance of proximity to a variety of enterprises working in the same field, to science and research centers, and to a diversified labour force.

Other factors further contribute to concentration: a growing need for rapid transport services (incl. air) in the course of globalisation; increasing relevance of foreign direct investment which tends to go to major urban centres.

This concentrating trend is more powerful than the de-concentration potential stemming from decreasing transport cost importance.

The above factors are also valid for transition countries. But some of them haven an even higher concentrating impact: strong foreign direct investment, traditional concentration of research and development, low quality of long-distance transport links from non-metropolitan centres.

The EU Commission's Sixth Periodic Report on the Social and Economic Situation and Development in the Union, draws the attention to two other factors affect differences in regional economic performance. Firstly, the urban-rural mix of population, where urbanised areas tend to perform better than rural areas. Secondly, the sectoral composition of the economy, where rural areas on average - but not always - tend to perform worse than regions with a high share of manufacturing or service activities.

Ways to counteract disparities

In small countries, regional disparities can be partly compensated by enhanced commuting. In Estonia, for example, 35% of all employees worked outside their home municipality in 1997, up from 25% two years earlier. This increase has been greatest among those living in the most peripheral municipalities. In 1997 more than a quarter of the rural population in Estonia worked in towns.

Prosperous capital and large city regions can act as engines for spread of growth, employment and, in the end, wealth for surrounding lagging areas. This is especially true within a travel distance of up to approx. 2.5 hours. It is more difficult in regions more distant from major growth centres. Hence, this problem is more expressed in countries of larger extension.

While major disparities are observed between rural and urban areas, the future major development discrepancy will be among regions having different levels of accessibility, knowledge potential and innovative strength.